WAB - Earnings call transcript Q2 2024 | Westinghouse Air Brake Technologies Corporation

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Operator

Good morning, everyone, and welcome to the Wabtec Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Kyra Yates, Vice President of Investor Relations. Ma'am, please go ahead.

Kyra Yates

Thank you, operator. welcome Second and Call. XXXX everyone, morning, to Quarter Wabtec's Earnings Good Mastalerz. us CEO, Vice and John and are President Santana; Finance, With President Olin; Rafael today CFO, John of Senior release Today's and our slide earlier can Relations the and accessed today with tab. presentation, our website financial were posted along disclosures to on Investor be earnings

Some best world the business today. view are and are and forward-looking making we of statements based our on our

in statements, risks, detailed relating and earnings please see presentation. uncertainties disclosures forward-looking more For to the assumptions our and release our

will to also Rafael. these the reconciliation as discuss encourage We turn non-GAAP financial to consider read tables and metrics you metrics. you now over and I will our disclosures call carefully

Rafael Santana

everyone. good and morning, Kyra, Thanks,

my billion. versus long-term strong $XX the robust adjusted $X.X Let's and by XX% XX-month progress earnings We quarter Slide growth. billion, move and expansion. start the creation will sales quarter segment value nearly XX% by with multiyear flow performance was cash was operations evidenced to for was driven backlog by was growth from quarter sales which was I'll $XXX on prior business, against perspectives and Total million. X. our our and up another quarter, up strong financials. an Sales Freight the EPS was cover from billion, margin from increased and the then framework, backlog delivered were John year $X.X year. Revenue share ago the driven The and the on per update

strong Wabtec delivered a the quarter. team Overall, second

against we on deliverables. our half half first With behind executing us, focused the second are

Slide business. Shifting strength underlying our the by focus momentum and encouraged I'm across forward, the X. to Looking

expectations details. and in XXXX market about talk Let's more

markets quarter, Despite across mixed, of when the our while encouraged freight geographies. North up and to last were our the international robust strength the we carloads metrics strength in are of was of second down the year's X.X% fleet was pipeline across compared locomotive remain our higher. active growth, fleet key opportunities this While our quarter. Wabtec's business, by carload active American industry's business

XX,XXX American discussed by at cars. This be the about we quarter, the sources from in North the has upgrade been year. and continue continuing of original raised a to XX,XXX investments infrastructure robust an expand back are fleet however, we industry the activity for the international and are truck supporting previous In fleet. Looking to forecast railcar to pipeline. see to to is Internationally, still orders commodity outlook Last be support and cars upgrade now to prices to industry aging delivered, refresh XXXX builds. which the down, mining, XX,XXX significant

moving mega for to need of transit remain solutions clean, in urbanization around driving transportation the the trends the globe. place, safe sector, the efficient decarbonization and and Finally,

by America, discuss to It to secured is significantly tunnels agreement in of order locomotive to improve of Slide turn orders by coal X a fleet share underground up the fuel is transit and key for solution ready commercial a highlights. In our is green breaking Albert. increase fleet business air customer have that network modernizations a XX recently finally, markets. let's locomotives modernize reliability opportunities locomotives our Transit our to million. a Pakistan North This that our braking greater international reducing for for multiyear Next, for Paris we example we one few Tier order demands a X Greater new the than best-in-class operations demonstrates largest solution $XXX emissions. servicing we solution to to order, will reliability improve which begin in manage would metropolitan will you improve emissions like also Valley's for availability a announced and to safety. In for XX-year the with and And strategic innovative reduce segment I a XX%. to authority to Brazil usage, part Wabtec friction of won services international area. This Pakistan, the in from great productivity, This reduce quality in railway.

this strength of relentless of business, deliver demonstrates across our the strong continue execution on and we team's the opportunities the All on. underlying pipeline to focus

is innovative to continue needs. to results positioned review and call capture segment that, address quarter I'll the Wabtec turn our to With well our scalable financial profitable to overall that John the performance. technologies with growth and customers' over

John Olin

Thanks, hello, Rafael, and everyone.

I will more in X. Turning results to quarter detail. second review Slide our

second as quarter largely results we expected. Our played out

full note first revenue due to both half the half tempered of to our of revenue also from results new and half expected expectations, quarter the slightly load to that grow faster is quarters. a our expect second year production more evenly our across the the first but than results more growth half. manufacturing results. The X our second effort We half earnings to in but and experienced primary in than to over our shift growing locomotives tempered of and our first amds we at from combined growth It versus driver is this second first shared be year we to expected half an the in a margin important production our pace

and in second earnings the half, do to Within each we year-over-year expect revenue grow quarter.

growth. by greater growth billion, versus Sales the driven increase were reflects to segment, the by third the was year. be equipment the the which fourth the components. $X.XX in quarter's for freight X.X% a second especially quarter quarter expect we and quarter's prior However, than growth Sales

percentage margin productivity. second XX.X%, up $XXX was GAAP improvement gross was per which quarter, higher Adjusted an by ago. driven improved the and points. GAAP income earnings operating were year. share the on continuous For the percentage operating year driven $X.XX, improved was X.X increase diluted million, margin This focus QX XX.X% margin gross versus by was in sales, and a of unrelenting up versus points prior X.X quarter

X.X streamline operations. our our optimization we of further and to million quarter, $X initiative the pretax portfolio primarily integration During and net were which Webtech's to restructuring related had charges for integrate

revenue X.X will million $XXX $XX to million XXXX. to of expected portfolio As by low-margin $XX drive nonstrategic while earnings Integration delivered up of strength Wabtec adjusted reducing was XX% roughly business. you strong diluted Overall, the per complexity. of versus is In recall, the $X.XX, rate quarter, eliminate share run underlying the another million prior optimization savings And our demonstrating quarter, year. may manufacturing initiative

Slide Turning to X.

review more Let's detail. in lines product our

Second quarter up we as expected. consolidated sales were X.X%

the second and aided mods our and by from offset equipment. versus sales XX.X% deliveries local North quarter lower offset continue business in Our by across production results growth Component as lower experience partially new up of increase North the or sales sales increased year, sales partially X.X% further Intelligence our largely of and and the last growth half thereby locomotives to consistent international build. Digital late we with were in in to and XXXX combined more were by of of sales and load labor were robust revenues PTC to factories, our manufacturing L&M driven the sales in second new aided from have be last sales driven revenues, of higher efficiencies. Equipment driven half staffing year, were higher order versus increased to allowing level products, last a us more deliveries acquisition international all American QX balance American by solid by mining XX.X% appropriately our first by by market. our we where railcar industrial quality in improve year-over-year groups or up shifted gain quarter, year's up our to

and Our year-over-year sales. higher services grew X.X%. overhauls driven growth parts was sales Sales primarily by

reliability and superior performance, Our to segment, customers Transit our In availability up the X.X%. recognize were continue our fleet. of sales

aftermarket our decarbonization, grew segment accelerate urbanization saw infrastructure. constant transit sustainable drivers in the grow X.X%. momentum we basis, currency revenue such quarter, remains a On need in for and the During secular XX%. as The the as positive investments sales

gross points Moving XX.X%, gross year. to points GAAP up margin up last percentage quarter. percentage X.X X.X Slide during margin was the was also X. from which Adjusted was

to the new favorable Mix despite quarter. segment combined sales, addition margin favorable the Freight modernizations in was within between higher and In gross locomotives also mix segments. benefited from higher the

profit operating a as in Foreign currency quarter. revenue as margin the gross and to was exchange well headwind

During strike QX of year's from we increased fixed from cost as late integration and X.X favorable of quarter, Aerie XXXX. the start absorption, well benefits last lapping also the in benefited productivity as

to driving Our benefits. and productivity well continues lean operational team execute by

turning Slide to XX. Now

quarter, operating margin expense GAAP Adjusted was last XX.X%, X.X were last points For million, up improved but $XX a than was operating QX the of margin was second which revenues. Engineering XX.X%. year. percentage versus points GAAP up year, moderately versus to largely percentage SG&A as percentage expenses year. X.X flat higher prior adjusted and

safety. and engineering our technologies in to business invest in we future customers' decarbonization as resources importantly, investing our digital We more are opportunities. improve But that current capacity an productivity, industry utilization leader in and continue

Now segment XX, let's Freight with the take a look on Slide results at segment. starting

the up the an segment integration million, operating included from million operating the Freight year's as percentage versus behind lapped Freight optimization. Adjusted GAAP X.X year. integration percentage XX.X% strong portfolio for by inefficiencies expenses X.X last were segment $XXX the income gross operating during same margin the SG&A X.X XX.X%, by of engineering of GAAP driven margin execution, up and caused favorable operating year. income discussed, and Freight already Adjusted percentage related X.X points XX.X%, versus I last in costs savings year. time, revenue. of increase as income restructuring As up segment quarter, At were to Aerie. mix, $X improved million was was primarily was up points a operational the prior in strike prior sales margin $XXX segment was operating we The XX.X% for and lower manufacturing

Finally, was period multiyear year $XX.XX year. from from The billion, prior a was $X.XX the the X.X% X.X% down segment billion, same XX-month ago. backlog backlog up

related XX. were up Adjusted X.X income percent was mix. When and million Transit $XX income foreign X.X up X.X GAAP transit for was a operating Slide were $X X.X%. adjusting as at Turning integration savings points by year X.X% driven million. Restructuring to sales to Adjusted XX.X%, of last segment sales $XXX costs currency, operating in was from Integration were percentage $XX segment favorable million. million. revenue operating QX. income

down backlog profitability. a selective quarter that decrease being XX-month basis focus was $X.XX year-over-year due billion, segment our thereby long-term to on ago. we drive orders the to versus more X.X% a to on Transit was backlog, on The add expecting for Finally, year improved the expected

on position financial to Now XX. our Slide let's turn

the at Second for quarter another in highlight cash $XXX was quarter cash with million. operating flow coming

and partially offset During $XXX securitization of of benefited from the capital, flow working reduction a million borrowings. higher quarter, cash earnings by improved

We greater continue cash full the year. than XX% to expect for conversion

quarter be balance was which a at X.Xx year Our strong the And financial evidenced same which position first, leverage. our our quarter, second $X.XX continue X.Xx ended leverage of at liquidity at end the as and ratio lower position, debt ago billion. very quarter to debt sheet by: versus net was the the

allocate returns continue disciplined in balanced We a to and way to capital maximize shareholders. our for

$XX the the purchased our I'd of that, With dividends. quarter, to XXXX $XXX over talk back we During call to and million Rafael million about guidance. shares paid to financial like in turn our

Rafael Santana

John. Thanks,

turn discuss Now our Slide let's to guidance. XXXX to year full XX

our heard be adjusted very today, was quarter, up $X.XX slightly to our As our a we increasing team of at XX.X%. the EPS EPS expectations. to guidance. We range of Consequently, now midpoint, you previous delivered second in ahead the are $X.XX strong which adjusted expect

cash conversion flow unchanged. Our revenue guidance and remain

Wabtec and to drive I'm beyond. well profitable ahead, Looking positioned XXXX into confident growth that is

up wrap let's Now Slide XX. on

our world-class intense today, continue team, to we our to for demand base we thanks stakeholders, resilient our components, significant in with focus continuous deliver have digital innovative part equipment products systems and to and our heard customers. and on growth in large you team improvement long-term our value the and solid continues on focus our with services, technologies Overall, believe installed technologies momentum opportunity for cost continued transit management. building and underlying an As solutions

the to while your I'll our call returns. our our and turn Q&A drive thank that, planning time growth to continue delivering to double-digit share shareholder Kyra the per morning, you growth horizon, with previous guidance, earnings Kyra? Consistent portion expect I thereby this for discussion. maximizing With over to begin through organic of our we now to mid-single-digit want

Kyra Yates

Rafael. you, Thank

to we We ready Operator, questions. Instructions] our first move [Operator now on for question. will now are

Operator

first today our from Daniel And comes Imbro Stephens. question from

Unknown Analyst

Maybe I'll start side. on the new locomotive

as up provide your coming Any modeling for slides. while. contract on was backlog? in July years in how we when start was just to then million $XXX-plus quarter-to-date? the mentioned the of that in one from is, bigger many clarify, included It's should the had years you it? about think XQ that it And signed Or the Tier can X you you've think order, that the orders up color a I multiple remarks

Rafael Santana

not That No. included was the in previous backlog.

So the second in Q it's backlog.

executed And this is piece it 'XX second pipeline will other think The of that of speaks 'XX strength just is our be the and I order the to piece is opportunities. million. between largely an

across see there to good that internationally, and continue momentum different We expands geographies. really

to North with but in continue We it opportunities mixed America, see here.

a The And pipeline healthy. pipeline. opportunities. the We They progressing. current our positive. number it's to supports overall, of are a have continuing current sizable backlog it. worked and in is being We're grow, total We're

Unknown Analyst

John, encouraging. on guide, a Really follow-up, it maybe a we can And from little just Great. if dig bit. the into

think half. expecting in said you growth I you're and back earnings revenue the

margins the year. relatively think But like moderate would flat. I the that it sequentially, assumption revenue previous had through been looks is

How margin? operating to that? of there the a what's that margin outlook half changing you piece strong half? you sequential about talk about drive for conservatism operating the So maybe the cost year some can on or first after the are in margin the the on increasing on thinking deleverage Is side back cost

Rafael Santana

growth. last of I'm we sorry, first and as our half the second up percentage first are but Daniel. growing X.X talked at And and of quarters, And going for back of with significantly there is Daniel, level. And the both we've halves -- is that, the was growth driving Daniel, -- is expected. about unfolding margin Thanks, also XX.X% revenue year-over-year that having half certainly, about to they're some the those or our level the couple growth that, more being certainly way margin what well tempered significant the not kind half. be -- higher unfold. talked and points. the up up And for how to in is a in going we've reason With both Revenue measures, half

last So mix, a on let's of about talk things. call. and One we the about couple talked is this those

tailwind slight that Our mix for into turn is the good a to expect us, first in we half and headwind a half. second

reasons. of the So that's one

Fixed cost really The is right? around other absorption, absorption.

a in With being almost the much have on are we we basis the again, in versus year-over-year second growth getting up first half, the that half the absorption XX%, first half. more

won't So be there. that again,

in on X.X And there's both half the second we've rate. half. the half. benefit right? But and answer the in benefiting at first some common a both half is there, mix Now things second in some is got and similar Integration onetime really absorption the is,

Operator

Angel Stanley. from comes question Morgan Next Castillo from

Angel Castillo Malpica

on one quick a Just revenue. the kind of

on sounds getting like touched didn't change it of of kind factors, some kind and but You've that you there's mixed it, better. guidance, some

if and keeping talked unpack more You about could that bit you carloads and the little thinking around railcar versus that deliveries. But guide. maybe just unchanged a EPS

Rafael Santana

be favorability a a and came going say, reasons. in half. And the to more favorability $X.XX see little little track, the the is quarter That's did is little Everything largely and in tracking that half on rate well. some We tracking we expecting revenue is X that on revenue first a at adjusted we we things actuals Mix first that but EPS track. We about kind in the in quarter, the same in favorable up second I quarter. would midpoint. of plan. of the And bit to the the a it look back fine-tuning favorable. parking is at due seeing I of brought in up that mix that than $X.XX the it bit of what terms we Again, in Angel, did is is we're half we're bit are in the brought our the Angel, bit, of on for right little expected. would bit arena. a right in the And tax of

the And the also half. X the last quarters. we're XX% our this the and XX.X%. good And we've then it in and thing, However, on rate, about still is guided back to and a talked what about to couple months we rate feel with the into favorable. unfold going is tax how down of we've guidance tax from bringing very headwind really line overall to But half

Angel Castillo Malpica

first That's flow expectation how think cash been sees better XX%. And And And optimism unfolding, to generation. on than of you of kind cash half added your typically very a for things helpful. has conviction given second are greater level very just continued the half and robust.

talk like just about balanced for you quite talked could seems more you of little but of your capital cash process, your about generation disciplined, allow So it should capital. deployment be kind and allocation, perhaps a flow aggressive robust bit

cash of expectations kind half. the just could your you second for that in on if So on flow touch

Rafael Santana

still Well, thanks million we're and we that most up a first with companies little why basis. we added strike regard the was what to if bit a ago, on working year-over-year as you And seeing a seeing the recall at half in of half, year to were there Yes, $XXX is were for capital rising much time. because very with out we're And industrial appreciated. a at first disruptions. was pointing regards on a the had supply there of strong potential our inventory building the

back the bit. disruptions. supply that brought quite in did fantastic a year, down managing last So team a inventory we half the down it job back The after on of

seeing working And is we're so the that higher capital, half so seeing significant what lapping first there. strength really we're in

guidance we'll to the past. are deploy we've buy conversion, cash, cash we're XX% that, the we've we expecting had with shares. to that of back looking And M&A. about over and We're talked Overall, Angel, favor to the as going continue in excess

Justin Long

in you're on little a maybe what the you front Could the M&A bit seeing? expand pipeline and

Rafael Santana

be we we to drive making opportunistic to drive we're that. expect really positioned sure profitable here. is me see at long-term as share is through We're shareholders for ROIC ever And decision-making that The opportunities as to robust higher pipeline to opportunistic I be we're going here. to will drive we're really feel as mean, going looking buybacks, be going continuing to business continue M&A. on growth. the profitable been. so. Let growth. to it's well But we return to And and value here very faster do What's

Operator

question comes from Our next Bascome from Susquehanna. Majors

Bascome Majors

doing see Can start are of you the about internationally. business? And What's mod either breadth is to talked in something expand Railway. wanted from there Just an modifications? the on some can or opportunity scale to installed you from to that Where you more Pakistan time? XX orders over you base you those cover the to North of that America like geography those facilities see expand

Rafael Santana

Yes.

-- have pipeline a continued looking availability reliability doing very some emphasize Kazakhstan, that what talked have as if seeing ultimately see by to our so think the when allows you those power seeing in the things one fleets, We're strong opportunity as opportunities it's customers looking engines. They of what are I our both to do we significantly you in those if whether I of location. But units the in to we we can are we be business it's for work we're So if is have one Pakistan, customers talked are value, often of for continue we know, the we invest the they're age improve single of with very those. reliable, the through. But what's concentrated innovation competitive to work we'll about about think a some internationally. we we exciting internationally think the international business leverage we out on opportunities, they're that Brazil, the share winning. We largely there. customer not those and shipped, Australia, equipped efficient of that to that upgrading in on locations that and and it's about modernizations, of world and fleets about much that if the around significant kit modernize reduce fuel through When we've

we think and order to orders first highlighted kind 'XX a us I this Africa, going in be 'XX. year, the the that's that's in in for half of significant executed West of

the it's into 'XX. I'm visibility and strength into and especially bringing to going call broader of 'XX international, good out see going So conversion broader to into

our we've seen over fleets think years, So dynamics internationally, the X% growth and to grow see to dynamics we good last that good between I X% and business and overall, there. X% continue X%, X

Bascome Majors

of And the who's talk a that be to get come do can bit we orders large in into operating regulatory EPA within in and some bit next the realistic got for about XXXX Washington in backlog specifically, your customers? to levels more leadership new with not to expect they're us with follow in it's a year? And at the inquiry to up discussions uncertainty, And the extensions until both leadership North locomotive be and who's rail the with both little if and just how going American you going mad after the you've there. of see certainty multiyear domestically,

Rafael Santana

mixed see North to think America. specific. I So customer it It's we continue in very

of, think So it to have order reflected quarter. that in I'm redundancy or levels customers here different going see might you some I the second fleet really got not. significant call, varies we And the on

connected FDL ultimately same ways, We're specifics. our what really the customer their older the what thing don't the invest, it's on customers returns in is engine. value, the innovation you we're the X to of will lot the was a we I now about So Evil the of few call to a the to which engine saw lot I'm fleet, here fleets. What I'll years, for happy over doing is the it's growth modernizing an modernizations, last obtain I business, tied see when largely driving they have. think which think the make

fuel in of year at which percent this on and drive the and X-plus for product, the fleet, that EVO improvements we're will Tier the fact, commercializing efficiency doing same X. So we're going really end thing another into

improve to customers of going to improve on that's which XX, operate those reliability fleets they that age, innovation come, modernize and will before will continued fleets, OR of in both get with reduction an and how of services cost, make fleets. the years their XX element availability also drive they that it's but So will

strong business see for think here we backlog have. we forward I the progress we all, coverage with the in all So as

Operator

next Muraki Jefferies. from from Saree question Our comes

James Monigan

Sari. for on James is This

North I locomotive to customer of modernization? So was driver on the are believe with the versus in up wanted number locos Tier they locos ordering Class just the have. Xs generally new follow I What orders America. X And the fine behind

and understand just they like the conversation I the that So locos? decided had with why new customer go wanted to you to the with

Rafael Santana

I very to, think both It's opportunity customers it's much see tied the reliability availability. how value. improve of costs to improved how here again, and an operations, they see

just about network, think what just about think taking the X, to with fleet on about but in that have their And just fuels. very the sustain. levels call hydrogen Data service also next the forth. and So alternative also speed take we this much capability that of I'll they're to Tier able fleet not to specific call opportunity on like things that's I'll could talked ready biofuels, with that what so it come fleet the take of

those the So are some elements. of

think mean, taking you've to electronics obsolescence fleets, an older time. that perspective I got some the over on fact you if much highlight addition challenge you very maintaining of those fleets I've got to that, the on to from especially In and

very of with some lower improve think see service an here. dynamics investing the aligned you'll also cost customers in opportunity cases, I stability. their to grow much to to And So with customers

from that our to those, some So of in I drive continue America else. and are elements will everywhere demand customers North the think,

James Monigan

of to about the kind as talk while, strength. to you behind driver I when show kind you continued North the weakness and follow-up, recover while a like remained And for touch Can a want weak Great. expect of to international North America on here? America digital,

Rafael Santana

Yes.

saw on connected locomotive call products. for I demand I'll think of is you in quarter, the to really, higher some think, board, what ultimately what which I

the on We also good saw demand technologies. mining a digital

and those North to be market. ultimately, the American lower think continue were by in offset sales I

think I saw in quarter, the to positive. that a second you tick

well, continuing technologies So through demand mining, like grew businesses international. fundamentally growth continues with That With driven in U.S. focused in what I discussed the or convertibility calls we're forward, the the I I OpEx pipeline, 'XX we that discretionary a regard. half things much that for this higher continue by But here order recurring here moving but X.X%. PTC, the to continue year second onboard and that ultimately on are drive demand teams revenues from our products very as call softer same for to in sure in see business to to making progress a that, drive business. still we our think

Operator

Scott comes Group Wolfe next question Our Research. from from

Scott Group

the Just one more on guidance.

half, So half get on more an a look I just basis. on just like to first the second I totally want of little comps. sort absolute

deliveries. in So of margins sort op thought looking the XX% bit margins the XX.X% out was and hey, right the suggests we're a first half. smoothing If and message guidance, it model second at go half. I right, were that we're little the below mods in more,

of upside the the And to the so is I sort the of trying to we're ultimately, I'm figure I sort of in the year? back out, right, think seeing smoother. revenue there the implied guess, half why aren't margin margins smoother? And

Rafael Santana

Yes, fair the mix, first of pull the half. aided that also first don't is it's talked in half XX.X% in And the little and in half back the lifting half. Scott, It's down to by amount expect a a the bit that we it second right? about. thing Mix same we going is is absorption it

Scott Group

the And go ultimately, think like -- a go so half the more we business first there but when what start there, be -- second early to the on 'XX about we or should margins, do you like forward? above half, is should just representative too thinking is maybe

John Olin

every the upon at XXXX waking people certainly We'll the have morning get looks in into up looking what early we where that XX,XXX of be year. end we're that. to too And like. it launching terms we from It's of at margin to have improve the

as position guidance guidance so are in and in couple on a to move about of And long-term feel in with this we year line of in our that. quarters what's But we we'll of believe we good out a be provide front us.

Rafael Santana

Scott, to by the coming with there productivity think lean actions only is, have cost good would momentum thing initiatives about integration we I driven add from I all.

portfolio to we more continue see you're see going going half to optimization. it's expand you're what while going And think continue the if to quarter-to-quarter, are variation, to margins ahead. half, to I think I to

Scott Group

makes as just tailwind a like, of one factor of past, sort price freight And follow-up, that right? that driver been really margin a in No, sustainable good Yes. Obviously, a is historically? And than is improvement? cost now is bigger the then sense. bigger maybe maybe further it's price margins than

Rafael Santana

leads Scott, by those we ourselves. the yes, we connected into to to that drive at differentiation along customer much business, which profitable we our bring innovation ahead And our level value means, very to we able value for customers on ultimately look drive those and into and share, of driving should be to the lines. lines, which to we growth customers, expect value our value for price drive for continue

Operator

Our comes question Jerry Sachs. from from Goldman Revich next

Jerry Revich

comment wonder about with just the any have your you customers Chevron case. flows the potential I since about they're how Can thinking been on the don't the if Yes, and that just you impact if mind? CARB. since changes And could ruling, that on talk conversations you've what at had you EPA

Rafael Santana

Yes.

But impact acting prominent course, less think pertaining expect based ruling, consider by that I that that regulations on think courts will an I here, granted the receive if So to regulations have are will within Jerry. mean, can authority to more take their to federal certainly rail. agencies here when Congress, difference of here I agencies we a role as

certainly think mandate, one if different about one you X-person through that. crew emissions go I I it the think the other it, that's way with in area here and -- think about really the but like is the ways, I the could car associated mean

can't things but I have a those. in to change play going associated those customer So we behavior time, over with say seen I necessarily are out think are that

and I playing still fluid fairly think those are out.

Jerry Revich

then performance, a Got mix service to? really to with expand year-over-year, it. of I'm And that you as the in set particularly outstanding wondering percent margin can that Because see out. declining really freight, on total margin just you performance benefits alluded

however at business you I'm levels back And labor standpoint, So an of drove from favorable wondering it? measure hours that efficiency you are what folks mix. per unit parts pre-covid then of or

Rafael Santana

really half. big not in the it's first is to the there's of the or second in we're be it's half. a of little X drivers. a headwind And going favorability to Jerry, going Okay. first not a for there With the the And regards to only the be see lot second bit mix, quarter, half

very is area that equipment the low in going take the group, wound had little up terms I'm is our had to While first that back, we right? half margin, order overall that XXXX, than -- a the favorability. And order bit that in in an sorry, group significant margin. first you I'm we've of half an lower The was equipment back international the to average Gerry, of

the And half. so against in the first Again, quarter, second in there be we're and mix favorability. significant that won't comparing that driving

us to the is a second our The with for business. year. strong good area has been business and regards expected mining across Mining

OE in expect However, to do when first we producing look are aftermarket production at the back and schedule, aftermarket first the half I'm -- we sorry, more the OE and more the half in half. more more in

turn line, to of things. within by One Components product been first a So tailwind margin. And favorability area higher in the the And our group, a mix greater from headwind. growth driven this international couple is half. third then it's has of that's a is to the going in a

And the for are then specific railcar in that are back got The half than first the cars higher the being for cars that second we margin build. is built in half. the the one orders

back We've the half. going got we're So a the benefit, to same and not in thing then there. have

Jerry Revich

are of point? question, efficiency of efficiency precoded the at focused at the apologize, you this I part levels back

Rafael Santana

yes. be much be back all the us, plants. where would I efficiencies we I answer And behind strike thinking the precoded so but ramifications The our expect some within wouldn't as are overall, all of would guess

the we of look done the a great As percentage of fact, matter when this The extremely first that and well. run year, seeing post lift admirable the in to due has operations Aerie at X.X supply kind disruptions in of at really productivity. Jerry, of job team that And driving half an of you're have half strike points operations some productivity. of of the

Operator

Our of Ken Bank from from next Hopster question comes America.

Ken Hoexter

up, from on kind guess, mods guess proceeded the at that the discussions to know Class that. still then how locomotive of lawsuits post Chevron just to that down, at margin ago clarify there railroad, or I going I'm terms order, North share looking on I that, I in And John, share gain. to any while you American this that's that just discussions yet? I just clarify, of in. And real was thoughts point builds doctrine slide, orders if North was got there new average. a did mention sustainability of Rafael, deliveries, on target Wabtec that to railcar as new historical a anything shifting then is one quick expectation a you've American low

Rafael Santana

we North That's me Let data order. to about order mentioned thing a pass it only but here, we've start that that I'll America John? John provided. the the on only and was

John Olin

regards With think railcar I -- Ken, the was market to the share. question, Yes. the and

you that of disruptions a of in to position seen we We we've were and inventory And half year, taking the back supply -- off and still share amount gained swing, very going first a availability. fair market last took on of that full well. So share. supporting bit. full the it because paid of and an lot and of tempered of again, the I value things seen kind our and but we've look to share of products goes service our way think the lot a customers. a stick. the in And supplying It's at we the that have

amount of of a share. fair that we're terms on that holding seeing again, to So benefit in

Rafael Santana

the On your question precedent. on Chevron

needs conversations for a regulatory the I the think CARB of result I -- robust in future. major conversations about cumene the their customers mandate. shift seen for with very any can't we're as we process X much say having we're have crew fleet

Ken Hoexter

in was of size the then that going me but X% as and Or terms Any backlog? backlog the we it's and All lumpy Anything that the building right. from scale that it you're the past follow-up backlog is order. and year term. here And like of XX million on is to thought kind on in up long thoughts things a -- months tell in the X% peak $XXX down beyond? comes -- just we're next look at of into

Rafael Santana

the is start at I we're it's XX strong, really groups months, what out, XX -- the So business strong. months and work pipeline business coverage looking the run XX driving point, miles I call of we to at with really is first, from it's that this make next I'll it's our direction. that sure and the the continued we opportunities think when about All think cost all, in I way

I future expand to profit think, position again, quarter-to-quarter. into once visibility which pool variation ahead. Yes, our years, We to to drive reinforces, going continue there's be

As in quarters coverage pointed have. we to that previous you out, we've it and down before, the seen really comes

Operator

question Instructions] comes Neles from Wertheimer our next Rob [Operator Research. from

Robert Wertheimer

a know the half, is absolute My back front in the stronger fill helpful. minor for you front doing on room in couple question And but is a there -- room XQ? XQ mentioned if still I you John, front in that were I in one half? half. don't with was half little half, are revenue Are a than in think to any the mix of you loading, just year-over-year, the which there any -- back XQ. doing is differences mods and -- you level between mentioned fewer on back

Rafael Santana

Rob, think question, So mods. I number of that one, at production combined the mods, and local to on question looking would broaden the I

be in be would down back flat to it the that up So first the half, into double digits. well half, the would And in slightly.

all right mods those absorption that slightly and driving shift that But for all back negative. both we're now, at looking that's revenue half locals in that's types again, combined, of and So more and the the the things. Robert. the

Robert Wertheimer

That's down figure on one Yes, half sorry, -- or Well, ahead. the go thing is trying half that versus modeling was what understand I'm but to negative sort X flat year-over-year? slightly of out you said

John Olin

the half, locos, with half the to second profit going within we the as within is and quarter, revenue same over the nearly second total, quarter, That's but modernizations talked strong the half rate more much and be on growth thing a we When fourth grow to of half revenue -- the in back And up basis. third but as back quarter terms expect we we the gain In would within half, variations was the to referring look at a and up about weren't the growth. to you than in at for the percent We're half. but half first terms quarter second quarters slightly very margin right? have in first the year-over-year half. moderated if I had half both in expect the we much quarter to look

Robert Wertheimer

Perfect. Okay.

transact are Sorry to lonely. there. I guess be your then [indiscernible] And getting

progress, there as You're of having margin quarters good great a couple well.

market I'll price And on margin direction any stop in Just just transit. commentary on a there. versus inflation,

Rafael Santana

and I'll start, fundamentals same complete, we let in continue but me see that Let the John to business.

that X% on business. growth far around expect We X%. of to as the market be part as to goes

continue around expect going is margins I'm improved to discipline backlog, that today. order continue in teams We to ultimately the intake the should apply, strong on see what reflect which to we and to call

you're of result a going to be never to some that. good So and the smooth progress. It's going as see numbers variation backlog on

John Olin

backlog. quarter. a more to quarter. a our selective being long-term the add about we've business. you talked on the focus our large on backlog, in improved bit were we in They due that's know, that Commenting first it's were down as in on little And Rob, this XX-month to Yes. line the with they tempered drive part profitability orders of And transit and

backlogs to We've profitability we business selectivity see over in the more going in in next the impact and transit over first business of the as few seen of our we or a the see to some would extent, expect we as in again the in shifts build strength it in quarter quarters are timing But to overall, of level the is there. higher underlying profitability. build But time. we backlog some

Operator

Barger from Steve comes question next our And KeyBanc Capital from Markets.

Steve Barger

relative about addressable you define can and penetration the in versus for gauge opportunity back market just trying products. for those to each? talk size what to international how you forward digital, America is I'm And rate Going the North

Rafael Santana

We of more America. highly in course, penetrated North are, much

opportunities think some have for go we you have products internationally, instance. here. if If trap connected into mean, if still optimizer, really about still with the that think think to -- like think a significant think about And you products. I of we I to is about Kazakhstan of you of you the while some ways bulk markets our -- --

PTC into about also work you us see through continue is to zero is What X.X, to into think zero you're of those we think forward you which some our I demand going think products interesting with to moving the continue these like to North I regulation international America. We're there, in grow markets. out If and of some have markets.

of So faster international could the in moving of America. to some dynamics markets, extent, potentially North start automation, given into degrees some some you seeing

dynamics America. think, I still more, international the earlier of North and from positive growth is coming in I more described some So

Steve Barger

rounding initially size. it's multibillion-dollar million So how you market $XXX about guess, a think business. opportunity I do Is that globally? or, Or

Rafael Santana

It is opportunity. a multibillion-dollar

size So is here. significant

look I of to at the to timing is of some the one that I get things internationally more these think disorders.

really the to some progress. You're get the couple that started those. fundamentally cases, see the might those orders glad back. years group describe But time And little bit in are here by a more a to some of take work

PTC, some more heard to of you're orders orders North America we on you've from going of from those the see to progress. continue as we've us of think I outside gotten

Steve Barger

step-up dynamic versus this Got And sizable you. the the the few Do transit years, last quarter John, margins quarters. pretty have expect prior that In year? it. for same in you a X fourth seen

John Olin

we're over profiles. provide on Steve, important the say to look the sequentially. that quarters provide more thoughts that going quarter. ends develop would I've margin lot fourth businesses not a time, that, of felt just overall, I specific and and margins. And than always But individual year-over-year it's we don't traits to and

Rafael Santana

Steve, of that team I terms business. see the and in fundamentals the sellers to mid-teen has the really patients see there, to we of profitable having expect margins, taken ahead. The that And in growth continue. to

Steve Barger

from that last causes what the just, that staying Or And years, it. what happen -- did at caused this year, X the in away margin flush -- why that Got past? has Is look budget that customers? step-up. -- John, at I

John Olin

the typically off patterns my fourth aftermarket more top government because business. be sales SG&A customers' but quarter, in lot transit. mix biggest transit there's quarter probably budgets, cases, a fourth spending the of the of some has the of the within In head would for in is spending

Operator

Yates conclude this Kyra remarks. And session. closing floor I'd ladies any for will At that time, over to back like and to the question-and-answer today's gentlemen, turn

Kyra Yates

Jamie, and with Thank you thank forward for to you, you, your participation next look quarter. Goodbye. again everyone, speaking We today.

Operator

presentation. And We today's call ladies and for and gentlemen, with conclude joining. conference you that thank we'll

You your may disconnect now lines.

Westinghouse Air Brake Technologies (WAB) 24 Jul 242024 Q2 Earnings call transcript