WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORP

Previous wording

Wabtec is a global provider of value-added, technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries, as well as the mining, marine and industrial markets. Our highly engineered products, which are intended to enhance safety, improve productivity and reduce maintenance costs for customers, can be found on most locomotives, freight cars, passenger transit cars and buses around the world. Our core products and services are essential in the safe and efficient operation of freight rail and passenger transit vehicles. Wabtec is a global company with operations in over 50 countries and our products can be found in more than 100 countries throughout the world. In the first six months of 2024, approximately 50% of the Company’s Net sales came from customers outside the United States.

Current wording

Wabtec is a global provider of value-added, technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries, as well as the mining, marine and industrial markets. Our highly engineered products, which are intended to enhance safety, improve productivity and reduce maintenance costs for customers, can be found on most locomotives, freight cars, passenger transit cars and buses around the world. Our core products and services are essential in the safe and efficient operation of freight rail and passenger transit vehicles. Wabtec is a global company with operations in over 50 countries and our products can be found in more than 100 countries throughout the world. In the first nine months of 2024, approximately 52% of the Company’s Net sales came from customers outside the United States.

Previous wording

During the first six months of 2024, Wabtec continued to execute on our value creation framework by signing several key agreements including: a multi-year Tier 4 locomotive order in North America for over $600 million, Wabtec's first multi-year service contract with a customer in Brazil worth over $240 million, a long term parts agreement with a customer in Asia, and a multi-year order for new locomotives in Africa. Operationally, Wabtec began commercial operations for its Green Friction braking solution in Paris and launched the next generation of railcar movers with its Shuttlewagon Commander NXT. Additionally, as a result of Wabtec's strong revenue and profitable growth over the past few years, rating agencies have made the following changes to our credit ratings: both Fitch Ratings and S&P Global Ratings upgraded Wabtec's credit rating from BBB- to BBB with a Stable outlook, and Moody's updated Wabtec's outlook to positive from stable.

Current wording

During the first nine months of 2024, Wabtec continued to execute on our value creation framework by signing several key agreements including: a multi-year Tier 4 locomotive order in North America for over $600 million, a multi-year locomotive order in Kazakhstan for over $400 million, and a multi-year order for new locomotives in Africa. Additionally, Wabtec won a long-term parts agreement with a Class I railroad for over $300 million, signed its first multi-year service contract with a customer in Brazil worth over $240 million, and secured a long-term parts agreement with a customer in Asia. Operationally, Wabtec began commercial operations for its Green Friction braking solution in Paris and launched the next generation of railcar movers with its Shuttlewagon Commander NXT. Additionally, as a result of Wabtec's strong revenue and profitable growth over the past few years, rating agencies have made the following changes to our credit ratings: both Fitch Ratings and S&P Global Ratings upgraded Wabtec's credit rating from BBB- to BBB with a Stable outlook, and Moody's updated Wabtec's outlook to positive from stable.

Previous wording

During the first quarter of 2022, Wabtec announced Integration 2.0, a three-year strategic initiative to target incremental run rate synergies estimated to be between $75 million and $90 million in 2025. The scope of the review includes consolidating our operating footprint, reducing headcount, streamlining the end-to-end manufacturing process, restructuring the North America distribution channels, expanding operations in low-cost countries and simplifying the business through systems enablement. Management will also consider additional capital investments to further simplify and streamline the business. The Company anticipates that it will incur one-time restructuring charges of approximately $135 million to $165 million related to this initiative, of which approximately $130 million has been incurred through June 30, 2024. Total estimated initiative charges could change based on the specific programs approved or changes to the scope of the review. During the three and six months ended June 30, 2024, the Company incurred one-time restructuring charges for programs included in the initiative of approximately $4 million and $12 million, respectively, and $8 million and $17 million for the three and six months ended June 30, 2023, respectively, primarily for employee-related costs and asset write downs associated with site consolidations in Europe. Programs approved to date are expected to result in approximately 15 facility closures and impact up to 1,100 employees.

Current wording

During the first quarter of 2022, Wabtec announced Integration 2.0, a three-year strategic initiative to target incremental run rate synergies estimated to be between $75 million and $90 million in 2025. The scope of the review includes consolidating our operating footprint, reducing headcount, streamlining the end-to-end manufacturing process, restructuring the North America distribution channels, expanding operations in low-cost countries and simplifying the business through systems enablement. Management will also consider additional capital investments to further simplify and streamline the business. The Company anticipates that it will incur one-time restructuring charges of approximately $135 million to $165 million related to this initiative, of which approximately $140 million has been incurred through September 30, 2024. Total estimated initiative charges could change based on the specific programs approved or changes to the scope of the review. During the three and nine months ended September 30, 2024, the Company incurred one-time restructuring charges for programs included in the initiative of approximately $10 million and $22 million, respectively, and $13 million and $30 million for the three and nine months ended September 30, 2023, respectively, primarily for employee-related costs and asset write downs associated with site consolidations in Europe. Programs approved to date are expected to result in approximately 15 facility closures and impact up to 1,100 employees.

Previous wording

In addition to Integration 2.0, Wabtec is focused on exiting various low margin product offerings through Portfolio Optimization to improve profitability while reducing manufacturing complexity. Wabtec expects to incur approximately $85 million in net exit charges related to Portfolio Optimization, which will be predominately non-cash asset write downs. Wabtec recorded charges of approximately $2 million and $5 million during the three and six months ended June 30, 2024, respectively, for asset write downs related to Portfolio Optimization. No charges related to Portfolio Optimization were recorded during the six months ended June 30, 2023. Total one-time restructuring charges related to Portfolio Optimization to date are approximately $33 million.

Current wording

In addition to Integration 2.0, Wabtec is focused on exiting various low margin product offerings through Portfolio Optimization to improve profitability while reducing manufacturing complexity. Wabtec expects to incur approximately $85 million in net exit charges related to Portfolio Optimization, which will be predominately non-cash asset write downs. Wabtec recorded charges of approximately $8 million and $13 million during the three and nine months ended September 30, 2024, respectively, for asset write downs related to Portfolio Optimization. No charges related to Portfolio Optimization were recorded during the nine months ended September 30, 2023. Total one-time restructuring charges related to Portfolio Optimization to date are approximately $41 million.

Previous wording

Net sales for the three months ended June 30, 2024 increased by $237 million, or 9.8%, to $2.64 billion compared to the same period in 2023. Organic sales increased $221 million which was attributable to both Freight and Transit Segments. Freight Equipment sales increased from higher North American and international locomotive sales and increased mining sales. Components sales increased due to higher international railcar sales and growth in industrial end-markets. Freight Services sales increased from higher deliveries of locomotive modernizations and overhauls and higher parts sales. Transit sales increased from higher demand for Aftermarket products driven by increased infrastructure investment, partially offset by lower Original Equipment sales. Sales from acquisitions contributed $34 million in the Freight Segment and unfavorable changes in foreign exchange rates decreased sales by $18 million from both the Freight and Transit Segments.

Current wording

Net sales for the three months ended September 30, 2024 increased by $113 million, or 4.4%, to $2.66 billion compared to the same period in 2023. Organic sales increased $114 million which was attributable to both the Freight and Transit Segments. Freight Services sales increased from higher deliveries of locomotive modernizations and engine overhauls. Digital Intelligence sales increased due to higher international sales, including Positive Train Control ("PTC"), on-board locomotive solutions, and digital mining products. Freight Equipment sales decreased from lower locomotive deliveries, partially offset by increased mining sales. Transit sales increased from higher demand for Original Equipment Manufacturing and Aftermarket products driven by increased investments in sustainable infrastructure.

Previous wording

Cost of sales for the three months ended June 30, 2024 increased by $86 million, or 5.1%, to $1.77 billion compared to the same period in 2023. The increase is primarily due to the increase in net sales. Cost of sales as a percentage of net sales was 67.0% and 69.9% for the three months ended June 30, 2024 and 2023, respectively. The improvement in gross margin is attributable to favorable mix within and between the Freight and Transit segments, strong productivity and favorable fixed cost absorption. Costs of sales for the three months ended June 30, 2024 and 2023 included $6 million and $8 million, respectively, of restructuring costs, primarily for headcount actions and footprint rationalization related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Current wording

Cost of sales for the three months ended September 30, 2024 increased by $25 million, or 1.4%, to $1.78 billion compared to the same period in 2023. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 67.0% and 69.0% for the three months ended September 30, 2024 and 2023, respectively. The improvement in gross margin is attributable to favorable mix within the Freight segment, strong productivity and the impacts of Integration 2.0. Costs of sales for the three months ended September 30, 2024 and 2023 included $7 million and $13 million, respectively, of restructuring costs, primarily for headcount actions and footprint rationalization related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Previous wording

Total operating expenses increased $33 million, or 8.0%, for the three months ended June 30, 2024 compared to the same period in 2023, primarily due to the increase in net sales. Operating expenses as a percentage of sales was 16.8% and 17.1% for the three months ended June 30, 2024 and 2023, respectively. Selling, general and administrative expenses ("SG&A") increased $31 million for the three months ended June 30, 2024 compared to the same period in 2023. The increase is primarily from costs incurred to support the higher sales volume and higher employee compensation and benefit costs, partially offset by the impacts of Integration 2.0. Restructuring costs included in SG&A were $3 million and $2 million for the three months ended June 30, 2024 and 2023, respectively, primarily for headcount actions and footprint rationalization programs related to Integration 2.0.

Current wording

Total operating expenses increased $25 million, or 5.9%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to the increase in Net sales and higher restructuring costs. Operating expenses as a percentage of sales was 16.8% and 16.5% for the three months ended September 30, 2024 and 2023, respectively. Selling, general and administrative expenses ("SG&A") increased $23 million for the three months ended September 30, 2024 compared to the same period in 2023. The increase is primarily from costs incurred to support the higher sales volume and higher employee compensation and benefit costs, partially offset by the impacts of Integration 2.0. Restructuring costs included in SG&A were $5 million for the three months ended September 30, 2024, primarily for headcount actions and footprint rationalization programs related to Integration 2.0 and Portfolio Optimization. There were no restructuring amounts recorded in SG&A for the three months ended September 30, 2023.

Previous wording

Interest expense, net, decreased $7 million to $96 million for the six months ended June 30, 2024 compared to the same period in 2023 primarily due to lower average overall debt balances in the current period, partially offset by higher effective interest rates.

Current wording

Interest expense, net, decreased $8 million to $52 million for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to lower average debt balances in the current period.

Previous wording

Other income, net, increased $2 million to $4 million for the three months ended June 30, 2024 compared to the same period in 2023, primarily due to lower foreign exchange losses, partially offset by lower equity income.

Current wording

Other (expense) income, net, decreased $13 million from $10 million to $(3) million for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to higher foreign exchange losses and lower equity income.

Previous wording

The effective income tax rate was 24.5% and 25.5% for the three months ended June 30, 2024 and 2023, respectively. The year over year decrease was primarily driven by a change in the jurisdictional mix of earnings for the three months ended June 30, 2024.

Current wording

The effective income tax rate was 24.2% and 24.5% for the three months ended September 30, 2024 and 2023, respectively. The year over year decrease was primarily driven by a change in the jurisdictional mix of earnings for the three months ended September 30, 2024 and audit closures.

Previous wording

Freight Segment organic sales increased by $197 million driven primarily by:

Current wording

Freight Segment organic sales increased by $58 million driven primarily by Services sales from higher deliveries of locomotive modernizations and engine overhauls and Digital Intelligence due to higher international sales, including PTC, on-board locomotive solutions, and digital mining products. Equipment sales decreased from lower locomotive deliveries, partially offset by increased mining sales.

Previous wording

Freight Segment Cost of sales increased $92 million from higher sales volume, and Cost of sales as a percentage of Net sales decreased 3.0 percentage points. The improvement in gross margin is attributable to favorable mix within the Freight Segment product lines, strong productivity and favorable fixed cost absorption. Cost of sales for the three months ended June 30, 2023 was also impacted by manufacturing inefficiencies related to labor negotiations at our Erie facility. Cost of sales for each of the three months ended June 30, 2024 and 2023 included $5 million of restructuring costs, primarily related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Current wording

Freight Segment Cost of sales decreased $15 million, and Cost of sales as a percentage of Net sales decreased 2.6 percentage points. The improvement in gross margin is attributable to favorable mix within the Freight Segment product lines and strong productivity. Cost of sales for the three months ended September 30, 2023 was also impacted by manufacturing inefficiencies related to labor negotiations at our Erie facility. Cost of sales for each of the three months ended September 30, 2024 and 2023 included $2 million of restructuring costs, respectively, primarily related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Previous wording

Freight Segment operating expenses increased by $14 million primarily driven by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions.

Current wording

Freight Segment operating expenses decreased by $1 million primarily driven by lower professional services spend and a reduction in research and development costs, partially offset by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions. Freight Segment operating expenses for the three months ended September 30, 2023 were also impacted by labor negotiations at our Erie facility. Freight SG&A expenses for the three months ended September 30, 2024 included $2 million of restructuring costs, primarily related to Portfolio Optimization. The amounts recorded in the three months ended September 30, 2023 were not significant.

Previous wording

The following table shows the major components of the change in Net sales for the Transit Segment in the second quarter of 2024 from the second quarter of 2023:

Current wording

The following table shows the major components of the change in Net sales for the Transit Segment in the third quarter of 2024 from the third quarter of 2023:

Previous wording

Transit Segment organic sales increased by $55 million driven by strong Aftermarket sales primarily as a result of increased demand for products and services and increased infrastructure investment, partially offset by lower Original Equipment Manufacturing sales. Unfavorable changes in foreign exchange rates also decreased sales by $6 million.

Current wording

Transit Segment organic sales increased by $56 million driven by strong Original Equipment Manufacturing and Aftermarket sales primarily as a result of increased demand for products and services and increased investments in sustainable infrastructure. Changes in foreign exchange rates also increased sales by $8 million.

Previous wording

Transit Segment Cost of sales decreased by $6 million, and Costs of sales as a percentage of sales decreased by 2.3 percentage points primarily from favorable mix within the Transit product lines, partially offset by higher sales volume. The increase in gross margin was also attributable to benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit Cost of sales for the three months ended June 30, 2024 and 2023 includes $1 million and $3 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Current wording

Transit Segment Cost of sales increased by $40 million, primarily due to higher sales volume. Costs of sales as a percentage of sales decreased by 1.0 percentage points. The increase in gross margin was attributable to benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects, partially offset by unfavorable mix within the Transit Segment. Transit Cost of sales for the three months ended September 30, 2024 and 2023 included $5 million and $11 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Previous wording

Transit Segment operating expenses increased by $6 million as compared to the prior year. Higher SG&A expenses to support higher sales volume and higher employee compensation and benefit costs were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit SG&A expenses for each of the three months ended June 30, 2024 and 2023 include $3 million of restructuring costs, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Current wording

Transit Segment operating expenses increased by $15 million as compared to the prior year. Higher SG&A expenses to support higher sales volume and higher employee compensation and benefit costs were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit SG&A expenses for the three months ended September 30, 2024 included $3 million of restructuring costs, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0. The amounts recorded in the three months ended September 30, 2023 were not significant.

Previous wording

FIRST SIX MONTHS OF 2024 COMPARED TO FIRST SIX MONTHS OF 2023

Current wording

FIRST NINE MONTHS OF 2024 COMPARED TO FIRST NINE MONTHS OF 2023

Previous wording

The following table shows the major components of the change in Net sales in the six months ended June 30, 2024 from the six months ended June 30, 2023:

Current wording

The following table shows the major components of the change in Net sales in the nine months ended September 30, 2024 from the nine months ended September 30, 2023:

Previous wording

Net sales for the six months ended June 30, 2024 increased by $540 million, or 11.7%, to $5.14 billion compared to the same period in 2023. Organic sales increased $483 million which was attributable to both Freight and Transit Segments. Freight Equipment sales increased from higher North American and international locomotive sales and increased mining sales. Freight Services sales increased from higher deliveries of locomotive modernizations and overhauls and higher parts sales. Transit sales increased from higher demand for Aftermarket products driven by increased infrastructure investment, partially offset by lower Original Equipment sales. Sales from acquisitions contributed $70 million in the Freight Segment and unfavorable changes in foreign exchange rates decreased sales by $13 million.

Current wording

Net sales for the nine months ended September 30, 2024 increased by $653 million, or 9.1%, to $7.80 billion compared to the same period in 2023. Organic sales increased $597 million which was attributable to both the Freight and Transit Segments. Freight Equipment sales increased from higher North American and international locomotive sales and increased mining sales. Freight Services sales increased from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales. Transit sales increased from higher demand for Original Equipment Manufacturing and Aftermarket products driven by increased investments in sustainable infrastructure. Sales from acquisitions contributed $72 million in the Freight Segment and unfavorable changes in foreign exchange rates decreased sales by $16 million.

Previous wording

Cost of sales for the six months ended June 30, 2024 increased by $239 million, or 7.4%, to $3.45 billion compared to the same period in 2023. The increase is primarily due to the increase in net sales. Cost of sales as a percentage of net sales was 67.2% and 69.8% for the six months ended June 30, 2024 and 2023, respectively. The improvement in gross margin is attributable to improved pricing, favorable mix between the Freight and Transit segments and improved productivity. Cost of sales for both the six months ended June 30, 2024 and 2023 included $12 million of restructuring costs, primarily for headcount actions and footprint rationalization related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Current wording

Cost of sales for the nine months ended September 30, 2024 increased by $264 million, or 5.3%, to $5.24 billion compared to the same period in 2023. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 67.1% and 69.5% for the nine months ended September 30, 2024 and 2023, respectively. The improvement in gross margin is attributable to improved pricing, favorable mix between the Freight and Transit segments, improved productivity and favorable fixed cost absorption. Cost of sales for the nine months ended September 30, 2024 and 2023 included $19 million and $25 million, respectively, of restructuring costs, primarily for headcount actions and footprint rationalization related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Previous wording

Total operating expenses increased $47 million, or 5.9%, for the six months ended June 30, 2024 compared to the same period in 2023, primarily due to the increase in net sales. Operating expenses as a percentage of sales was 16.5% and 17.4% for the six months ended June 30, 2024 and 2023, respectively. Selling, general and administrative expenses ("SG&A") increased $49 million for the six months ended June 30, 2024 compared to the same period in 2023. The increase is primarily from costs incurred to support the higher sales volume and higher employee compensation and benefit costs, partially offset by the impacts of Integration 2.0. Restructuring costs included in SG&A were $6 million and $7 million for the six months ended June 30, 2024 and 2023, respectively, primarily for headcount actions and footprint rationalization programs related to Integration 2.0.

Current wording

Total operating expenses increased $72 million, or 5.9%, for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to the increase in Net sales. Operating expenses as a percentage of sales was 16.6% and 17.1% for the nine months ended September 30, 2024 and 2023, respectively. SG&A expenses increased $72 million for the nine months ended September 30, 2024 compared to the same period in 2023. The increase is primarily from costs incurred to support the higher sales volume and higher employee compensation and benefit costs, partially offset by the impacts of Integration 2.0. Restructuring costs included in SG&A were $11 million and $7 million for the nine months ended September 30, 2024 and 2023, respectively, primarily for headcount actions and footprint rationalization programs related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Previous wording

Interest expense, net, decreased $6 million to $49 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to lower average overall debt balances in the current period, partially offset by higher effective interest rates.

Current wording

Interest expense, net, decreased $15 million to $148 million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to lower average debt balances in the current period, partially offset by higher effective interest rates.

Previous wording

Other income, net, decreased $5 million to $2 million for the six months ended June 30, 2024 compared to the same period in 2023, primarily due to lower equity income.

Current wording

Other (expense) income, net, decreased $18 million from $17 million to $(1) million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to lower equity income.

Previous wording

The effective income tax rate was 24.1% and 25.5% for the six months ended June 30, 2024 and 2023, respectively. The year over year decrease was primarily driven by higher discrete equity compensation tax deductions for the six months ended June 30, 2024 and a change in the jurisdictional mix of earnings.

Current wording

The effective income tax rate was 24.1% and 25.1% for the nine months ended September 30, 2024 and 2023, respectively. The year over year decrease was primarily driven by higher discrete equity compensation tax deductions for the nine months ended September 30, 2024, audit closures, and a change in the jurisdictional mix of earnings.

Previous wording

The following table shows the major components of the change in Net sales for the Freight Segment in the first six months of 2024 from the first six months of 2023:

Current wording

The following table shows the major components of the change in Net sales for the Freight Segment in the first nine months of 2024 from the first nine months of 2023:

Previous wording

Additionally, Freight Segment sales also benefited from our strategic acquisition of L&M Radiator, Inc. by $34 million.

Current wording

Freight Segment organic sales increased by $486 million driven primarily by Services sales from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales, and Equipment sales from higher North American and international locomotive sales and increased mining sales. Additionally, Freight Segment sales also benefited from acquisitions by $72 million, primarily from our strategic acquisition of L&M Radiator, Inc.

Previous wording

Freight Segment Cost of sales increased $213 million from higher sales volume, and Cost of sales as a percentage of Net sales decreased 3.4 percentage points. The improvement in gross margin is attributable to improved pricing, favorable mix within the Freight Segment product lines and improved productivity. Cost of sales for the six months ended June 30, 2023 was also impacted by manufacturing inefficiencies related to labor negotiations at our Erie facility and costs related to next generation product development in Digital Intelligence. Cost of sales for the six months ended June 30, 2024 and 2023 included $8 million and $6 million, respectively, of restructuring costs, primarily related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Current wording

Freight Segment Cost of sales increased $198 million from higher sales volume, and Cost of sales as a percentage of Net sales decreased 3.0 percentage points. The improvement in gross margin is attributable to improved pricing, favorable mix within the Freight Segment product lines and improved productivity. Cost of sales for the nine months ended September 30, 2023 was also impacted by manufacturing inefficiencies related to labor negotiations at our Erie facility and costs related to next generation product development in Digital Intelligence. Cost of sales for the nine months ended September 30, 2024 and 2023 included $10 million and $8 million, respectively, of restructuring costs, primarily related to Integration 2.0 in both years and Portfolio Optimization in 2024.

Previous wording

Freight Segment operating expenses increased by $9 million primarily driven by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions.

Current wording

Freight Segment operating expenses increased by $13 million primarily driven by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions. Freight SG&A expenses for the nine months ended September 30, 2024 included $2 million of restructuring costs, primarily related to Portfolio Optimization. The amounts recorded in the nine months ended September 30, 2024 were not significant.

Previous wording

The following table shows the major components of the change in Net sales for the Transit Segment in the first six months of 2024 from the first six months of 2023:

Current wording

The following table shows the major components of the change in Net sales for the Transit Segment in the first nine months of 2024 from the first nine months of 2023:

Previous wording

Transit Segment organic sales increased by $24 million driven by strong Aftermarket sales primarily as a result of increased demand for products and services and increased infrastructure investment. This increase was partially offset by a decrease in Original Equipment Manufacturing sales. Changes in foreign exchange rates also decreased sales by $10 million.

Current wording

Transit Segment organic sales increased by $111 million driven by strong Original Equipment Manufacturing and Aftermarket sales primarily as a result of increased demand for products and services and increased investments in sustainable infrastructure.

Previous wording

Transit Segment Cost of sales increased by $26 million primarily from higher sales volume, and Costs of sales as a percentage of sales decreased by 0.7 percentage points. The increase in gross margin is primarily attributable to favorable mix within the Transit Segment and the benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit Cost of sales for the six months ended June 30, 2024 and 2023 includes $4 million and $6 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Current wording

Transit Segment Cost of sales increased by $66 million primarily from higher sales volume, and Costs of sales as a percentage of sales decreased by 0.7 percentage points. The increase in gross margin is primarily attributable to favorable mix within the Transit Segment and the benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit Cost of sales for the nine months ended September 30, 2024 and 2023 included $9 million and $17 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Previous wording

Transit Segment operating expenses increased by $5 million as compared to the prior year. Higher SG&A expenses to support higher sales volume and higher employee compensation and benefit costs were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit SG&A expenses for the six months ended June 30, 2024 and 2023 includes $6 million and $5 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Current wording

Transit Segment operating expenses increased by $20 million as compared to the prior year. Higher SG&A expenses to support higher sales volume and higher employee compensation and benefit costs were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects. Transit SG&A expenses for the nine months ended September 30, 2024 and 2023 included $9 million and $6 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.

Previous wording

Liquidity is provided by operating cash flows and borrowings under the Company’s Senior Notes, the 2022 Credit Agreement and the 2024 Credit Agreement, each with a consortium of commercial banks. Additionally, the Company utilizes the revolving receivables program and supply chain financing program described below, as well as other short-term financing agreements with certain banks, for added flexibility as part of our liquidity management strategy. The following is a summary of selected cash flow information and other relevant data:

Current wording

Liquidity is provided by operating cash flows and borrowings under the 2022 Credit Agreement and the 2024 Credit Agreement, each with a consortium of commercial banks, and proceeds from the Company’s Senior Notes. Additionally, the Company utilizes the revolving receivables program and supply chain financing program described below, as well as other short-term financing agreements with certain banks, for added flexibility as part of our liquidity management strategy. The following is a summary of selected cash flow information and other relevant data:

Previous wording

Operating activities In the first six months of 2024, cash provided by operating activities was $569 million compared to $90 million in the first six months of 2023. Significant changes to the sources and (uses) of cash for the six month periods include the following:

Current wording

Operating activities In the first nine months of 2024, cash provided by operating activities was $1,111 million compared to $515 million in the first nine months of 2023. Significant changes to the sources and (uses) of cash for the nine month periods include the following:

Previous wording

•$202 million from increased Net income;

Current wording

•$246 million from increased Net income;

Previous wording

•$98 million from changes in Accounts payable due to timing of payments;

Current wording

•$137 million from changes in Accounts payable due to timing of payments;

Previous wording

•$4 million from favorable changes in accounts receivables driven by $179 million of higher collections on receivables, mostly offset by $(175) million of higher remittance for the Revolving Receivables Program;

Current wording

•$122 million from favorable changes in Accounts receivables driven by $202 million of higher collections on receivables, partially offset by $(80) million of higher remittance for the Revolving Receivables Program; and,

Previous wording

•$128 million from changes in Inventory primarily from the inventory build during the first six months of 2023 in anticipation of a strike at the manufacturing facility in Erie, Pennsylvania, as well as supply chain disruptions;

Current wording

•$86 million from changes in Inventory primarily from the inventory build during the first nine months of 2023 due to a strike at the manufacturing facility in Erie, Pennsylvania, as well as supply chain disruptions.

Previous wording

Investing activities In the first six months of 2024 and 2023, cash used for investing activities was $(57) million and $(293) million, respectively. During the first six months of 2024, Wabtec used $(77) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes and received $20 million of proceeds from disposals of property, plant and equipment. During the first six months of 2023, Wabtec acquired L&M Radiator Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers, for net cash of approximately $(223) million and used $(70) million for additions to property, plant, and equipment.

Current wording

Investing activities In the first nine months of 2024 and 2023, cash used for investing activities was $(106) million and $(336) million, respectively. During the first nine months of 2024, Wabtec used $(123) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes, received $17 million of proceeds from dispositions of businesses, received $13 million of proceeds from disposals of property, plant and equipment, and used $(13) million for acquisitions. During the first nine months of 2023, Wabtec acquired L&M Radiator Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers, for net cash of approximately $(229) million and used $(109) million for additions to property, plant, and equipment.