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 and applications. Our highly engineered rail and transit products, which are designed 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 worldwide. In the first six months of 2026, approximately half of the Company’s net sales were generated 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 and applications. Our highly engineered rail and transit products, which are designed 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 worldwide. In the first nine months of 2026, approximately half of the Company’s net sales were generated from customers outside the United States.

Previous wording

Total multi-year backlog increased $3.5 billion during the first six months of 2026 to a record $30.9 billion at June 30, 2026. Significant Freight orders included a multi-year, multi-billion-dollar mining contract for drive systems and aftermarket parts, a $1.0 billion Australian order spanning across new locomotives, components, digital solutions, and multi-year services, a $210 million U.S. locomotive modernization order, a $184 million Positive Train Control (PTC) order, and a $52 million mining drive systems order in the Asia-Pacific region. We also began executing the first EVO modernization build to support the commercial rollout to the installed base. Key Transit orders during the first six months of 2026 included $109 million in brakes, couplers, and platform doors.

Current wording

Total multi-year backlog increased $4.0 billion during the first nine months of 2026 to a record $31.4 billion at September 30, 2026. Significant Freight orders during the first nine months of 2026 included international orders spanning new locomotives, components, digital solutions, and multi-year services, including a multi-year service agreement supporting the Simandou mining project. Other significant Freight orders included a multi-year, multi-billion-dollar mining contract for drive systems and aftermarket parts, new locomotive and modernization orders in North America across multiple Class 1 customers, an international Positive Train Control (PTC) order, and a mining drive systems order in the Asia-Pacific region. We also began executing the first EVO modernization build to support the commercial rollout to the installed base. In Transit during the first nine months of 2026, we were awarded several significant orders across multiple key customers in brakes, couplers, and platform doors.

Previous wording

Wabtec is focused on driving operational efficiency and improving profitability while reducing manufacturing complexity. As a result, there are restructuring initiatives, including Integration 3.0, Portfolio Optimization and Integration 2.0, aimed at achieving these focus areas. During the first six months of 2026 and 2025, Wabtec incurred $5 million and $15 million, respectively, of restructuring costs primarily for employee-related costs on programs under these initiatives. In addition, Transaction costs incurred during the six months ended June 30, 2026 and 2025 related to recent acquisitions were approximately $14 million and $35 million, respectively.

Current wording

Wabtec is focused on driving operational efficiency and improving profitability while reducing manufacturing complexity. As a result, there are restructuring initiatives, including Integration 3.0, Portfolio Optimization and Integration 2.0, aimed at achieving these focus areas. During the first nine months of 2026 and 2025, Wabtec incurred $10 million and $21 million, respectively, of restructuring costs primarily for employee-related costs on programs under these initiatives. In addition, Transaction costs incurred during the nine months ended September 30, 2026 and 2025 related to recent acquisitions were approximately $14 million and $44 million, respectively.

Previous wording

Future macroeconomic volatility, changes to tariffs and trade policies, impacts from regional conflicts and war, supply chain disruptions, and labor availability, amongst other things, could cause a negative impact on revenue and cost increases resulting in an adverse effect on the Company’s operating results. Additionally, broad-based inflation, metals, energy and other commodity costs, transportation and logistics costs, labor costs, and foreign currency exchange rate fluctuations all continue to impact our results. The Company utilizes various mitigating actions intended to lessen the impact of macroeconomic volatility, including the impact of current tariffs. These actions include implementing price escalations and surcharges, driving operational efficiencies through various cost mitigation efforts and discretionary spend management, strategically sourcing materials, reviewing and modifying distribution logistics, and accelerating integration synergies through our strategic initiatives. The Company has experienced increased tariff costs which unfavorably impacted our operating results and cash from operations for the six months ended June 30, 2026. Although we do not expect a material impact to our results of operations in 2026 because of mitigation efforts, due to the volatility of trade policies, we are unable to reasonably predict the future impact.

Current wording

Future macroeconomic volatility, changes to tariffs and trade policies, impacts from regional conflicts and war, supply chain disruptions, and labor availability, amongst other things, could cause a negative impact on revenue and cost increases resulting in an adverse effect on the Company’s operating results. Additionally, broad-based inflation, metals, energy and other commodity costs, transportation and logistics costs, labor costs, and foreign currency exchange rate fluctuations all continue to impact our results. The Company utilizes various mitigating actions intended to lessen the impact of macroeconomic volatility, including the impact of current tariffs. These actions include implementing price escalations and surcharges, driving operational efficiencies through various cost mitigation efforts and discretionary spend management, strategically sourcing materials, reviewing and modifying distribution logistics, and accelerating integration synergies through our strategic initiatives. The Company has experienced increased tariff costs which have unfavorably impacted our operating results and cash from operations for the nine months ended September 30, 2026. Although a nominal amount of these costs has been recovered through tariff refunds and the Company continues to pursue additional refund claims, the net impact of tariffs and timing of refunds on the Company's results of operations and cash flows remains subject to uncertainty.

Previous wording

Net sales for the six months ended June 30, 2026 increased by $813 million, or 15.3%, to $6.13 billion compared to the same period in 2025. Organic sales increased $289 million, or 5.4%, which was attributable to both the Freight and Transit Segments. Freight sales increased primarily due to higher North American and international locomotive deliveries and higher mining sales, partially offset by lower deliveries of locomotive modernizations and engine overhauls and the exit of a low margin Digital project. Transit sales increased from higher demand for Aftermarket and Original Equipment Manufacturing products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels. Acquisitions increased Net sales by $457 million, or 8.6%, and favorable changes in foreign exchange rates increased Net sales by $92 million, or 1.7%.

Current wording

Net sales for the three months ended September 30, 2026 increased by $234 million, or 8.1%, to $3.12 billion compared to the same period in 2025. Organic sales increased $137 million, or 4.7%, which was attributable to both the Freight and Transit Segments. Freight sales increased primarily due to higher deliveries of locomotive modernizations, higher core services sales, strong industrial and maintenance of way demand, higher sales of asset inspection products and higher mining sales, partially offset by lower locomotive deliveries. Transit sales increased from higher demand for Aftermarket and Original Equipment Manufacturing products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels. Acquisitions increased Net sales by $114 million, or 4.0%, and unfavorable changes in foreign exchange decreased Net sales by $5 million, or 0.2%.

Previous wording

Cost of sales for the three months ended June 30, 2026 increased by $250 million, or 14.1%, to $2.02 billion compared to the same period in 2025. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 63.5% and 65.3% for the three months ended June 30, 2026 and 2025, respectively. The improvement in gross margin is attributable to productivity and efficiency, savings from restructuring initiatives, and accretion from recent acquisitions, partially offset by inflation driven by tariffs and unfavorable mix within the Freight Segment. Cost of sales for the three months ended June 30, 2026 included $5 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the three months ended June 30, 2025 included $3 million of costs related to restructuring initiatives.

Current wording

Cost of sales for the three months ended September 30, 2026 increased by $72 million, or 3.8%, to $1.96 billion compared to the same period in 2025. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 62.7% and 65.3% for the three months ended September 30, 2026 and 2025, respectively. The improvement in gross margin is attributable to productivity and efficiency, favorable mix within both the Freight and Transit segments, savings from integration and other restructuring initiatives and accretion from recent acquisitions, partially offset by higher commodity costs and net tariffs. Cost of sales for the three months ended September 30, 2025 included $24 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the three months ended September 30, 2026 and 2025 both included $2 million of costs related to restructuring initiatives.

Previous wording

Total operating expenses increased $95 million, or 20.4%, for the three months ended June 30, 2026 compared to the same period in 2025. Selling, general and administrative expenses ("SG&A") increased $53 million for the three months ended June 30, 2026 compared to the same period in 2025. The increase is primarily due to incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by lower transaction costs and the impacts of restructuring initiatives. Transaction costs associated with acquisitions included in SG&A were $1 million and $25 million for the three months ended June 30, 2026 and 2025, respectively. SG&A for the three months ended June 30, 2025 included $3 million of costs related to restructuring initiatives. Engineering expenses increased $20 million and Amortization expense increased $22 million, both due to incremental expense from acquisitions.

Current wording

Total operating expenses increased $28 million, or 5.5%, for the three months ended September 30, 2026 compared to the same period in 2025. Selling, general and administrative expenses ("SG&A") increased $8 million for the three months ended September 30, 2026 compared to the same period in 2025. The increase is primarily due to incremental expense from acquisitions, partially offset by lower transaction costs and the impacts of integration and other restructuring initiatives. Transaction costs associated with acquisitions included in SG&A were $9 million for the three months ended September 30, 2025. SG&A for the three months ended September 30, 2025 included $4 million of costs related to restructuring initiatives. Engineering expenses increased $8 million and Amortization expense increased $12 million, both due to incremental expense from acquisitions.

Previous wording

Interest expense, net, increased $34 million to $80 million for the three months ended June 30, 2026 compared to the same period in 2025, due to higher average overall debt balances in the current period, primarily related to acquisitions.

Current wording

Interest expense, net, increased $15 million to $80 million for the three months ended September 30, 2026 compared to the same period in 2025, due to higher average overall debt balances in the current period, primarily related to acquisitions.

Previous wording

Freight Segment organic sales increased by $158 million, or 8.2%, driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales, partially offset by decreased Services sales from lower deliveries of locomotive modernizations. Acquisitions increased sales by $163 million, or 8.5%, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $14 million, or 0.7%.

Current wording

Freight Segment organic sales increased by $102 million, or 4.9%, driven primarily by Services sales from higher deliveries of locomotive modernizations and higher core services sales, Components sales from strong industrial, maintenance of way, and international demand, partially offset by lower North America railcar build, and Digital sales from higher demand for asset inspection products. Equipment sales also increased slightly from higher mining sales, mostly offset by lower locomotive deliveries. Acquisitions increased sales by $49 million, or 2.3%, primarily from Frauscher, and favorable changes in foreign exchange increased sales by $4 million, or 0.2%.

Previous wording

Freight Segment Operating expenses increased by $68 million, and Operating expenses as a percentage of Net sales increased 0.9 percentage points. The increase in Freight Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs.

Current wording

Freight Segment Operating expenses increased by $10 million, and Operating expenses as a percentage of Net sales decreased 0.5 percentage points. Freight Segment SG&A expenses decreased $3 million for the three months ended September 30, 2026. The decrease is primarily due to lower employee compensation and benefit costs, partially offset by incremental expense from acquisitions. Freight Segment Engineering expenses increased $10 million and Amortization expense increased $3 million both due to incremental expense from acquisitions.

Previous wording

The following table shows the major components of the change in Net sales for the Transit Segment in the second quarter of 2026 from the second quarter of 2025:

Current wording

The following table shows the major components of the change in Net sales for the Transit Segment in the third quarter of 2026 from the third quarter of 2025:

Previous wording

Transit Segment organic sales increased by $111 million, or 7.4%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure. Sales from the Dellner Couplers acquisition increased sales by $110 million, or 7.4%, and favorable changes in foreign exchange rates increased sales by $58 million, or 3.9%.

Current wording

Transit Segment organic sales increased by $35 million, or 4.4%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased pricing related to contract escalations and increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure. Sales from the Dellner Couplers acquisition increased sales by $65 million, or 8.2%, and unfavorable changes in foreign exchange rates decreased sales by $9 million, or 1.1%.

Previous wording

Transit Segment Cost of sales increased by $151 million, primarily due to higher sales volume, and Costs of sales as a percentage of Net sales decreased by 2.2 percentage points. The increase in gross margin was attributable to increased productivity and savings from restructuring initiatives. Cost of sales for the six months ended June 30, 2026 included $8 million of costs related to purchase price accounting for the step-up of inventory related to acquisitions to fair value on the date of acquisition.

Current wording

Transit Segment Cost of sales increased by $39 million, primarily due to higher sales volume and acquisitions, and Cost of sales as a percentage of Net sales decreased by 2.8 percentage points. The increase in gross margin was attributable to increased productivity, favorable pricing and mix within the Transit Segment and savings from integration and other restructuring initiatives.

Previous wording

Transit Segment Operating expenses increased by $29 million and as a percentage of Net sales increased by 0.4 percentage points. The increase in Transit Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by savings from restructuring initiatives. Transit SG&A expenses for the three months ended June 30, 2025 included $4 million of costs related to restructuring initiatives.

Current wording

Transit Segment Operating expenses increased by $21 million and as a percentage of Net sales increased by 0.9 percentage points. Transit Segment SG&A expenses increased $14 million, Engineering expenses decreased $2 million and Amortization expense increased $9 million for the three months ended September 30, 2026, primarily due to incremental expense from acquisitions, partially offset by savings from integration and other restructuring initiatives. Transit SG&A expenses for the three months ended September 30, 2025 included $2 million of costs related to restructuring initiatives.

Previous wording

FIRST SIX MONTHS OF 2026 COMPARED TO FIRST SIX MONTHS OF 2025

Current wording

FIRST NINE MONTHS OF 2026 COMPARED TO FIRST NINE MONTHS OF 2025

Previous wording

The following table shows the major components of the change in Net sales in the six months ended June 30, 2026 from the six months ended June 30, 2025:

Current wording

The following table shows the major components of the change in Net sales in the nine months ended September 30, 2026 from the nine months ended September 30, 2025:

Previous wording

Net sales for the three months ended June 30, 2026 increased by $473 million, or 17.5%, to $3.18 billion compared to the same period in 2025. Organic sales increased $229 million, or 8.5%, which was attributable to both the Freight and Transit Segments. Freight sales increased primarily due to higher North American and international locomotive deliveries and higher mining sales, partially offset by lower deliveries of locomotive modernizations. Transit sales increased from higher demand for Aftermarket and Original Equipment Manufacturing products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels. Acquisitions increased Net sales by $232 million, or 8.6%, and favorable changes in foreign exchange increased Net sales by $24 million, or 0.9%.

Current wording

Net sales for the nine months ended September 30, 2026 increased by $1,047 million, or 12.8%, to $9.25 billion compared to the same period in 2025. Organic sales increased $426 million, or 5.2%, which was attributable to both the Freight and Transit Segments. Freight sales increased primarily due to higher North American and international locomotive deliveries and higher mining sales, partially offset by lower deliveries of locomotive modernizations and engine overhauls. Transit sales increased from higher demand for Aftermarket and Original Equipment Manufacturing products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels. Acquisitions increased Net sales by $571 million, or 7.0%, and favorable changes in foreign exchange rates increased Net sales by $87 million, or 1.1%.

Previous wording

Cost of sales for the six months ended June 30, 2026 increased by $429 million, or 12.3%, to $3.91 billion compared to the same period in 2025. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 63.8% and 65.4% for the six months ended June 30, 2026 and 2025, respectively. The improvement in gross margin is attributable to productivity and efficiency, savings from restructuring initiatives, and accretion from recent acquisitions, partially offset by inflation driven by tariffs and unfavorable mix within the Freight Segment. Cost of sales for the six months ended June 30, 2026 included $28 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the six months ended June 30, 2026 and 2025 included $3 million and $6 million, respectively, of costs related to restructuring initiatives.

Current wording

Cost of sales for the nine months ended September 30, 2026 increased by $501 million, or 9.3%, to $5.86 billion compared to the same period in 2025. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 63.4% and 65.4% for the nine months ended September 30, 2026 and 2025, respectively. The improvement in gross margin is attributable to productivity and efficiency, savings from integration and other restructuring initiatives, and accretion from recent acquisitions, partially offset by increases in net tariffs and commodity costs and unfavorable mix within the Freight Segment. Cost of sales for the nine months ended September 30, 2026 and 2025 included $28 million and $24 million, respectively, of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the nine months ended September 30, 2026 and 2025 included $5 million and $8 million, respectively, of costs related to restructuring initiatives.

Previous wording

Total operating expenses increased $213 million, or 23.9%, for the six months ended June 30, 2026 compared to the same period in 2025. SG&A expenses increased $147 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily due to incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by the impacts of restructuring initiatives. Transaction costs associated with acquisitions included in SG&A were $14 million and $35 million for the six months ended June 30, 2026 and 2025, respectively. SG&A for the six months ended June 30, 2026 and 2025 included $2 million and $8 million, respectively, of costs related to restructuring initiatives. Engineering expenses increased $30 million and Amortization expense increased $36 million both due to incremental expense from acquisitions.

Current wording

Total operating expenses increased $241 million, or 17.2%, for the nine months ended September 30, 2026 compared to the same period in 2025. SG&A expenses increased $155 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase is primarily due to incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by the impacts of integration and other restructuring initiatives. Transaction costs associated with acquisitions included in SG&A were $14 million and $44 million for the nine months ended September 30, 2026 and 2025, respectively. SG&A for the nine months ended September 30, 2026 and 2025 included $1 million and $12 million, respectively, of costs related to restructuring initiatives. Engineering expenses increased $38 million and Amortization expense increased $48 million both due to incremental expense from acquisitions.

Previous wording

Interest expense, net, increased $59 million to $151 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to higher average overall debt balances in the current period, primarily related to acquisitions.

Current wording

Interest expense, net, increased $74 million to $231 million for the nine months ended September 30, 2026 compared to the same period in 2025, primarily due to higher average overall debt balances in the current period, primarily related to acquisitions.

Previous wording

Other income, net, decreased $1 million to $21 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a $32 million net gain on mark-to-market derivatives in the prior period associated with the acquisitions of Dellner Couplers and Frauscher. This was partially offset by higher foreign exchange gains in the current period, compared to foreign exchange losses in the prior period.

Current wording

Other income, net, increased $12 million to $33 million for the nine months ended September 30, 2026 compared to the same period in 2025, primarily due to foreign exchange gains in the current period, compared to foreign exchange losses in the prior period. This was partially offset by a $30 million net gain on mark-to-market derivatives in the prior period associated with the acquisitions of Dellner Couplers and Frauscher.

Previous wording

The effective income tax rate was 23.1% and 24.0% for the six months ended June 30, 2026 and 2025, respectively. The year over year decrease in the effective rate was primarily driven by prior period audit settlements and higher discrete equity compensation tax deductions.

Current wording

The effective income tax rate was 24.2% and 24.8% for the nine months ended September 30, 2026 and 2025, respectively. The year-over-year decrease in the effective rate was primarily driven by prior period audit settlements, higher discrete equity compensation tax deductions and 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 2026 from the first six months of 2025:

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 2026 from the first nine months of 2025:

Previous wording

Freight Segment organic sales increased by $178 million, or 4.7%, driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales. This was partially offset by decreased Services sales from lower deliveries of locomotive modernizations and engine overhauls, decreased Digital Intelligence sales driven by the exit of a low margin project, and decreased Components sales from lower North America rail car build, partially offset by strong industrial demand. Acquisitions increased sales by $347 million, or 9.1%, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $34 million, or 0.9%.

Current wording

Freight Segment organic sales increased by $280 million, or 4.7%, driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales and Components sales from strong industrial demand, partially offset by lower North America railcar build. This was partially offset by decreased Services sales from lower deliveries of locomotive modernizations and engine overhauls and decreased Digital Intelligence sales driven by the exit of a low-margin project. Acquisitions increased sales by $396 million, or 6.7%, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $38 million, or 0.6%.

Previous wording

Freight Segment Cost of sales increased by $278 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.5 percentage points. The improvement in gross margin is attributable to productivity and efficiency and accretion from recent acquisitions, partially offset by inflation driven by tariffs, unfavorable mix within the Freight Segment, and the exit of a low margin Digital project. Cost of sales for the six months ended June 30, 2026 included $20 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the six months ended June 30, 2026 and 2025 included $2 million and $4 million, respectively, of costs related to restructuring initiatives.

Current wording

Freight Segment Cost of sales increased by $311 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.8 percentage points. The improvement in gross margin is attributable to productivity and efficiency and accretion from recent acquisitions, partially offset by higher commodity and net tariff costs, unfavorable mix within the Freight Segment and the exit of a low-margin Digital project. Cost of sales for the nine months ended September 30, 2026 and 2025 included $20 million and $24 million, respectively, of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions. Cost of sales for the nine months ended September 30, 2026 and 2025 included $2 million and $5 million, respectively, of costs related to restructuring initiatives.

Previous wording

Freight Segment Operating expenses increased by $141 million, and Operating expenses as a percentage of Net sales increased 1.5 percentage points. The increase in Freight Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs.

Current wording

Freight Segment Operating expenses increased by $151 million, and Operating expenses as a percentage of Net sales increased 0.8 percentage points. Freight Segment SG&A expenses increased $90 million, Engineering expenses increased $34 million and Amortization expense increased $27 million for the nine months ended September 30, 2026, primarily due to incremental expense from acquisitions.

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 2026 from the first six months of 2025:

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 2026 from the first nine months of 2025:

Previous wording

Transit Segment organic sales increased by $71 million, or 9.0%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure. Sales from the Dellner Couplers acquisition increased sales by $69 million, or 8.8% , and favorable changes in foreign exchange rates increased sales by $10 million, or 1.3%.

Current wording

Transit Segment organic sales increased by $146 million, or 6.4%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure. Sales from the Dellner Couplers acquisition increased sales by $175 million, or 7.6%, and favorable changes in foreign exchange rates increased sales by $49 million, or 2.1%.

Previous wording

Transit Segment Cost of sales increased by $83 million, primarily due to higher sales volume and acquisitions, and Cost of sales as a percentage of Net sales decreased by 2.1 percentage points. The increase in gross margin was attributable to increased productivity, favorable mix within the Transit Segment, and the savings from restructuring initiatives. Cost of sales for the three months ended June 30, 2026 included $5 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions.

Current wording

Transit Segment Cost of sales increased by $190 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased by 2.4 percentage points. The increase in gross margin was attributable to increased productivity, favorable mix within the Transit Segment and savings from integration and other restructuring initiatives. Cost of sales for the nine months ended September 30, 2026 included $8 million of costs related to purchase price accounting for the step-up of inventory related to acquisitions to fair value on the date of acquisition. Cost of sales for the nine months ended September 30, 2026 and 2025 both included $3 million of costs related to restructuring initiatives.

Previous wording

Transit Segment Operating expenses increased by $56 million and as a percentage of Net sales increased by 0.4 percentage points. Higher SG&A expenses to support higher sales volume, higher employee compensation and benefit costs, and incremental Operating expenses from acquisitions were partially offset by savings from restructuring initiatives. Transit SG&A expenses for the six months ended June 30, 2026 and 2025 included $2 million and $8 million, respectively, of costs related to restructuring initiatives.

Current wording

Transit Segment Operating expenses increased by $77 million and as a percentage of Net sales increased by 0.6 percentage points. Higher SG&A expenses to support higher sales volume, higher employee compensation and benefit costs, and incremental Operating expenses from acquisitions were partially offset by savings from integration and other restructuring initiatives. Transit SG&A expenses for the nine months ended September 30, 2026 and 2025 included $1 million and $10 million, respectively, of costs related to restructuring initiatives.

Previous wording

Liquidity is provided by operating cash flows, borrowings under our credit facilities, 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:

Current wording

Liquidity is provided by operating cash flows, borrowings under our credit facilities, 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. Subsequent to September 30, 2026, the Company established a commercial paper program under which it may issue up to $2.0 billion of unsecured short-term notes. The program is supported by the Company's existing Revolving Credit Facility and provides an additional source of liquidity but does not increase the Company's overall borrowing capacity. The following is a summary of selected cash flow information and other relevant data:

Previous wording

Operating activities In the first six months of 2026, cash provided by operating activities was $640 million compared to $400 million in the first six months of 2025. The increase was driven by higher net income and decreased working capital requirements.

Current wording

Operating activities In the first nine months of 2026, cash provided by operating activities was $1,095 million compared to $767 million in the first nine months of 2025. The increase was driven by higher net income and decreased working capital requirements.

Previous wording

Net income was $759 million, an increase of $93 million compared to the prior year period. Non‑cash adjustments, including depreciation and amortization of $282 million and stock‑based compensation of $50 million, further supported cash provided by operating activities and increased year over year, primarily due to incremental non‑cash expense from acquisitions and higher equity‑based compensation.

Current wording

Net income was $1,170 million, an increase of $191 million compared to the prior year period. Non‑cash adjustments, including depreciation and amortization of $424 million and stock‑based compensation of $75 million, further supported cash provided by operating activities and increased year over year, primarily due to incremental non‑cash expense from acquisitions and higher equity‑based compensation.

Previous wording

Cash provided by operating activities also benefited from changes in working capital. Higher Receivables decreased cash from operations by $229 million, compared to a decrease in cash from operations of $243 million in the prior year period, driven by the timing of collections from customers. Higher Inventories decreased cash from operations by $35 million, compared to a decrease in cash from operations of $180 million in the prior year period, driven by the impact of increased raw material costs and tariffs in the prior year period. Lower Customer deposits decreased cash from operations by $70 million, compared to a $14 million increase in cash from operations in the prior year, from changes in the timing of customer deposits. Other operating activities decreased cash from operations by $105 million, compared to a $41 million decrease in cash from operations in the prior year, primarily from changes in other accrued expenses due to the timing of payments.

Current wording

Cash provided by operating activities also benefited from changes in working capital. Higher Receivables decreased cash from operations by $342 million, compared to a decrease in cash from operations of $368 million in the prior year period, driven by the timing of collections from customers. Higher Inventories decreased cash from operations by $100 million, compared to a decrease in cash from operations of $228 million in the prior year period, driven by the impact of increased raw material costs and tariffs in the prior year period. Lower Customer deposits decreased cash from operations by $149 million, compared to a $1 million increase in cash from operations in the prior year, from changes in the timing of customer deposits.

Previous wording

Investing activities In the first six months of 2026 and 2025, cash used for investing activities was $1,160 million and $98 million, respectively. During the first six months of 2026, Wabtec used $1,062 million for acquisitions, primarily for Dellner Couplers and $108 million for additions to property, plant and equipment for investments in our facilities and manufacturing processes. During the first six months of 2025, Wabtec used $83 million for additions to property, plant, and equipment and $21 million for acquisitions.

Current wording

Investing activities In the first nine months of 2026 and 2025, cash used for investing activities was $1,243 million and $1,887 million, respectively. During the first nine months of 2026, Wabtec used $1,062 million for acquisitions, primarily for Dellner Couplers and $182 million for additions to property, plant and equipment for investments in our facilities and manufacturing processes. During the first nine months of 2025, Wabtec used $1,755 million for acquisitions, primarily for Inspection Technologies, and $138 million for additions to property, plant, and equipment.

Previous wording

Financing activities In the first six months of 2026, cash provided by financing activities was $408 million, which included $1,049 million of inflows from net changes in debt, partially offset by $457 million of stock repurchases, $106 million of dividend payments, and $54 million of payments for income tax withholding on share-based compensation. In the first six months of 2025, cash provided by financing activities was $454 million, which included $735 million of inflows from net changes in debt, partially offset by $148 million of stock repurchases, $87 million of dividend payments, and $39 million of payments for income tax withholding on share-based compensation.

Current wording

Financing activities In the first nine months of 2026, cash used for financing activities was $147 million, which included $855 million of inflows from net changes in debt, which was more than offset by $762 million of stock repurchases, $158 million of dividend payments, $55 million of payments for income tax withholding on share-based compensation, and $19 million of distributions to/redemption of noncontrolling interest. In the first nine months of 2025, cash provided by financing activities was $907 million, which included $1,235 million of inflows from net changes in debt, partially offset by $148 million of stock repurchases, $130 million of dividend payments, $39 million of payments for income tax withholding on share-based compensation, and $6 million of distributions to noncontrolling interest.

Previous wording

During the second quarter of 2026, the Company entered into $75 million of interest rate hedge contracts to manage its net exposure to interest rate changes and its overall cost of borrowing.

Current wording

During 2026, the Company entered into $250 million of interest rate hedge contracts to manage its net exposure to interest rate changes and its overall cost of borrowing.

Previous wording

As of June 30, 2026, the Company held approximately $670 million of cash, cash equivalents and restricted cash, which was primarily held outside of the United States, mainly in Europe, India, South Africa, and China. While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States net of any tax impacts. As of June 30, 2026, approximately $10 million of the Company's cash balance was classified as restricted, primarily for cash held in escrow related to acquisitions.

Current wording

As of September 30, 2026, the Company held approximately $489 million of cash, cash equivalents and restricted cash, which was primarily held outside of the United States, mainly in Europe, India, South Africa, and China. While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States net of any tax impacts. As of September 30, 2026, approximately $11 million of the Company's cash balance was classified as restricted, primarily for cash held in escrow related to acquisitions.

Previous wording

During the six months ended June 30, 2026, the Company borrowed and repaid $476 million and $76 million, respectively, against the collateralized receivables. During the six months ended June 30, 2025, the Company borrowed and repaid $350 million against the collateralized receivables. Additional information with respect to the Revolving Receivables Program is included in Note 2 of "Notes to Condensed Consolidated Financial Statements" included in Part I, Item 1 of this report.

Current wording

During the nine months ended September 30, 2026, the Company borrowed and repaid $526 million and $99 million, respectively, against the collateralized receivables. During the nine months ended September 30, 2025, the Company borrowed and repaid $800 million and $600 million, respectively, against the collateralized receivables. Additional information with respect to the Revolving Receivables Program is included in Note 2 of "Notes to Condensed Consolidated Financial Statements" included in Part I, Item 1 of this report.

Previous wording

On February 6, 2026, the Board of Directors reauthorized the stock repurchase program and refreshed the amount available for stock repurchases to $1.2 billion of the Company’s outstanding shares. This new stock repurchase authorization supersedes the previous authorization of $1.0 billion, of which approximately $760 million remained at the reauthorization date. No time limit was set for the completion of the program, which conforms to the requirements under the agreements governing the Company's credit facilities and the indentures for the Senior Notes currently outstanding. The Company may repurchase shares in the future at any time, depending upon market conditions, our capital needs and other factors. Purchases of shares may be made by open market purchases or privately negotiated purchases and may be made pursuant to Rule 10b5-1 plan or otherwise. As of June 30, 2026, approximately $760 million was remaining under the stock repurchase plan.

Current wording

On February 6, 2026, the Board of Directors reauthorized the stock repurchase program and refreshed the amount available for stock repurchases to $1.2 billion of the Company’s outstanding shares. This new stock repurchase authorization supersedes the previous authorization of $1.0 billion, of which approximately $760 million remained at the reauthorization date. No time limit was set for the completion of the program, which conforms to the requirements under the agreements governing the Company's credit facilities and the indentures for the Senior Notes currently outstanding. The Company may repurchase shares in the future at any time, depending upon market conditions, our capital needs and other factors. Purchases of shares may be made by open market purchases or privately negotiated purchases and may be made pursuant to Rule 10b5-1 plan or otherwise. As of September 30, 2026, approximately $456 million was remaining under the stock repurchase plan.