Westinghouse Air Brake Technologies’ second quarter results fell short of Wall Street’s revenue expectations, with management attributing the miss to a supply part issue that delayed locomotive shipments. CEO Rafael Santana explained, “Q2 revenues were adversely impacted due to a supply part issue that we experienced during the quarter. This delayed shipment of locomotives to our customers.” Despite these headwinds, operating margins improved, aided by a favorable product mix and cost management. Management acknowledged the challenges but emphasized that the supply issue has been resolved and expects to catch up on delayed deliveries by year-end.
Is now the time to buy WAB? Find out in our full research report (it’s free).
Wabtec (WAB) Q2 CY2025 Highlights:
- Revenue: $2.71 billion vs analyst estimates of $2.78 billion (2.3% year-on-year growth, 2.5% miss)
- Adjusted EPS: $2.27 vs analyst estimates of $2.18 (4.1% beat)
- Adjusted EBITDA: $608 million vs analyst estimates of $613 million (22.5% margin, 0.8% miss)
- The company lifted its revenue guidance for the full year to $11.08 billion at the midpoint from $10.88 billion, a 1.8% increase
- Management raised its full-year Adjusted EPS guidance to $8.85 at the midpoint, a 2.3% increase
- Operating Margin: 17.4%, up from 16.3% in the same quarter last year
- Backlog: $21.83 billion at quarter end
- Organic Revenue was flat year on year (9.2% in the same quarter last year)
- Market Capitalization: $32.59 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Wabtec’s Q2 Earnings Call
- Robert Cameron Wertheimer (Melius Research) asked how potential rail mergers could impact Wabtec’s business. CEO Rafael Santana indicated mergers could boost rail volumes, benefiting Wabtec through increased demand.
- Oliver Z Jiang (Morgan Stanley) sought clarity on international demand trends and backlog changes. Santana emphasized a strong pipeline in both domestic and international markets, with solid 12-month backlog coverage.
- Adam Roszkowski (Bank of America) questioned the shape of second-half revenue and margin trends. Management expects revenue acceleration and robust margin growth as delayed shipments are delivered and acquisitions are integrated.
- Jatin Khanna (Goldman Sachs) inquired about tariff impacts and the integration of Inspection Technologies. Santana and CFO John Olin stated tariffs are being managed through cost and pricing actions and that the acquisition is expected to be accretive with positive customer response.
- Christian Zyla (KeyBanc Capital Markets) asked about digital segment opportunities post-acquisitions. Santana said scale has been achieved, and future growth will focus on leveraging digital, telematics, and international expansion.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace at which delayed locomotive shipments convert into recognized revenue, (2) integration progress and financial contributions from Inspection Technologies and pending acquisitions, and (3) margin trends as product mix shifts and cost actions are tested amid ongoing macroeconomic uncertainty. Execution in digital and aftermarket growth areas will also be closely watched.
Wabtec currently trades at $188.82, down from $214.46 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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