Westinghouse Air Brake Technologies (WAB) Stephens 26th Annual Investment Conference | NASH2024 summary

Business model and growth drivers

• Focus on delivering efficiency, productivity, and reliability to customers, ensuring strong returns on investment even during industry downturns.

• Growth supported by increasing backlogs, long-term contracts, and cost reduction initiatives, including Lean manufacturing and integration programs.

• Integration 2.0 program has driven significant cost synergies, with further opportunities identified for future efficiency gains.

• Margin expansion achieved through better asset utilization and ongoing portfolio optimization, including shedding low-profit revenue.

• Pricing for value and new technology introductions, such as EVO Advantage, are expected to further support margin growth.

Market outlook and momentum

• Strong multi-year backlog ($22 billion) provides visibility into 2025, with efforts now focused on filling 2026 orders.

• International locomotive order pipeline is robust, driven by market share gains and growth in regions like Brazil, Australia, India, CIS, and Africa.

• Installed base in international markets growing at a 4.5% CAGR over seven years, supporting recurring service and digital revenue.

• North American market remains stable through modernization programs, even as new locomotive purchases slow.

• Rail car component demand faces headwinds due to projected declines in new rail car builds.

Modernization and technology initiatives

• Modernization programs (FDL and EVO engines) offer customers significant fuel efficiency and emissions reductions at lower costs than new units.

• EVO Advantage, currently being tested, is expected to deliver up to 7% fuel savings and open a new wave of modernization opportunities.

• Many years of modernization opportunities remain, with commercialization of EVO MOD expected in late 2025 or early 2026.