WAB Q2 2025 Earnings Call Highlights: Strong Growth Amid Supply Challenges

Westinghouse Air Brake Technologies Corp (WAB) reported better-than-expected margin expansion and double-digit adjusted earnings per share growth in H1 2025. The company's 12-month backlog reached $8.2 billion, up 11.9%, indicating strong demand and visibility for future growth. WAB increased its 2025 sales guidance to $11.1 billion and adjusted EPS to $8.55-$9.15. However, revenue was adversely impacted by a supply part issue, and operating cash flow generation was lower on a year-over-year basis due to higher working capital and inventory levels.

Westinghouse Air Brake Technologies Corp (WAB) has reported robust earnings growth and increased guidance for the second quarter of 2025, despite facing supply chain hurdles. The company achieved better-than-expected margin expansion and double-digit adjusted earnings per share (EPS) growth in the first half of 2025 [1].

WAB reported a 12-month backlog of $8.2 billion, up 11.9%, indicating strong demand and visibility for future growth. The company successfully closed the acquisition of Inspection Technologies, which is expected to deliver immediate shareholder value and strategic fit with existing technologies [1].

However, revenue was adversely impacted by a supply part issue, delaying locomotive shipments and resulting in approximately $60 million of revenue being shifted to the second half of the year. Equipment sales were down 4.2% from last year's second quarter due to the supply part issue, and digital intelligence sales were down 4.8% from last year, primarily driven by the timing of international projects [1].

Operating cash flow generation was $209 million, lower on a year-over-year basis due to higher working capital and inventory levels. The multiyear backlog was down 4.0% on a constant currency basis, indicating potential challenges in long-term order commitments [1].

WAB increased its 2025 sales guidance to approximately $11.1 billion and adjusted EPS to be between $8.55 to $9.15, reflecting confidence in sustained growth. The company expects strong revenue and margin growth in the second half of the year, with organic revenue growth accelerating and adjusted operating margins increasing robustly year-over-year [1].

The transit segment showed strong performance with sales up 8.7% in the quarter, driven by elevated infrastructure investment and global ridership. The company highlighted significant opportunities for increased rail volumes and increased efficiency in the rail industry, which could make rail more attractive compared to other transport modes [1].

WAB's stock price has seen a positive reaction to the earnings report, with shares gaining 14.2% in the after-hours trading session following the earnings release. The company's strong financial performance and robust pipeline provide a solid foundation for future growth, despite the challenges posed by supply chain issues [2].

References:
[1] https://www.gurufocus.com/news/3004531/westinghouse-air-brake-technologies-corp-wab-q2-2025-earnings-call-highlights-strong-growth-amid-supply-challenges
[2] https://finance.yahoo.com/news/comfort-systems-stock-14-q2-152700803.html