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- **Revenue Growth**: Q3 sales up 8% YoY to $2.9B, driven by Freight (+32%) and Transit (+8.2%).
- **Backlog Record**: 12-month backlog $8.3B (+8.4%), multiyear backlog $20.9B.
- **Margin Expansion**: Adjusted operating margin 21.0% (+1.3ppt YoY), gross margin 34.7% (+1.7ppt YoY).
- **Tariff Mitigation**: $6M Q3 charges, with 4-pronged strategy to offset costs.
- **Guidance Update**: 2025 EPS raised to $8.85-$9.05, +18% midpoint.

**【CEO Summary Section】**
- **Q3 2025 Performance**: Sales of $2.9 billion (+8% YoY), driven by Freight (+32%) and Transit (+8.2%) segments. Adjusted EPS up 16% to $2.32.
- **Backlog Strength**: 12-month backlog of $8.3 billion (+8.4%), with multiyear backlog at record $20.91 billion.
- **International Growth**: $4.2 billion Kazakhstan locomotive order, $125M mining drive systems deal, and $140M India brake orders.
- **Transit Momentum**: 15.5% operating margin in Transit, targeting mid-teens for full year.
- **2025 Guidance Update**: Adjusted EPS raised to $8.85-$9.05 (+18% midpoint), reflecting strong Q3 and pipeline visibility.

**【CFO Financial Commentary】**
- **Gross Margin Expansion**: 34.7% GAAP gross margin (+1.7ppt YoY), driven by contract escalations and Inspection Technologies.
- **Operating Efficiency**: Adjusted operating margin 21.0% (+1.3ppt YoY), despite higher SG&A from acquisitions.
- **Cash Flow**: $367M operating cash flow, with >90% cash conversion expected for full year.
- **Leverage Management**: Net debt at 2.0x, targeting 2.0-2.5x post-Dellner & Frauscher closings.
- **Tariff Impact**: $6M Q3 charges, with ongoing mitigation efforts (tariff sharing, supply chain shifts).

**【Q&A Highlights】**
- **Pipeline Confidence**: 2026 coverage stronger than 2025, with international outpacing North America.
- **Mod vs. New Locomotives**: Expect combined growth in 2026, with services margin targeting 5-7%.
- **Digital Growth**: Inspection Technologies adds 45.6% Digital Intelligence sales, digital penetration expanding internationally.
- **Acquisition Synergies**: Evident, Frauscher, and Dellner expected to be accretive to margins and EPS in 2026.
- **Tariff Outlook**: Peak gross impact in 2026, with net impact mitigated through pricing and cost management.

Westinghouse Air Brake Technologies Corporation (WAB) Q3 2025 Earnings Call Transcript

Revenue

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WAB

WAB fundamentals

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