Wabtec’s 2026 outlook: locomotives, acquisitions and a larger digital business

The operating base for the 2026 outlook

Wabtec forecast 2026 adjusted earnings of $10.05–$10.45 per diluted share and sales of $12.19–$12.49 billion on 11 February 2026. Reuters cited LSEG analyst estimates of $10.23 per share and $11.98 billion in sales. The Pittsburgh, Pennsylvania-based company, led by chief executive Rafael Santana, finished 2025 with a $27 billion multi-year backlog. Annual sales were $11.17 billion, GAAP earnings were $6.83 per share and adjusted earnings were $8.97. Operating cash flow totaled $1.76 billion. Fourth-quarter sales reached $2.97 billion, up 14.8%, while adjusted earnings increased to $2.10 per share. The backlog rose 23%, or 20.5% excluding currency effects, from the previous year. Fourth-quarter adjusted earnings exceeded analysts’ $2.08 estimate, while sales topped their $2.86 billion estimate. Its Freight segment’s Digital sales increased 74.4%, including the acquired Inspection Technologies and Frauscher businesses.

The 2023 baseline

Wabtec’s 2023 revenue was $9.68 billion. GAAP earnings of $4.53 per diluted share increased 30.9%, while adjusted earnings of $5.92 rose 21.8%. Operating cash flow reached $1.20 billion. The company returned more than $530 million to shareholders through dividends and repurchases, including $409 million spent buying back shares. During the fourth quarter, it acquired the remaining 50% of locomotive assembly joint venture Lokomotiv Kurastyru Zauyty for $81 million, net of cash received.

Fourth-quarter sales were $2.53 billion, increasing 9.5%. Freight sales rose 7.7%, supported by double-digit growth in Services and Components, while Transit increased 14.3%. GAAP operating margin was 12.2% and adjusted operating margin was 17.0%. Quarterly operating cash flow was $686 million, compared with $410 million a year earlier. Wabtec’s initial 2024 outlook projected sales of $10.05–$10.35 billion and adjusted earnings of $6.50–$6.90 per share. It expected operating cash conversion above 90% for that year.

First-quarter 2024 sales and cash generation

First-quarter 2024 revenue increased 13.8% to $2.50 billion, with growth in both Freight and Transit. GAAP earnings were $1.53 per share and adjusted earnings were $1.89, increasing 64.5% and 47.7%, respectively. GAAP operating margin reached 16.5%, alongside a 19.8% adjusted margin. Freight growth was concentrated in Equipment and Services. Transit sales increased 5.5%, reflecting higher original-equipment and aftermarket sales. The company attributed the earnings improvement to higher sales, wider margins and a lower tax rate.

Wabtec Corporation

Operating cash flow was $334 million, compared with a $25 million outflow in the prior-year quarter. Higher income, working-capital improvements and additional receivables-securitization funding contributed. Wabtec ended March with $639 million in cash, cash equivalents and restricted cash, and $4.00 billion in debt. It repurchased $175 million of shares and paid $36 million in dividends. The revised annual forecast called for $10.25–$10.55 billion in sales and $7.00–$7.40 in adjusted earnings per share, while retaining the operating cash-conversion target above 90%.

Equipment growth in the second quarter of 2024

Second-quarter 2024 sales increased 9.8% to $2.64 billion. GAAP earnings were $1.64 per share, up 54.7%, and adjusted earnings were $1.96, up 39.0%. GAAP operating margin was 16.3%, while adjusted operating margin was 19.3%. Within Freight, Equipment sales rose 36.4% and Components rose 17.5%. Transit sales increased 2.0%, supported by aftermarket activity. Wabtec attributed the consolidated margin improvement to higher sales and stronger gross margins.

Operating cash flow reached $235 million, compared with $115 million a year earlier. Higher income and working-capital improvements were partly offset by reduced receivables-securitization funding. The 12-month backlog increased $114 million from the previous year, while the multi-year backlog declined $356 million, or $140 million excluding currency effects. Wabtec repurchased $200 million of shares and paid $35 million in dividends. It raised and narrowed adjusted earnings guidance to $7.20–$7.50 per share, retaining the $10.25–$10.55 billion annual revenue range.

Services and Digital in the third quarter of 2024

Third-quarter 2024 revenue reached $2.66 billion, up 4.4%. GAAP earnings were $1.63 per share and adjusted earnings were $2.00, rising 22.6% and 17.6%, respectively. GAAP operating margin was 16.3% and adjusted operating margin was 19.7%. Freight’s Services sales increased 16.5%, while Digital increased 12.7%. Transit sales rose 9.6%, led by original equipment. Lower restructuring and transaction costs contributed to the improvement in Transit’s GAAP operating margin.

Quarterly operating cash flow increased to $542 million from $425 million, supported by higher net income and additional receivables-securitization funding. The 12-month backlog was $533 million above the prior-year level. The multi-year backlog increased $751 million, or $692 million excluding exchange-rate effects. Wabtec repurchased $599 million of shares and paid $35 million in dividends during the quarter. It raised and tightened annual adjusted earnings guidance again, to $7.45–$7.65 per share, while maintaining the $10.25–$10.55 billion revenue forecast.

The 2024 annual results and longer-term targets

Wabtec’s 2024 sales totaled $10.39 billion. GAAP earnings reached $6.04 per share, increasing 33.3%, while adjusted earnings of $7.56 rose 27.7%. Annual operating cash flow was $1.83 billion. Fourth-quarter sales were $2.58 billion, up 2.3%, with $723 million in operating cash flow. Customer deposits and a tax refund supported quarterly cash generation. Fourth-quarter Transit sales increased 7.1%, while full-year Freight sales grew 7.9%. Annual share repurchases totaled $1.10 billion.

In February 2025, Wabtec replaced its previous longer-term guidance with targets running through 2029. These included mid-single-digit compound annual revenue growth, more than 350 basis points of adjusted operating-margin expansion, double-digit compound annual earnings growth and average cash conversion above 90%. Its initial 2025 forecast called for revenue of $10.725–$11.025 billion and adjusted earnings of $8.35–$8.75 per share. The board increased the quarterly dividend by 25% to 25 cents per share, following a $1 billion increase in repurchase authorization announced in December.

Inspection technologies extend the digital portfolio

Wabtec agreed to acquire Evident’s Inspection Technologies division on 14 January 2025 and completed the transaction on 1 July. The $1.78 billion price was approximately $1.68 billion after anticipated tax benefits. The business, formerly part of Olympus’s Scientific Solutions division, supplied nondestructive testing, remote visual inspection and analytical instruments. It had more than 1,300 employees and four engineering and production facilities. Its estimated 2024 revenue was $433 million, with approximately $112 million in EBITDA.

Recurring revenue represented approximately 68% of the acquired business’s revenue base. Wabtec estimated that the addition expanded Digital Intelligence’s addressable market from $8 billion to $16 billion. It financed the purchase with cash, term notes, term loans and short-term credit-agreement borrowing. The transaction valuation incorporated $25 million in projected annual cost synergies. At closing, Wabtec expected a slight benefit to adjusted earnings per share in the second half of 2025. Those benefits remained acquisition forecasts.

First-quarter 2025 revenue and receivables

First-quarter 2025 revenue increased 4.5% to $2.61 billion. GAAP earnings were $1.88 per share and adjusted earnings were $2.28, up 22.9% and 20.6%. GAAP operating margin was 18.2%, while adjusted operating margin was 21.7%. Freight sales grew 4.2%, with Services up 16.9%. Transit sales increased 5.3%, supported by original equipment and aftermarket demand. Wabtec reported higher gross margins in both segments.

Operating cash flow declined to $191 million from $334 million, reflecting higher receivables. The 12-month backlog increased $486 million, while the multi-year backlog increased $219 million, or $460 million excluding currency effects. Wabtec ended the quarter with $698 million in cash, cash equivalents and restricted cash, and $4.01 billion in debt. It paid $43 million in dividends and repurchased $98 million of shares. Management widened the annual adjusted earnings range to $8.35–$8.95 per share, increasing its midpoint by 10 cents, while leaving the revenue forecast unchanged.

Dellner adds passenger-train connection systems

Wabtec announced its agreement to acquire Sweden-based Dellner Couplers on 18 March 2025 and announced completion on 11 February 2026. The agreement valued the business at $960 million in cash, financed with existing cash and short-term debt. Dellner supplied train connection systems and services for passenger rolling stock. Its installed base comprised approximately 100,000 couplers and 12,500 gangways, with production, assembly and aftermarket facilities in 13 countries serving more than 200 customers.

The addition expanded Wabtec’s Transit portfolio. At the agreement date, Dellner was expected to generate approximately $250 million in 2025 revenue. Wabtec’s transaction valuation included $22 million in projected annual cost synergies, expected within three years. It also forecast a benefit to adjusted earnings per share in the first ownership year and improving returns on invested capital over time. The earnings contribution and synergies were expected transaction benefits, rather than savings established by the completion announcement.

Frauscher adds signaling and train-detection technology

Wabtec agreed to buy Frauscher Sensor Technology on 7 July 2025 and completed the acquisition on 1 December. The business, based in Austria, specialized in train detection, wayside object control and axle counting. Founded in 1987, it had more than 700 employees across 15 countries and installations in over 100 countries. Its significant presence in Europe and India extended Wabtec’s Digital Intelligence business in those markets.

The transaction carried a €675 million enterprise value paid in cash. Frauscher was expected to generate approximately €145 million in 2025 revenue. The price represented an estimated 12.4 times projected 2025 EBITDA after adjusting for anticipated annual cost synergies. Wabtec expected to realize those synergies over three years and forecast a slight adjusted earnings-per-share benefit during the first ownership year. Train-detection and wayside-control capabilities joined a digital portfolio that also contained the newly acquired industrial inspection business.

Union Pacific’s modernization contract

Union Pacific and Wabtec announced a $1.2 billion AC4400 locomotive-modernization agreement on 4 February 2026. They had signed it during the fourth quarter of 2025. Production was assigned to Wabtec facilities in the United States, with deliveries beginning in 2027. Once the program was completed, Union Pacific expected to have more than 1,700 modernized locomotives in its fleet.

Each upgraded locomotive was to receive:

The FDL Advantage engine upgrade.
LOCOTROL Expanded Architecture for operation of longer trains.
Modular Control Architecture for data, diagnostics and software capabilities.

The companies expected fuel consumption to decline by more than 5%, tractive effort to increase 14% and reliability to improve 80%. These were projected results for the upgraded fleet. The program was intended to extend locomotive life, improve fleet standardization and introduce newer control and diagnostic technologies.

A supplied-part issue affects second-quarter 2025 deliveries

Second-quarter 2025 sales increased 2.3% to $2.71 billion. GAAP earnings were $1.96 per share and adjusted earnings were $2.27, up 19.5% and 15.8%. GAAP operating margin reached 17.4%, with an adjusted margin of 21.1%. Freight sales were largely unchanged: Services grew 6.0%, but a supplied-part issue reduced locomotive deliveries, while mining sales also declined. Transit sales rose 8.7%. Wabtec expected the delayed locomotive deliveries to move into the second half.

Operating cash flow was $209 million, compared with $235 million a year earlier. Working capital included higher inventories associated with the delivery delay and the timing of customer deposits. The 12-month backlog increased $876 million, while the multi-year backlog declined $247 million, or $448 million excluding currency movements. Wabtec raised its annual revenue forecast to $10.925–$11.225 billion, largely incorporating Inspection Technologies following its July acquisition. It increased adjusted earnings guidance to $8.55–$9.15 per share and retained the cash-conversion target above 90%.

Third-quarter 2025 acquisitions and delivery timing

Third-quarter 2025 revenue increased 8.4% to $2.89 billion. GAAP earnings were $1.81 per share and adjusted earnings were $2.32, rising 11.0% and 16.0%. GAAP operating margin was 17.0%, while adjusted operating margin was 21.0%. Freight sales grew 8.4%, including Inspection Technologies. Equipment sales increased 32.0% and Digital rose 45.6%, with the inspection acquisition contributing to Digital’s growth. Services declined 11.6% because of modernization-delivery timing. Transit sales increased 8.2%.

Quarterly operating cash flow declined to $367 million from $542 million, partly because of higher tariffs and working capital. Multi-year backlog increased $3.34 billion, or $3.30 billion excluding exchange-rate movements. Cash, cash equivalents and restricted cash totaled $528 million, and debt was $5.29 billion at quarter-end. Wabtec paid $43 million in dividends. Management raised and narrowed annual adjusted earnings guidance to $8.85–$9.05 per share, while maintaining the $10.925–$11.225 billion revenue range and an operating cash-conversion target above 90%.

CSX combines new equipment and fleet modernization

CSX announced a $670 million agreement with Wabtec on 9 February 2026. The order combined 100 new Evolution Series locomotives, modernization of 50 existing locomotives, and digital solutions and services. The modernization work concerned aging D9 locomotives, converting them from direct-current to alternating-current traction. CSX expected deliveries of the new locomotives to start during 2026 and deliveries of the modernized units to begin in 2027.

The order included Trip Optimizer with Smart Horsepower per Ton. Wabtec described the system as designed to support more efficient locomotive operation and fuel use. The new Evolution Series equipment was intended for long-haul and heavy-duty service. The modernization program was intended to extend service life, improve fleet standardization and add newer control and diagnostic technologies. CSX and Wabtec expected improvements in fuel efficiency, tractive effort and reliability. Those statements described the planned equipment and operating benefits, with deliveries scheduled after the agreement.