WAB earnings analysis
What we found in WAB's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Wabtec posted a strong Q2, with revenue increasing 17.5% year over year to $3.179 billion, gross margin expanding 180 basis points to 36.5%, and GAAP EPS of $2.33 versus $2.12 in Q1 2026 and $1.96 a year earlier. Both Freight and Transit grew at high-teens rates, while the $30.9 billion record backlog supports demand visibility. The principal offsets are acquisition-funded debt and higher interest expense, reduced liquidity, and ongoing tariff and working-capital exposure.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 17.5% with organic expansion
- Q2 net sales rose $473 million, or 17.5%, year over year to $3.179 billion. This also represents a $229 million, or 8.5%, organic-sales increase, while acquisitions contributed $232 million.
- Gross and operating margins expanded
- Gross profit increased to $1.161 billion from $938 million, lifting gross margin to 36.5% from 34.7%. Operating income rose $128 million to $600 million and operating margin expanded to 18.9% from 17.4%.
- Freight delivered growth and profit leverage
- Freight sales increased 16.9% to $2.243 billion and segment operating income increased 21.4% to $504 million. Freight organic sales grew $158 million, driven by locomotive deliveries and mining, despite lower modernization deliveries.
- Transit growth accelerated with Dellner
- Transit sales rose 18.9% to $936 million, with operating income up 33.9% to $146 million. Organic sales increased $71 million and Dellner Couplers added $69 million of revenue.
- Operating cash flow strengthened
- First-half operating cash flow increased to $640 million from $400 million; less $108 million of PP&E additions, implied first-half free cash flow was $532 million. Capex equaled 1.8% of first-half sales of $6.129 billion.
- Record backlog supports future demand
- Multi-year backlog rose $3.5 billion in the first half to a record $30.9 billion at June 30, 2026, including a $1.0 billion Australian order and a $210 million U.S. locomotive-modernization order.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Acquisition debt is raising interest expense
- Net interest expense increased $34 million year over year to $80 million in Q2, reflecting higher average debt balances primarily associated with acquisitions. The Dellner Couplers acquisition closed for approximately $1.053 billion.
- Liquidity declined following acquisition funding
- Total available liquidity declined to $2.022 billion at June 30, 2026 from $3.207 billion at December 31, 2025. Cash and equivalents excluding restricted cash fell to $660 million from $764 million, while revolver availability declined to $1.362 billion from $2.000 billion.
- Working-capital demands remain material
- Receivables consumed $229 million of first-half operating cash flow, inventories consumed $35 million, customer deposits consumed $70 million, and other operating activities consumed $105 million. These working-capital outflows partially offset $759 million of first-half net income.
- Tariff and cost volatility remain headwinds
- Management states that higher tariff costs unfavorably affected both operating results and cash from operations in the first six months of 2026. It incurred $28 million of acquisition inventory fair-value step-up costs in first-half cost of sales and notes tariff-policy volatility prevents reliable prediction of future impacts.
- Freight aftermarket and digital sales softened
- Freight first-half organic growth was constrained by a $192 million decline in Services sales, a $46 million decrease in Digital Intelligence, and an $18 million decrease in Components sales; these were offset by $434 million of Equipment growth.
- No formal risk-factor changes disclosed
- The company reports no material changes to risk factors from its December 31, 2025 Form 10-K. Nonetheless, the filing identifies $1.053 billion of acquisition spending in the first half, retaining execution and integration risk around recent acquisitions.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $2.33
- Gross margin
- 36.5%
- Operating margin
- 18.9%
- Segment
- Freight revenue: $2.243 billion, up $324 million (16.9%) YoY
- Segment
- Transit revenue: $936 million, up $149 million (18.9%) YoY
What they said about what is next.
The 10-Q MD&A does not provide quantitative FY2026 revenue or EPS guidance; outlook is limited to liquidity sufficiency for at least the next 12 months and commentary that tariff mitigation is not expected to have a material 2026 operating-results impact.
The filing reads better than the one before it.
What came before.
- 10-Q · April 22, 2026
- Wabtec reported Q1 2026 revenue of $2,950 million, up $340 million (13.0%) versus Q1 2025 ($2,610 million), with gross profit rising to $1,061 million and diluted EPS increasing to $2.12 from $1.88. Operating income…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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