Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales increased by 4.5% to $2.6 billion, with adjusted EPS up 21% from the previous year.
- The 12-month backlog grew by 6% to $8.2 billion, indicating strong business momentum.
- International markets are performing well, with significant opportunities in Africa, Asia, and CIS regions.
- The company secured major orders, including a $300 million service agreement in Kazakhstan and a $140 million order for new locomotives in North America.
- WAB's international revenue has been growing at a high single-digit rate, delivering higher profitability than the North American region.
Negative Points
- Caution is advised for the North American market due to tariff activities and mixed freight business metrics.
- The North American railcar build is expected to decrease by 17% compared to last year.
- Equipment sales decreased by 9.5% due to a shift in capacity to modernizations.
- Foreign currency exchange had an adverse impact on sales and gross profit.
- The economic environment remains uncertain and volatile, requiring proactive cost management.
Q & A Highlights
Q: Rafael, you mentioned uncertainty around North America. How does this affect your business and pipeline?
A: Rafael Santana, CEO: North America is lagging compared to international markets, where we have strong momentum and profitability. We are cautious but focused on delivering our 2025 guidance and driving profit growth into 2026 and beyond.
Q: Can you clarify the impact of tariffs on your 2025 guidance?
A: John Olin, CFO: Our guidance includes the first round of tariffs but excludes reciprocal tariffs due to their volatility. We are monitoring the situation and will adjust as needed.
Q: How do you expect margin progression in transit and freight segments for 2025?
A: John Olin, CFO: We expect a strong second quarter, but the favorable mix from Q1 may not repeat. We are focusing on productivity and cost management to maintain margins.
Q: How are tariffs affecting customer behavior and your Integration 3.0 strategy?
A: Rafael Santana, CEO: We are working with customers and suppliers to manage supply chain shifts. Integration 3.0 remains on track to achieve $100-$125 million in savings by 2028, unaffected by tariffs.
Q: What growth do you expect in international aftermarket services?
A: Rafael Santana, CEO: We anticipate 6-7% growth in mature service businesses. Our international fleets are running hard, supporting this growth.
Q: Can you expand on the impact of tariffs on your business?
A: John Olin, CFO: We are not disclosing specific impacts due to ongoing volatility. We are collaborating with stakeholders to minimize tariff effects and have adjusted prices accordingly.
Q: How are you managing cost controls amid economic uncertainty?
A: John Olin, CFO: We are implementing cost control measures beyond Integration 2.0 and 3.0, focusing on prudent spending and maintaining our guidance commitments.
Q: How does international margin compare to North America, and is there room for growth?
A: John Olin, CFO: International margins are higher than North American margins, and we expect this trend to continue. We have made significant progress in improving productivity and integration internationally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
