Westinghouse Air Brake Technologies Corporation

Good day and welcome to the WAB Tech fourth quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded I would now like to turn the conference over to Kyra Yates, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Wabtec's fourth quarter 2024 earnings call. With us today are President and CEO Rafael Santana, CFO John Olin, and Senior Vice President of Finance John Mastlers. Today's slide presentation, along with our earnings release and financial disclosures, were posted to our website earlier today and can be accessed on the Investor Relations tab. Some statements we are making are forward-looking and based on our best view of the world and our business today. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non-GAAP financial metrics, and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics. I will now turn the call over to Rafael.

Thanks, Kyra, and good morning, everyone. Before John and I get into the details of the fourth quarter, I'd like to share some thoughts on the past year, this year, and the next five years. Overall, the WTAC team has delivered another very strong year. We saw a top line growth of 7%, operating margin expansion of 190 basis points, cash conversion of 117%, and adjusted EPS growth of 28%. The team continued to lay a solid foundation for us to build on as we look to realize the full potential of our company. Looking ahead, I'm excited by the underlying momentum of our business and the team's unrelenting focus on driving continuous improvement and delivering for our customers. I believe WAPTEC is well-positioned to drive continued profitable growth ahead. To that end, our 2025 financial guidance includes mid-single-digit revenue growth and margin expansion, which would deliver our fifth consecutive year of double-digit EPS growth. Finally, we are currently three years into our five-year long-term guidance that was issued in early 2022. I'm pleased to report that we have largely achieved our five-year goals in just three years. Consequently, we are announcing our new five-year long-term guidance, and we have even more opportunity to drive value today than we did three years ago. These opportunities are evidenced by the launch of Integration 3.0 and our continuing efforts to optimize our portfolio, which will support over 350 basis points of margin improvement over the next five years. Our financial position remains strong. We continue to execute against our capital allocation framework to maximize shareholder value by investing for future growth and returning value to our shareholders. And as a result of our performance in 24, In our confidence in the future, our board of directors has increased our dividend by 25% and has authorized another $1 billion for share repurchases, which we announced in December. Let's move to slide five to discuss our Q4 results. I'll start with an update on our business, my perspectives on the quarter, and progress against our long-term value creation framework and then John Wilk over the financials. We delivered a strong fourth quarter. Sales were $2.6 billion, which was up over 2%, and adjusted EPS was up 9% from the year-ago quarter. Total cash flow from operations for the quarter was $723 million, representing a strong cash conversion of 212%. The 12-month backlog was $7.7 billion, signifying continued momentum and visibility across the businesses. Shifting our focus to slide six, let's talk about our 2025 end market expectations in more details. While key metrics across our freight business remain mixed, we are encouraged by the strength of our business international market activity, and our current pipeline of opportunities across geographies. North American car loads continue to be up for the quarter. Despite this car load growth, the industry's and WAPTEC's active locomotive fleet were largely flat when compared to the last year's fourth quarter. Looking at the North American railcar builds, demand for new railcars was down compared to 2023, and landed at approximately 42,000 cars for 2024. The industry outlook for 2025 is to be down nearly 17%. Internationally, activity is strong across core markets, such as Latin America, Africa, Asia, and CIS. Significant investments to expand and upgrade infrastructure are supporting a robust international locomotive orders pipeline. In mining, commodity prices and an aging fleet continue to support activity to refresh and upgrade the truck fleet. Finally, moving to the transit sector, we continue to see underlying indicators for growth. Ridership levels are increasing in key geographies along with fleet expansion and renewals. Next, let's turn to slide seven to discuss a few business highlights. This quarter, we converted over a billion dollars of pipeline in new locomotive and modernizations orders. With that context, in North America, we secured $355 million in mods within the quarter, including the first mods order with Fairmax. These orders demonstrate the need for our Class 1 customers to continue to invest in their fleets over time. Fourth quarter was also a strong quarter for international orders. We won orders for new locomotives, totaling $649 million with several customers. These locomotives will help support the mining and agricultural growth in various international markets. In this context, we would like to highlight Africa, where we continue to capture significant growth opportunities in that region. We won an order to support the Simandou project, which is the largest mining project ever undertaken in the region. This project will be worth over $1 billion when you combine the equipment and services opportunities. These international wins demonstrate continued demand for best-in-class solutions that drive productivity, reliability, and durability for our customers. Moving to our digital intelligence business, we signed significant orders with Class 1 customers for advanced automation train handling solutions. And finally, we won signaling contracts for over $100 million with our North America Transit customers. This is our digital group's strongest year for orders, totaling approximately $1 billion. All of this demonstrates the underlying strength across our businesses the team's relentless focus on execution, and the strong pipeline of opportunities which we continue to execute on. Moving to slide eight, before turning it over to John, I want to briefly discuss our ability to deliver strong and sustainable results. Over the last five years, WAPTEC has demonstrated a solid track record of managing through challenging markets, geopolitical issues, hyperinflation, and other significant disruptions. We believe our dedicated management team, favorable end markets, and our leading technologies and solutions will enable us to remain resilient and more profitable. Our 12-month backlog of $7.7 billion provides visibility and support for GRUF. The 12-month backlog has consistently grown over the past four years despite a weaker North American rail market and a volatile macroeconomy. This is in part due to the high level of recurring revenues that our products command in the marketplace. Our track record of strong operating margin expansion across the business is evidence of our ability to deliver productivity, manage costs, and price for value we deliver. And finally, we have also demonstrated our ability to consistently generate strong cash flows. with cash conversion averaging 98% over the last five years. We expect that our execution, combined with the strength of our business, leading products and technologies will result in Wabtec being resilient through economic cycles, delivering profitable growth, and driving superior shareholder returns. With that, I'll turn the call over to John to review the quarter segment results and our overall financial performance. John? Thanks, Rafael, and hello, everyone.