Westinghouse Air Brake Technologies Corporation

Good morning, everyone, and welcome to the Wabtec fourth quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star and then zero on your telephone keypads. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor 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 2025 earnings call. With us today are President and CEO Rafael Santana, CFO John Olin, and Senior Vice President of Finance John Mastelers. 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 take a moment to reflect on our performance over the past year and share my thoughts on the year ahead. 2025 was another outstanding year, reflecting the strength and resilience of our business model and our ability to execute in dynamic markets. We delivered top line growth of 7.5% and grew adjusted EPS by nearly 19%. We accomplished all of that while converting a record orders pipeline into a very strong multi-year backlog. As we move into 2026, our orders, backlog, and pipeline momentum remain very strong, supported by growing demand. We also advanced our strategic priorities through acquisitions, and integration initiatives, unlocking synergies and driving operational efficiencies. To these ends, we're very pleased with the businesses that we acquired in 2025, the teams that came with these businesses, and the strong financial results that we have seen from day one of our ownership. Additionally, our efforts on integration, cost management, and simplification continue to exceed our expectations. As we exit 2025, the underlying momentum of our business gives us the confidence in delivering another strong cycle. We expect 2026 to mark our sixth consecutive year of mid to high-teen adjusted EPS growth, positioning us to drive very significant long-term value creation. Finally, 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 2025 and our confidence in the future, our board of directors has increased our dividend by 24% and has increased our share buyback authorization to $1.2 billion. This is the strongest position our company has been in, and we're both confident and determined about the years ahead. Let's move to slide five to discuss our fourth quarter 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 will cover the financials. We delivered another strong quarter. Sales were $3 billion, which was up 15%, and adjusted EPS was up 25% from the year-ago quarter. Total cash flow from operations for the quarter was $992 million, representing a very strong cash conversion. The 12-month backlog closed the year at $8.2 billion, up 7% from the prior year, while the multi-year backlog surpassed $27 billion, up 23%. These backlog results will drive our continued revenue and earnings momentum and provides us strong visibility and revenue coverage in 2026. Shifting our focus to slide six, let's talk about 2025 and market expectations in more details. While key metrics across our freight markets remain mixed, we are very encouraged by the overall strength of our business, the momentum we are seeing in international markets, and the continuing pipeline of opportunities across geographies. In North America, carload traffic was flat in the quarter, which resulted in fewer active locomotives. However, the locomotives that were in service operated at a higher intensity compared to last year, demonstrating the critical role our technology and solutions play in driving efficiency for our customers. Internationally, car loads continue to grow at a robust pace across core markets, such as Latin America, Africa, India, and Asia. Significant investments to expand and upgrade infrastructure are supporting our international orders pipeline. Looking at the North America railcar build, as discussed last quarter, demand for new railcars was down compared to the prior year and landed at approximately 31,000 cars for 2025. The industry outlook for 26 is expected to be 24,000 cars, down another 22% versus 2025. Finally, moving to the transit sector, we continue to see underlying indicators for growth. Ridership levels are rising in key markets such as Europe and India, and we are seeing high backlogs at car builders alongside increased public investment for fleet expansion and renewals. Next, let's turn to slide seven to discuss a few business highlights. This quarter, we converted more than $2 billion of pipeline into new locomotive and modernization orders for North American customers, an important milestone that reflects our customers' long-term commitment to invest in their fleets and further strengthen what is now our largest multi-year backlog for North America. We are seeing some customers capitalize on strong fleet investment returns. This is not just about upgrading assets. It is about improving service levels for their customers, lowering total cost of ownership, reducing obsolescence, and positioning fleets for the next generation of technology-enabled operations focused on safety, reliability, and availability. We expect orders to follow this trend, reinforcing the long-term demand for Wabtex innovative solutions. Moving to digital, we secured $75 million in orders for PTC and kinetics in key international markets such as Brazil and Kazakhstan. Also in the quarter, we delivered the first battery electric heavy haul locomotives to BHP. an important milestone for Wabtec and the industry. These locomotives are engineered to perform in one of the world's most demanding environments, leveraging advanced energy management technology, including regenerative braking, to maximize efficiency and significantly reduce emissions. Together with PHP, we are demonstrating how cutting-edge solutions can help meet operational needs while advancing sustainability efforts. And finally, I'm excited to bring Frauscher Sensor Technologies into WAPTEC. Following the closing of that acquisition at the beginning of December, this business is a market leader in train detection, wayside object control solutions, and axle counting systems. In addition, We are pleased to share that we closed on the acquisition of Downer Couplers yesterday. This acquisition will further strengthen our position in critical rail technologies. With that, I'd like to welcome both the Frauscher and Downer employees to Wabtec. All of this demonstrates the underlying strength across our businesses and the strong pipeline of opportunities which we continue to execute on. Moving to slide eight, I want to briefly discuss how we are positioned to deliver strong and sustainable results. Over the past five years, WAPTEC has built a track record of navigating challenging markets, geopolitical uncertainty, hyperinflation, tariffs, and other significant disruptions, and 2025 was no exception. Our success is driven by a highly committed management team, and industry-leading technologies, allowing us to remain resilient and relevant to our customers and our stakeholders. Our 12-month backlog of $8.2 billion provides visibility and support for growth. This backlog has consistently grown over the past five years, even amid a relatively flat North American rail market and a volatile macro economy. thanks to the innovation and the high level of recurring revenues that our products generate. Our ability to expand operating margins across the business reflects disciplined execution by driving continued productivity, simplifying the organization, managing costs, and pricing for the value we deliver. And finally, We have also demonstrated our ability to consistently generate strong cash flows with cash conversion averaging 99% over the last six years. Looking ahead, we are confident that our execution, combined with the strength of our business and leading technologies, will result in Wagtag being resilient through the economic cycles, delivering profitable growth, and driving superior shareholder returns. Turning to slide 9. Before turning it over to John, I want to highlight the significant fleet renewal opportunity that remains in North America. Fleet renewal is not discretionary. It is a critical lever our customers have to improve operating ratios, enhance service for their customers, and strengthen their overall competitiveness. As I mentioned last quarter, North America railroads are still operating an aged fleet Today, more than 25% of active locomotives are over 20 years old, and 25% still run on DC technology. This aging fleet creates a compelling case for continued modernization. As locomotives age, failure rates and maintenance costs rise, making modernizations a highly attractive return on our customers' investment. We have also noted the operational advantages of AC technology. For every three DC locomotives, customers can replace them with approximately two AC units, enabling class ones to reduce fleet sizes while improving productivity and reliability. This helps address obsolescence, reduces maintenance costs, and enhances service levels. all while providing our customers with impactful returns on their investments for modernizing their fleets. To help our customers capture these benefits on additional fleets, we're excited to launch our first ever EVO modernization program in 2026. The Evolution Series locomotives, first introduced in 2005, are now reaching an age where modernization becomes increasingly compelling. Our new EVO modernization builds upon our proven EVO engine platform and is designed to deliver meaningful operational impacts to optimize performance, reduce costs, and advance their long-term strategic objectives. Key new technologies, such as an upgraded control system and EVO Advantage, will be available as part of this EVO mod. This product is expected to deliver greater than 20% improvement in reliability and attractive effort by replacing DC traction motors and replacing aged electronics and control systems. In addition, the new mods with EVO advantage are expected to drive up to 7% improvement in fuel savings. Overall, we're excited about the significant value modernizations we'll unlock for our customers and for our business, and we remain confident in the long-term opportunities ahead. With that, I'll turn the call over to John to review the quarter segment results and our overall financial performance. John?