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What changed in Wabtec's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Wabtec's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+224 added−225 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-14)

Top changes in Wabtec's 2024 10-K

224 paragraphs added · 225 removed · 172 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

55 edited+12 added−29 removed81 unchanged
Biggest changeIn 2022, Wabtec received sustainability awards from both the German Ministry of Transportation and Deutsche Bahn and for our Green Air heating, ventilation, and air conditioning (HVAC) solution. In recent years, we have also introduced a number of significant new products, including PTC equipment that encompasses onboard digital data and global positioning communication protocols.
Biggest changeThis was Wabtec’s second year in a row receiving the Thoroughbred Sustainability Partner Award from Norfolk Southern. Wabtec also is implementing energy-reducing technologies for the passenger transit sector. In 2022, Wabtec received sustainability awards from both the German Ministry of Transportation and Deutsche Bahn and for our Green Air heating, ventilation, and air conditioning (HVAC) solution.
Wabtec is advancing our sustainability priorities both through our own commitments to our people, communities, and planet, as well as by innovating next generation technologies that reduce emissions, energy consumption and waste, and increase fuel efficiency for our customers through advancements in our equipment and digital solutions. 5 • Driving the digital transformation of the rail industry.
Wabtec is advancing our sustainability priorities both through our own commitments to our people, communities, and planet, as well as by innovating next generation technologies that reduce 5 emissions, energy consumption and waste, and increase fuel efficiency for our customers through advancements in our equipment and digital solutions. • Driving the digital transformation of the rail industry.
A significant portion of our investment is expected to be focused on three customer-centric areas of innovation: zero-emissions operations, automation and digitization and advanced supply chain visibility. These investments will position our customers for success and make these technologies the standard going forward.
A significant portion of our investment is expected to be focused on three customer-centric areas of innovation: advanced supply chain visibility, automation and digitization and zero-emissions operations. These investments will position our customers for success and make these technologies the standard going forward.
Third quarter results may be affected by the timing of services performed under our locomotive maintenance contracts and vacation and scheduled plant shutdowns at several of our major customers. Fourth quarter results may be affected by the timing of spare parts and service orders placed by transit agencies worldwide.
Third and fourth quarter results may be affected by the timing of services performed under our locomotive maintenance contracts and vacation and scheduled plant shutdowns at several of our major customers. Fourth quarter results may be affected by the timing of spare parts and service orders placed by transit agencies worldwide.
We intend to increase sales through direct sales of existing products to current and new customers, by developing specific new products for application in new geographic markets, by making strategic acquisitions and through joint ventures with railway suppliers which have a strong presence in their local markets. We believe that international markets represent a significant opportunity for future growth.
We intend to increase sales through direct sales of existing products to current and new customers, by developing specific new products for application in new geographic markets, by making strategic acquisitions and through joint ventures with railway suppliers which have a strong presence in their local markets. We believe that international markets represent a 6 significant opportunity for future growth.
To guarantee interoperability in Europe, the European Union for Railway Agencies is responsible for defining and implementing Technical Standards of Interoperability, which covers areas such as infrastructure, energy, rolling stock, telematic applications, traffic operation and management subsystems, noise pollution and waste generation, protection against fire and smoke, and system safety.
To guarantee interoperability in Europe, the European Union for Railway Agencies is responsible for defining and implementing Technical Standards of Interoperability, which covers areas such as 10 infrastructure, energy, rolling stock, telematic applications, traffic operation and management subsystems, noise pollution and waste generation, protection against fire and smoke, and system safety.
In Transit, we are focused on mature markets such as Europe and emerging markets such as India. In Freight, we are targeting markets that operate significant fleets of locomotives and freight cars, including Australia, Brazil, Egypt, India, South Africa, Kazakhstan, and other select areas within Europe, Asia 6 and South America.
In Transit, we are focused on mature markets such as Europe and emerging markets such as India. In Freight, we are targeting markets that operate significant fleets of locomotives and freight cars, including Australia, Brazil, Egypt, India, South Africa, Kazakhstan, and other select areas within Europe, Asia and South America.
The Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses; supplies rail control and infrastructure products including electronics, signal design and engineering services; and refurbishes passenger transit vehicles.
The Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses; and supplies rail control and infrastructure products including electronics, signal design and engineering services.
Available free of charge on this site are: our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as the annual report to stockholders, our Green Bond Report (https://ir.wabteccorp.com/investor-relations/green-finance-framework), our Sustainability Report (www.wabteccorp.com/sustainability), and other information.
Available free of charge on this site are: our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as the annual report to stockholders, our Green Bond Report (https://ir.wabteccorp.com/investor-relations/green-finance-framework), our sustainability and sustainability-related reports (www.wabteccorp.com/sustainability/report-archive), and other information.
As a result of those strategic acquisitions, as well as other smaller acquisitions and organic growth, Wabtec is a global provider of value-added, technology-based locomotives, equipment, systems and services for the freight rail and passenger transit industries, and the mining, marine, and industrial markets. Wabtec has approximately 29,000 employees, excluding contingent workers, and operations in over 50 countries.
As a result of those strategic acquisitions, as well as other smaller acquisitions and organic growth, Wabtec is a global provider of value-added, technology-based locomotives, equipment, systems and services for the freight rail and passenger transit industries, and the mining, marine, and industrial markets. Wabtec has approximately 29,500 employees, excluding contingent workers, and operations in over 50 countries.
We are focusing on technological advances, especially in the areas of electronics, battery power and alternative fuels, including hydrogen technologies, braking products and other on-board equipment, as a means to deliver new product growth. We seek to provide customers with incremental technological advances that offer immediate benefits with cost-effective investments. • Grow and refresh expansive installed base.
We are focusing on technological advances, especially in the areas of electronics and alternative fuels, including hydrogen technologies, braking products and other on-board equipment, as a means to deliver new product growth. We seek to provide customers with incremental technological advances that offer immediate benefits with cost-effective investments. • Grow and refresh expansive installed base.
For the fiscal year ended December 31, 2023, our top five customers accounted for approximately 30% of net sales. No one customer represents 10% or more of consolidated net sales. We believe that we have strong relationships with all of our key customers. 8 Competition We operate in a highly competitive marketplace.
For the fiscal year ended December 31, 2024, our top five customers accounted for approximately 30% of net sales. No one customer represents 10% or more of consolidated net sales. We believe that we have strong relationships with all of our key customers. 8 Competition We operate in a highly competitive marketplace.
On average, there are 100 participants in the LEAD program that rotate between business units every six months to work on strategic projects and assignments, gain exposure to senior leadership and build their global professional network. We are focused on strengthening this program to support our global talent pipeline.
On average, there are 100 participants in the LEAD program that rotate between business units or departments every six months to work on strategic projects and assignments, gain exposure to senior leadership and build their global professional network. We are focused on strengthening this program to support our global talent pipeline.
We continue to emphasize innovation and development funding to create new products and capabilities to increase customer productivity, efficiency, capacity, utilization and safety, such as the battery electric locomotive, hydrogen powered locomotive, vehicle monitoring and data analytics. We plan to invest in bringing new technologies to market for our customers.
We continue to emphasize innovation and development funding to create new products and capabilities to increase customer productivity, efficiency, capacity, utilization and safety, such as the hydrogen powered locomotive, vehicle monitoring and data analytics. We plan to invest in bringing new technologies to market for our customers.
Our engineering and development program includes investments in data analytics, train control and other new technologies, such as battery-electric, liquid natural gas and hydrogen-powered locomotives, with an emphasis on developing products that enhance safety, productivity and efficiency for our customers.
Our engineering and development program includes investments in data analytics, train control and other new technologies, such as liquid natural gas and hydrogen-powered locomotives, with an emphasis on developing products that enhance safety, productivity and efficiency for our customers.
Trombley also held progressive commercial and marketing leadership roles at Parsons and GE Transportation. 14 Greg Sbrocco was named Executive Vice President, Global Operations in February 2019. Prior to this, Mr. Sbrocco was Global Supply Chain Leader for GE Transportation since September 2014. Mr.
Trombley also held progressive commercial and marketing leadership roles at Parsons and GE Transportation. 12 Greg Sbrocco was named Executive Vice President, Global Operations in February 2019. Prior to this, Mr. Sbrocco was Global Supply Chain Leader for GE Transportation since September 2014. Mr.
As global demands for growth increase, current trends suggest that freight and passenger rail activity will more than double by 2050, leading to an increased demand for sustainable transportation of people and goods. These converging forces highlight the critical interplay between market dynamics, the need for decarbonization and Wabtec’s business strategy.
As global demands for growth increase, current trends suggest that freight and passenger rail activity will more than double by 2050, leading to an increased demand for sustainable transportation of people and goods. These converging forces highlight the critical interplay between market dynamics, the need for increased fuel efficiency and Wabtec’s business strategy.
The following is a summary of our primary products and services in both aftermarket and original equipment across both of our business segments: Equipment: • Diesel-electric, battery, and liquid natural gas powered locomotives for freight and transit • Engines, electric motors and premium propulsion systems used in locomotives, mining, marine, stationary power and drilling applications • Marine and mining products Digital Intelligence Products: • Positive Train Control ("PTC") equipment and electronically controlled pneumatic braking products • Railway electronics, including event recorders, monitoring equipment and end of train devices • Signal design and engineering services • Train performance such as distributed locomotive power, train 'cruise control', and train remote control • Transport intelligence such as Industrial/mobile Internet of Things (IoT) hardware & software, edge-to-cloud, on and off-board analytics & rules, and asset performance management • Transport logistics such as rail and shipper transportation management and port visibility and optimization • Network optimization such as rail network scheduling, dispatch and optimization, intermodal, terminal management and optimization, and rail yard management and optimization Components: • Freight car trucks and braking equipment and related components for Freight applications • Air compressors and dryers • Heat transfer components and systems for diesel and gas engine cooling, generator and transformer coolers and high temperature applications • Track and switch products • New commuter and switcher locomotives • Turbochargers for industrial and aftermarket vehicle applications Services: • Freight locomotive overhauls, modernizations and refurbishment • Master service agreements for locomotive and car maintenance • Transit locomotive and car overhaul • Unit exchange of locomotive components • Maintenance of way equipment and services Transit Products: • Railway and freight braking equipment and related components, including high-speed passenger transit vehicles • Friction products, including brake shoes, discs and pads • Heating, ventilation and air conditioning equipment • Access doors and platform screen doors • Pantographs 4 • Auxiliary power converter and battery charging • Passenger information systems and closed-circuit television • Signaling and railway electric relays • Doors, window assemblies, accessibility lifts, ramps and electric charging solutions for buses Wabtec is utilizing a flexible and growing portfolio of freight rail and passenger transit products and innovative technologies to support customers’ sustainability goals and targets.
The following is a summary of our primary products and services in both aftermarket and original equipment across both of our business segments: Equipment: • Diesel-electric and liquid natural gas powered locomotives for freight and transit • Engines, electric motors and premium propulsion systems used in locomotives, mining, marine, stationary power and drilling applications • Marine and mining products Digital Intelligence Products: • Positive Train Control ("PTC") equipment and electronically controlled pneumatic braking products • Railway electronics, including event recorders, monitoring equipment and end of train devices • Signal design and engineering services • Train performance such as distributed locomotive power, train 'cruise control', and train remote control • Transport intelligence such as Industrial/mobile Internet of Things (IoT) hardware & software, edge-to-cloud, on and off-board analytics & rules, and asset performance management • Transport logistics such as rail and shipper transportation management and port visibility and optimization • Network optimization such as rail network scheduling, dispatch and optimization, intermodal, terminal management and optimization, and rail yard management and optimization Components: • Freight car trucks and braking equipment and related components for freight applications • Air compressors, dryers and HVAC systems • Heat transfer components and systems for diesel and gas engine cooling, generator and transformer coolers and high temperature applications • Custom engineered burners and combustion systems • Railgear, signaling and switch products • Turbochargers for industrial and aftermarket vehicle applications Services: • Freight locomotive overhauls, modernizations and refurbishment • Master service agreements for locomotive and car maintenance • Transit locomotive and car overhaul • Unit exchange of locomotive components • Long term parts arrangements • Maintenance of way equipment and services Transit Products: • Railway and freight braking equipment and related components, including high-speed passenger transit vehicles • Friction products, including brake shoes, discs and pads 4 • Heating, ventilation and air conditioning equipment • Access doors and platform screen doors • Pantographs • Auxiliary power converter and battery charging • Passenger information systems and closed-circuit television • Signaling and railway electric relays • Doors, window assemblies, accessibility lifts, ramps and electric charging solutions for buses Wabtec is utilizing a flexible and growing portfolio of freight rail and passenger transit products and innovative technologies to support customers’ sustainability goals and targets.
The Company’s total backlog was approximately $22 billion at December 31, 2023. The Company’s contracts are subject to standard industry cancellation provisions, including cancellations on short notice or upon completion of designated stages.
The Company’s total backlog was approximately $22.3 billion at December 31, 2024. The Company’s contracts are subject to standard industry cancellation provisions, including cancellations on short notice or upon completion of designated stages.
As of December 31, 2023, we have a global workforce of approximately 29,000 employees, excluding contingent workers. A portion of our workers are represented by labor unions. The United Electrical, Radio and Machine Workers of America (UE), Locals 506 and 618 collective bargaining agreement, covering approximately 1,400 locomotive manufacturing workers in Erie, Pennsylvania, expired on June 9, 2023.
As of December 31, 2024, we have a global workforce of approximately 29,500 employees, excluding contingent workers. Unionized Population A portion of our workers are represented by labor unions. The United Electrical, Radio and Machine Workers of America (UE), Locals 506 and 618 collective bargaining agreement, covering approximately 1,400 locomotive manufacturing workers in Erie, Pennsylvania, expired on June 9, 2023.
Within North America, New York Air Brake Company, a subsidiary of the German air brake producer Knorr-Bremse AG (“Knorr”) and Amsted Rail Company, Inc., a subsidiary of Amsted Industries Corporation, are our principal overall OEM competitors. Our primary competition for locomotives is Electro-Motive Diesel, owned by a subsidiary of Caterpillar.
Within North America, New York Air Brake Company, a subsidiary of the German air brake producer Knorr-Bremse AG (“Knorr”) and Amsted Rail Company, Inc., a subsidiary of Amsted Industries Corporation, are our principal overall OEM competitors. Our primary competition for locomotives is Progress Rail, owned by a subsidiary of Caterpillar.
The following are also available free of charge on this site and are available in print to any shareholder who requests them: Our Corporate Governance Guidelines, the charters of our Audit, Compensation and Talent Management and Governance and Sustainability Committees, our Code of Conduct, which is applicable to all employees, our Code of Ethics for Senior Officers, which is applicable to our executive officers, our Policies on Related Party Transactions and Conflict Minerals. 13 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table provides information on our executive officers as of February 14, 2024.
The following are also available free of charge on this site and are available in print to any shareholder who requests them: Our Corporate Governance Guidelines, the charters of our Audit, Compensation and Talent Management and Governance and Sustainability Committees, our Code of Conduct, which is applicable to all employees, our Code of Ethics for Senior Officers, which is applicable to our executive officers, our Policies on Related Party Transactions and Conflict Minerals. 11 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table provides information on our executive officers as of February 12, 2025.
As a result of the large base of nearly 24,000 locomotives currently in use, Wabtec's Services product lines of modernizing, rebuilding and overhauling, remanufacturing, maintaining, and exchanging locomotives and components in the aftermarkets provides a significant, recurring revenue stream.
As a result of the large base of nearly 24,000 locomotives, Wabtec's Services product line of modernizing, rebuilding and overhauling, remanufacturing, maintaining, and exchanging locomotives and components in the aftermarkets provides a significant, recurring revenue stream.
We are helping our customers reduce their overall carbon footprint through the development of low-emitting locomotives like our Tier 4 and battery-electric locomotives, Trip Optimizer, Green Air and Green Friction products, and the use of alternative fuels such as biodiesel, renewable diesel, and hydrogen. • Expand high-margin recurring revenue streams.
We are helping our customers reduce their overall cost of operations through the development of low-emitting locomotives like our Tier 4 locomotives, Trip Optimizer, Green Air and Green Friction products, and the use of alternative fuels such as biodiesel, renewable diesel, and hydrogen. • Expand high-margin recurring revenue streams.
Engineering and Development To execute our strategy to develop new products, we invest in a variety of engineering and development activities. For the fiscal years ended December 31, 2023, 2022 and 2021, we invested $218 million, $209 million and $176 million, respectively, in engineering for product development and improvement activities.
Engineering and Development To execute our strategy to develop new products, we invest in a variety of engineering and development activities. For the years ended December 31, 2024, 2023 and 2022, we invested $206 million, $218 million and $209 million, respectively, in engineering for product development and improvement activities.
Olin served as Controller of Kraft Foods' Cheese Division, and had 12 years of financial leadership at Kraft, Oscar Mayer Foods, and Miller Brewing Company. Mr. Olin also held positions with financial services and specialized consulting firms including Ernst and Whinney (now Ernst and Young). Nicole Theophilus was named Executive Vice President & Chief Human Resource Officer in October 2020.
Olin served as Controller of Kraft Foods' Cheese Division, and had 12 years of financial leadership at Kraft, Oscar Mayer Foods, and Miller Brewing Company. Mr. Olin also held positions with financial services and specialized consulting firms including Ernst and Whinney (now Ernst and Young). Nicole Theophilus was named Executive Vice President & Chief Administrative Officer in July 2024. Ms.
In addition, we have opportunities to increase the sale of certain products that we currently manufacture for the rail industry into other industrial markets, such as mining, off-highway and energy. • Lead the decarbonization of rail. Today, rail represents the cleanest, most energy efficient and safest mode of moving freight and people on land.
In addition, we have opportunities to increase the sale of certain products that we currently manufacture for the rail industry into other industrial markets, such as mining, off-highway and energy. • Drive fuel efficiencies through emerging technologies. Today, rail represents the cleanest, most energy efficient and safest mode of moving freight and people on land.
Fetsko 59 President, Freight and Industrial Components Alicia Hammersmith 53 President, Freight Services Rogerio Mendonca 51 President, Freight Equipment Nalin Jain 54 President, Digital Intelligence Pascal Schweitzer 47 President, Transit Lillian Leroux 52 Chief Strategy and Sustainability Officer John A.
Fetsko 60 President, Freight and Industrial Components Alicia Hammersmith 54 President, Freight Services Rogerio Mendonca 52 President, Freight Equipment Nalin Jain 55 President, Digital Intelligence Pascal Schweitzer 48 President, Transit Lillian Leroux 53 Chief Strategy and Sustainability Officer John A.
Training and Development We continually invest in our employees’ career growth and provide employees with a wide range of development opportunities, including face-to-face, virtual, social and self-directed learning, mentoring and coaching programs. We have invested in training courses through Wabtec’s Learning Management System ("LMS"). In 2023, Wabtec again partnered with a third-party to provide diversity and inclusion training.
Training and Development We continually invest in our employees’ career growth and provide employees with a wide range of development opportunities, including face-to-face, virtual, social and self-directed learning, mentoring and coaching programs. We have invested in training courses through Wabtec’s Learning Management System ("LMS").
Officers Age Position Rafael Santana 52 President and Chief Executive Officer David L. DeNinno 68 Executive Vice President, General Counsel and Secretary John A.
Officers Age Position Rafael Santana 53 President and Chief Executive Officer David L. DeNinno 69 Executive Vice President, General Counsel and Secretary John A.
Heinz Company from January 2001 to December 2013, most recently as Corporate Controller and Principal Accounting Officer. Prior to 2001, Mr. Mastalerz was a Senior Manager with PricewaterhouseCoopers LLP. Kristine Kubacki was named Vice President of Investor Relations in April 2019. Previously, Ms.
Heinz Company from January 2001 to December 2013, most recently as Corporate Controller and Principal Accounting Officer. Prior to 2001, Mr. Mastalerz was a Senior Manager with PricewaterhouseCoopers LLP. Kyra Yates was named Vice President of Investor Relations in March 2024. Previously, Ms.
Mastalerz 57 Senior Vice President of Finance and Chief Accounting Officer Kristine Kubacki 49 Vice President, Investor Relations Rafael Santana was named President and Chief Executive Officer of the Company effective July 1, 2019. Previously, he served as Executive Vice President from February 2019 to July 2019. Mr.
Mastalerz 58 Senior Vice President of Finance and Chief Accounting Officer Kyra Yates 46 Vice President, Investor Relations Rafael Santana was named President and Chief Executive Officer of the Company effective July 1, 2019. Previously, he served as Executive Vice President from February 2019 to July 2019. Mr.
In 2023, the Freight Segment accounted for approximately 72% of Wabtec’s total net sales, with approximately 58% of its net sales in the U.S. and approximately 66% of the Freight Segment’s net sales were in the aftermarket.
In 2024, the Freight Segment accounted for approximately 72% of Wabtec’s total net sales, with approximately 59% of its net sales in the U.S. and approximately 61% of the Freight Segment’s net sales were in the aftermarket.
Our Environmental, Health and Safety ("EHS") program has a longstanding commitment to continuously improve and foster a culture that proactively reduces risks and hazards in our operations, protects the environment, ensures regulatory compliance, and encourages learning and development.
Environmental, Health and Safety Putting people first is how we do business at Wabtec. Our Environmental, Health and Safety ("EHS") program has a longstanding commitment to continuously improve and foster a culture that proactively reduces risks and hazards in our operations, protects the environment, ensures regulatory compliance, and encourages learning and development.
From pioneering advancements to current signaling systems and network efficiency solutions, we are striving to increase the rail capacity to move more freight by train. Wabtec is working to reduce existing locomotive fleet emissions through fuel-efficiency solutions and testing renewable diesel and biofuels. We are developing advanced propulsion technologies such as the first heavy-haul 100% battery electric locomotive.
From pioneering advancements to current signaling systems and network efficiency solutions, we are striving to increase the rail capacity to move more freight by train. Wabtec is working to reduce existing locomotive fleet emissions through fuel-efficiency solutions and testing renewable diesel and biofuels.
Wabtec has been transforming the rail landscape through various innovations and technologies for over 150 years. We have a long history of advancing technologies to meet customer needs and have been recognized for the development and production of locomotives, equipment, including PTC equipment, and systems for the freight rail and passenger transit industries.
We have a long history of advancing technologies to meet customer needs and have been recognized for the development and production of locomotives, equipment, including PTC equipment, and systems for the freight rail and passenger transit industries.
We provide our employees resources to help them be mentally, physically and financially well. We offer a wide range of benefits including healthcare and wellness (physical and mental) benefits, retirement benefits, paid time off, an employee assistance program, and seven employee resource groups to build diverse and inclusive communities at Wabtec.
We offer a wide range of benefits including healthcare and wellness (physical and mental) benefits, retirement benefits, paid time off, an employee assistance program, and seven employee resource groups to build diverse and inclusive communities at Wabtec.
Olin 63 Executive Vice President and Chief Financial Officer Nicole Theophilus 53 Executive Vice President and Chief Human Resources Officer Eric Gebhardt 55 Executive Vice President and Chief Technology Officer Gina Trombley 53 Executive Vice President, Sales & Marketing & Chief Commercial Officer - Americas Greg Sbrocco 55 Executive Vice President, Global Operations Michael E.
Olin 64 Executive Vice President and Chief Financial Officer Nicole Theophilus 54 Executive Vice President and Chief Administrative Officer Eric Gebhardt 56 Executive Vice President and Chief Technology Officer Gina Trombley 54 Executive Vice President, Sales & Marketing & Chief Commercial Officer - Americas Greg Sbrocco 56 Executive Vice President, Global Operations Michael E.
Through these efforts, our Operations and EHS teams are partnering to eliminate and reduce hazards and risks within Wabtec’s operations, which is fundamental to improved EHS performance. While we had zero fatalities and over 70 operational sites with zero recordable injuries across Wabtec’s operations in 2023, our total recordable injury rate slightly increased by 6% compared with 2022.
Through these efforts, our Operations and EHS teams are partnering to eliminate and reduce hazards and risks within Wabtec’s operations, which is fundamental to improved EHS performance. In 2024, we had zero fatalities and our total recordable injury rate decreased by over 5% compared with 2023.
Prior to 2006, Ms. Theophilus was a partner with the law firm Husch Blackwell. Eric Gebhardt was named Executive Vice President and Chief Technology Officer in October 2020. Prior to joining Wabtec, Mr. Gebhardt served as Managing Director of KCK-US, a Deleware corporation, from May 2019 through September 2020.
Eric Gebhardt was named Executive Vice President and Chief Technology Officer in October 2020. Prior to joining Wabtec, Mr. Gebhardt served as Managing Director of KCK-US, a Delaware corporation, from May 2019 through September 2020.
Quarterly results can also be affected by the timing of projects in backlog and by project delays. 12 Environmental Matters The Company's operations and products are subject to a variety of environmental laws and regulations governing air emissions, discharges into water, the use, handling, storage, and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances.
Environmental Matters The Company's operations and products are subject to a variety of environmental laws and regulations governing air emissions, discharges into water, the use, handling, storage, and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances.
Regulation In the course of our operations, we are subject to various regulations and standards of governments and other agencies in the U.S. and around the world.
We remain steadfast in our commitment to protecting our people and driving toward EHS excellence. Regulation In the course of our operations, we are subject to various regulations and standards of governments and other agencies in the U.S. and around the world.
To that end, we have assembled a wide range of patented products, which we believe provides us with a competitive advantage. • Decarbonizing the rail industry. We have taken significant steps to decarbonize global transport and make our world safer, smarter and greener.
To that end, we have assembled a wide range of patented products, which we believe provides us with a competitive advantage that enhances our customers' safety, productivity, reliability and capacity. • Driving fuel efficiency for the rail industry. We have taken significant steps to drive fuel efficiency in global transport and make our world safer, smarter and greener.
The railroad industry, in general, has historically been subject to fluctuations due to overall economic conditions and the level of use of alternative modes of transportation. 7 The roll forward of the Company's backlog of firm customer orders and the expected year of completion are as follows: In millions Freight Segment Transit Segment Consolidated Balance at December 31, 2022 $ 18,641 $ 3,800 $ 22,441 New orders 5,850 2,967 8,817 Less: Net sales (6,962) (2,715) (9,677) Adjustments / foreign exchange, net 302 116 418 Balance at December 31, 2023 $ 17,831 $ 4,168 $ 21,999 Expected Delivery 2024 $ 5,450 $ 2,007 $ 7,457 Thereafter $ 12,381 $ 2,161 $ 14,542 Global economic conditions have not resulted in any material cancellations recently, but they have impacted the timing of some orders in backlog as, in certain cases, the delivery of goods and services were pushed out from their original timelines and could result in future modifications or cancellations.
The railroad industry, in general, has historically been subject to fluctuations due to overall economic conditions and the level of use of alternative modes of transportation. 7 The roll forward of the Company's backlog of firm customer orders and the expected year of completion are as follows: In millions Freight Segment Transit Segment Consolidated Balance at December 31, 2023 $ 17,785 $ 4,214 $ 21,999 Less: 2024 Net sales (7,468) (2,919) (10,387) New orders 7,348 3,147 10,495 Adjustments / foreign exchange, net 321 (156) 165 Balance at December 31, 2024 $ 17,986 $ 4,286 $ 22,272 Expected Delivery 2025 $ 5,577 $ 2,104 $ 7,681 Thereafter $ 12,409 $ 2,182 $ 14,591 Global economic conditions have not resulted in any material cancellations recently, but they have impacted the timing of some orders in backlog as, in certain cases, the delivery of goods and services were pushed out from their original timelines and could result in future modifications or cancellations.
Customers include public transit authorities and municipalities, leasing companies, and manufacturers of passenger transit vehicles and buses around the world. In 2023, the Transit Segment accounted for approximately 28% of our total net sales, with approximately 19% of its net sales in the U.S. Approximately 55% of the Transit Segment’s net sales are in the aftermarket.
Customers include public transit authorities and municipalities, leasing companies, manufacturers of passenger transit vehicles and buses, and companies in the electrical generation, distribution, and charging industries. In 2024, the Transit Segment accounted for approximately 28% of our total net sales, with approximately 18% of its net sales in the U.S.
The 2022 biennial edition of the study concluded that the rail supply industry faced a moderate annual decline of 0.2% in the 2019 to 2020 period as a result of the negative impacts of the COVID-19 pandemic but forecasts a recovery of the global rail supply market with a compound annual growth rate of 3% through 2027.
The 2024 biennial edition of the study concluded that the global rail market grew 2.7% in the 2021 to 2023 period as the industry started recovering from the negative impacts of the COVID-19 pandemic and forecasts the industry to continue with a compound annual growth rate of 3% through 2027.
Prior to joining Wabtec, Ms. Theophilus served most recently as Chief Human Resource Officer of West Corporation from March 2016 through February 2018. Previously she served as Executive Vice President and Chief Human Resource Officer, Vice President of Human Resources and Vice President and Chief Employment Counsel of ConAgra Corporation, where she was employed from 2006 through 2015.
She also served as Executive Vice President and Chief Human Resource Officer, Vice President of Human Resources and Vice President and Chief Employment Counsel of ConAgra Corporation, where she was employed from 2006 through 2015. Prior to 2006, Ms. Theophilus was a partner with the law firm Husch Blackwell.
At Wabtec, our purpose stems from four values that shape our core identity: People First, Expand the Possible, Embrace Diversity, and One Wabtec. These values are woven throughout our global operations, and they motivate us to build lasting connections. Our headquarters are in Pittsburgh, Pennsylvania and we have offices, facilities, and operations in over 50 countries around the globe.
At 9 Wabtec, our purpose stems from four values that shape our core identity: People First, Expand the Possible, Embrace Diversity, and One Wabtec. These values are woven throughout our global operations, and they motivate us to build lasting connections. Wabtec is committed to ensuring our workplace respects and seeks the unique talents, experiences and viewpoints of all our employees.
The Company and the UE subsequently reached an agreement that was ratified by the UE on August 31, 2023, ending the labor strike. The Company continuously monitors its labor activity. Diversity and Inclusion Wabtec is committed to ensuring a diverse and inclusive workplace that respects and seeks the unique talents, experiences and viewpoints of all our employees.
The Company and the UE subsequently reached an agreement that was ratified by the UE on August 31, 2023, ending the labor strike. The Company continuously monitors its labor activity.
Protecting data collected by Wabtec products. • Innovating with Purpose Wabtec is committed to transparency on ESG topics, including the opportunities and challenges we encounter as we work to enhance performance and conduct business in a responsible manner.
Additionally, we utilize our Green Finance Framework to support the development of technologies that enable sustainable value creation. Wabtec is committed to transparency on ESG topics, including the opportunities and challenges we encounter as we work to enhance performance and conduct business in a responsible manner.
Compensation and Benefits We remain committed to a strong pay-for performance philosophy that aligns individual performance, behaviors and business results with individual rewards. To deliver on that commitment, we utilize market data to benchmark to the external market, and consider factors such as an employee’s role and experience, the location of the job and performance when determining compensation.
To deliver on that commitment, we utilize market data to benchmark to the external market and consider factors such as an employee’s role and experience, the location of the job and performance when determining compensation. We provide our employees resources to help them be mentally, physically and financially well.
Wabtec utilizes three Strategic Sustainability Principles to execute our sustainability strategy: • Innovating with Purpose. We are committed to developing responsible and sustainable products that minimize the impact on the planet. • Driving Responsible Operations. We are committed to providing safe work environments and products that enable productive and efficient use of resources. • Empowering People and Communities.
Our strategy helps us capitalize on market opportunities and reduce safety and environmental risks, while creating value for our customers, employees and other stakeholders. Wabtec utilizes three Strategic Sustainability Principles to execute our sustainability strategy: • Innovating with Purpose. We are committed to developing responsible and sustainable products that minimize the impact on the planet. • Driving Responsible Operations.
For additional information on our business segments, see Note 19 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report. Competitive Strengths Through both organic growth and strategic acquisitions, Wabtec has developed the following competitive strengths: • Iconic legacy and strong reputation with a history of over 150 years of innovation .
Competitive Strengths Through both organic growth and strategic acquisitions, Wabtec has developed the following competitive strengths: • Iconic legacy and strong reputation with a history of over 150 years of innovation . Wabtec has been transforming the rail landscape through various innovations and technologies for over 150 years.
We are committed to driving an inclusive culture grounded in integrity, committed to the development of and investment in the communities where our teams live and work. 9 As we refine our sustainability strategy, we believe it is important to listen to our key stakeholders.
We are committed to providing safe work environments and products that enable productive and efficient use of resources. • Empowering People and Communities. We are committed to driving an inclusive culture grounded in integrity, committed to the development of and investment in the communities where our teams live and work.
We are making additional investments in this technology which we believe will provide customers with opportunities to improve safety and efficiency, in part through data analytics solutions. During 2023, Wabtec also expanded the Digital Intelligence portfolio with entry into the railcar telematics market.
In recent years, we have also introduced a number of significant new products, including PTC equipment that encompasses onboard digital data and global positioning communication protocols. We are making additional investments in this technology which we believe will provide customers with opportunities to improve safety and efficiency, in part through data analytics solutions.
Removed
In 2023, Wabtec secured several orders for new battery-electric locomotives and modernizations that will upgrade existing fleets to help our customers extend the service life of their fleet and improve performance and reliability. We are also conducting collaborative research and development efforts with the National Laboratories to support the use of hydrogen to lower emissions across the rail industry.
Added
The Transit Segment maintains a large installed base of original equipment globally which allows for a significant recurring revenue stream in the aftermarket. Approximately 55% of the Transit Segment’s net sales are in the aftermarket.
Removed
In 2023, Norfolk Southern recognized Wabtec’s innovations in modernizing locomotives with its inaugural Thoroughbred Sustainability Partner Award in recognition of energy efficiency, innovation, and environmental stewardship. Wabtec also is implementing energy-reducing technologies for the passenger transit sector.
Added
We are also conducting collaborative research and development efforts with the National Laboratories to support the use of hydrogen to lower emissions across the rail industry. In 2024, Canadian National Railway Company, Norfolk Southern and Union Pacific Railroad each recognized Wabtec’s leadership in sustainability, energy efficiency, innovation, and environmental stewardship with partnership awards.
Removed
Environmental, Social and Governance Sustainability Wabtec is committed to sustainable value creation. Our sustainability strategy is to contribute to a better, more sustainable world through our unique business offerings, technologies and sustainable business practices. Our strategy helps us capitalize on market opportunities and reduce safety and environmental risks, while creating value for our customers, employees and other stakeholders.
Added
During 2023, Wabtec also expanded the Digital Intelligence portfolio with entry into the railcar telematics market. For additional information on our business segments, see Note 19 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report.
Removed
Accordingly, we identified the following Environmental, Social and Governance ("ESG") topics with the highest relative priority to Wabtec and its external stakeholders, which are aligned to our overall sustainability strategy and action plans: Topic Definition Alignment to Wabtec Strategic Sustainability Principles Greenhouse gas (GHG) emissions Reducing GHG emissions across Wabtec’s value chain and helping Wabtec partners across their value chain reduce GHG emissions.
Added
Environmental, Social and Governance Sustainability Wabtec is committed to creating sustainable value through innovative rail technologies and responsible business practices. Our mission to unlock our customers' potential by delivering innovative and lasting transportation solutions underpins our sustainability strategy.
Removed
This includes reducing major sources of indirect emissions during the procurement and processing of raw materials, during manufacturing and the operation of our facilities, and during product distribution and end use. • Innovating with Purpose • Driving Responsible Operations Energy & renewables Supporting policies and organizational partners that contribute to the renewable energy transition.
Added
As we refine our sustainability strategy, we believe it is important to listen to our key internal and external stakeholders to identify and develop Environmental, Social and Governance ("ESG") topics of focus that align to our overall sustainability strategy and action plans. These topics are reviewed periodically to ensure our focus is in-line with the current market conditions and trends.
Removed
Contributing to the success of the energy transition by improving the energy efficiency of Wabtec’s products and operations.
Added
We publish periodic sustainability and sustainability-related reports, where we present ESG information, including policies, goals, activities, and qualitative and quantitative data on our progress. Compensation and Benefits We remain committed to a strong pay-for performance philosophy that aligns individual performance, behaviors and business results with individual rewards.
Removed
Integrating renewables into Wabtec’s products and operations and enabling the adoption of new and emerging renewable energy solutions. • Innovating with Purpose • Driving Responsible Operations Innovation & technology Capitalizing on opportunities related to new product advancements and innovations that include the adoption of emerging technology to help address key societal and transportation sector challenges.
Added
We strive to create an environment where employees can be themselves. Our Board of Directors also plays a critical role in creating an organization that prioritizes, supports and invests in these ideals. Our headquarters are in Pittsburgh, Pennsylvania and we have offices, facilities, and operations in over 50 countries around the globe.
Removed
Developing a resilient business model capable of meeting societal expectations for continuous improvement. • Innovating with Purpose • Empowering People and Communities Business Ethics & Compliance Upholding ethics and integrity in every aspect of Wabtec’s business by ensuring transparency in all financial practices.
Added
Wabtec has partnered with a third-party vendor to provide an online learning platform available to all of our employees, both hourly and salary. Our Leadership, Expertise, Advancement and Development ("LEAD") program is the primary path for university graduates into Wabtec.
Removed
Complying with all applicable national and local laws and regulations by promoting practices and policies that encourage reporting instances of non-compliance and by implementing corrective actions that prevent recurrence. Preventing bribery, corruption, and anti-competitive behavior.
Added
Quarterly results can also be affected by the timing of projects in backlog and by project delays.
Removed
Promoting ethics and compliance throughout Wabtec’s value chain, especially among suppliers. • Driving Responsible Operations • Empowering People and Communities Data privacy & cybersecurity Investing in cybersecurity measures and adapting to business risks presented by technology and digitization. Protecting Wabtec’s proprietary information and intellectual property. Ensuring the responsible management and use of data, including data from customers, employees, and suppliers.
Added
Theophilus was originally named Wabtec's Executive Vice President & Chief Human Resource Officer in October 2020. Before joining Wabtec, Ms. Theophilus served as Chief Human Resource Officer of West Corporation from March 2016 through February 2018.
Removed
We publish an annual Sustainability Report, where we present ESG information, including policies, goals, activities, and qualitative and quantitative data on our progress. See "Available Information," below. During 2021, Wabtec adopted its Green Finance Framework. Following the release of the Green Financing Framework, the Company issued its inaugural "green bond" – a €500 million issuance in the European bond market.
Added
Yates served as the Vice President and Chief Financial Officer of Wabtec's Global Operations from March 2022 to March 2024, where she managed the financial performance of the Company's manufacturing, sourcing, and logistics operations. She also served as the Chief Financial Officer of Wabtec's Americas Services from March 2021 to March 2022. Ms.
Removed
The Company intends to utilize green financing instruments as part of its overall capital resources strategy to support the transition to a low-carbon transportation future and meet the sustainable transportation needs of growing cities around the world.
Added
Yates had been with GE Transportation since 2008, and prior to that she held several positions with other GE businesses beginning in 2000.
Removed
Projects supported by green financing will largely target the objective of climate change mitigation by focusing on the efficiency of freight rail systems and public transport, as well as on the provision of energy-efficient customer solution services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may be exposed to raw material shortages, supply shortages, fluctuations in raw material, energy and commodity prices, and inflationary pressure. We purchase energy, steel, aluminum, copper, rubber and rubber-based materials, chemicals, polymers and other key manufacturing inputs from outside sources, and traditionally have not had long-term pricing contracts with our pure raw material suppliers.
Biggest changeWe purchase energy, steel, aluminum, copper, rubber and rubber-based materials, chemicals, polymers and other key manufacturing inputs from outside sources, and traditionally have not had long-term pricing contracts with our pure raw material suppliers. The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control, including inflationary pressure.
The broader consequences of this conflict, which may include further sanctions, embargoes, regional instability, and geopolitical shifts; disruptions to transportation and distribution routes, or strategic decisions to alter certain routes; potential retaliatory action by the Russian government against companies, including us, including nationalization of foreign businesses and/or assets in Russia; increased tensions between the United States and countries in which we operate; and the extent of the conflict’s effect on our business and results of operations as well as the global economy, cannot be predicted.
The broader consequences of this conflict, which may include sanctions, embargoes, regional instability, and geopolitical shifts; disruptions to transportation and distribution routes, or strategic decisions to alter certain routes; potential retaliatory action by the Russian government against companies, including us, including nationalization of foreign businesses and/or assets in Russia; increased tensions between the United States and countries in which we operate; and the extent of the conflict’s effect on our business and results of operations as well as the global economy, cannot be predicted.
Failure to reach an agreement could result in strikes or other labor protests which could disrupt our operations. Furthermore, non-union employees in certain countries have the right to strike. If we were to experience a strike or work stoppage, it would be difficult for us to find a sufficient number of employees with the necessary skills to replace these employees.
Failure to reach an agreement could result in strikes or other labor protests which could disrupt our operations. Furthermore, non-union employees in certain countries have the right to strike. If we were to experience a strike or work stoppage, it could be difficult for us to find a sufficient number of employees with the necessary skills to replace these employees.
For example, the economic slowdown that was caused by COVID-19 impacted the timing of some orders, as customers deferred the delivery of some goods and services to future years. Reductions in freight traffic may reduce demand for our replacement products. The passenger transit railroad industry is also cyclical and is influenced by a variety of factors.
For example, the economic slowdown that was caused by the COVID-19 pandemic impacted the timing of some orders, as customers deferred the delivery of some goods and services to future years. Reductions in freight traffic may reduce demand for our replacement products. The passenger transit railroad industry is also cyclical and is influenced by a variety of factors.
Such an event could result in decreased revenues and increased capital, insurance or operating costs, including the increased costs of security to protect the Company’s infrastructure, among other results. Insurance maintained by the Company to protect against loss of business and other related consequences resulting from cyber incidents may not be sufficient to cover all damages.
Such an event could result in 20 decreased revenues and increased capital, insurance or operating costs, including the increased costs of security to protect the Company’s infrastructure, among other results. Insurance maintained by the Company to protect against loss of business and other related consequences resulting from cyber incidents may not be sufficient to cover all damages.
We are unable to predict what impact these or other regulatory changes may have, if any, on our business or the industry as a whole. We cannot assure that 20 costs incurred to comply with any new standards or regulations will not be material to our business, results of operations and financial condition.
We are unable to predict what impact these or other regulatory changes may have, if any, on our business or the industry as a whole. We cannot assure that costs incurred to comply with any new standards or regulations will not be material to our business, results of operations and financial condition.
The possibility exists for these types of warranty claims to result in costly product recalls, significant repair costs and damage to our reputation. Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.
The possibility exists for these types of warranty claims to result in costly product recalls, significant repair costs and damage to our reputation. 19 Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.
As a result, we are subject to various risks, any one of which could have a material adverse effect on those operations and on our business as a whole, including: • lack of complete operating control; • lack of local business experience; • currency exchange fluctuations and devaluations; • restrictions on currency conversion or the transfer of funds or limitations on our ability to repatriate income or capital; • the complexities of operating within multiple tax jurisdictions; • foreign trade restrictions and exchange controls; • adverse impacts of international trade policies, such as import quotas, capital controls or tariffs; • difficulty enforcing agreements and intellectual property rights; • the challenges of complying with complex and changing laws, regulations, and policies of foreign governments; • the difficulties involved in staffing and managing widespread operations; • the potential for nationalization of enterprises; • economic, political and social instability; • potential reputational harm associated with doing business in certain countries; • possible local catastrophes, such as natural disasters and epidemics; and • possible terrorist attacks, conflicts and wars, including those against American interests.
As a result, we are subject to various risks, any one of which could have a material adverse effect on those operations and on our business as a whole, including: • lack of complete operating control; • lack of local business experience; • currency exchange fluctuations and devaluations; • restrictions on currency conversion or the transfer of funds or limitations on our ability to repatriate income or capital; • the complexities of operating within multiple tax jurisdictions; • foreign trade restrictions and exchange controls; • adverse impacts of international trade policies, such as import quotas, capital controls or tariffs; • difficulty enforcing agreements and intellectual property rights; • the challenges of complying with complex and changing laws, regulations, and policies of foreign governments; • the difficulties involved in staffing and managing widespread operations; • the potential for nationalization of enterprises; • economic, political and social instability; • potential reputational harm associated with doing business in certain countries; • possible local catastrophes, such as natural disasters and epidemics; and • possible terrorist attacks, conflicts and wars, including actions targeting American interests.
We have incurred, and will continue to incur, both operating and capital costs to comply with environmental laws and regulations, including costs associated with the clean-up and investigation of some of our current and former properties and offsite disposal locations.
We have incurred, and will continue to incur, both operating and capital costs to comply with environmental laws and regulations, 18 including costs associated with the clean-up and investigation of some of our current and former properties and offsite disposal locations.
Our business may be adversely impacted by unintentional technology disruptions, including those resulting from programming errors, employee operational errors, software defects, and product vulnerabilities. 22 We also provide technological products integral to train operation.
Our business may be adversely impacted by unintentional technology disruptions, including those resulting from programming errors, employee operational errors, software defects, and product vulnerabilities. We also provide technological products integral to train operation.
Our exposure to the risks associated with international operations may intensify if our international operations expand in the future. 18 We may incur increased costs or margin degradation due to fluctuations in interest rates and foreign currency exchange rates.
Our exposure to the risks associated with international operations may intensify if our international operations expand in the future. We may incur increased costs or margin degradation due to fluctuations in interest rates and foreign currency exchange rates.
We are subject to currency exchange rate risk to the extent that our costs may be denominated in currencies other than those in which we earn and report revenues and vice versa.
We are subject to currency exchange rate 16 risk to the extent that our costs may be denominated in currencies other than those in which we earn and report revenues and vice versa.
As a result of our dependence on our key customers, we could experience a material adverse effect on our business, results of operations and financial condition if we lost any one or more of our key customers or if there is a reduction in their demand for our products. 15 Our business operates in a highly competitive industry.
As a result of our dependence on our key customers, we could experience a material adverse effect on our business, results of operations and financial condition if we lost any one or more of our key customers or if there is a reduction in their demand for our products. 13 Our business operates in a highly competitive industry.
In recent years, the global transportation landscape has been characterized by rapid changes in technology, leading to innovative transportation and logistics concepts that could change the way the railway industry does business. There may be additional innovations impacting the railway industry that we cannot yet foresee.
In recent years, the global transportation landscape has been characterized by rapid changes in technology, leading to innovative developments in transportation and logistics that could change the way the railway industry does business. There may be additional innovations impacting the railway industry that we cannot yet foresee.
Although we believe that our recent acquisitions will improve our market position and realize positive operating results, including operating synergies, operating expense reductions and overhead cost savings, we cannot be assured that these 17 improvements will be obtained or the timing of such improvements.
Although we believe that our recent acquisitions will improve our market position and realize positive operating results, including operating synergies, operating expense reductions and overhead cost savings, we cannot be assured that these 15 improvements will be obtained or the timing of such improvements.
For example, although the economic slowdown caused by COVID-19 did not result in any material cancellations of the Company's backlog, it did impact 16 the timing of some orders in backlog as, in certain cases, the delivery of goods and services were pushed out from their original timelines.
For example, although the 14 economic slowdown caused by the COVID-19 pandemic did not result in any material cancellations of the Company's backlog, it did impact the timing of some orders in backlog as, in certain cases, the delivery of goods and services were pushed out from their original timelines.
All terms are as defined in the Restated Credit Agreement. The indentures under which our Senior Notes were issued contain covenants and restrictions which limit, subject to certain exceptions, certain sale and leaseback transactions with respect to principal properties, the incurrence of secured debt without equally and ratably securing the senior notes and certain merger and consolidation transactions.
All terms are as defined in the Credit Agreements. 21 The indentures under which our Senior Notes were issued contain covenants and restrictions which limit, subject to certain exceptions, certain sale and leaseback transactions with respect to principal properties, the incurrence of secured debt without equally and ratably securing the senior notes and certain merger and consolidation transactions.
RISKS RELATED TO INTERNATIONAL OPERATIONS A significant portion of our sales may be derived from our international operations, which exposes us to certain risks inherent in doing business on an international level. For the fiscal year ended December 31, 2023, approximately 55% of our consolidated net sales were to customers outside of the United States.
RISKS RELATED TO INTERNATIONAL OPERATIONS A significant portion of our sales may be derived from our international operations, which exposes us to certain risks inherent in doing business on an international level. For the fiscal year ended December 31, 2024, approximately 53% of our consolidated net sales were to customers outside of the United States.
Our Restated Credit Agreement subjects us to customary (i) affirmative covenants, including requirements with respect to certain reporting obligations on us and our subsidiaries, and (ii) negative covenants, including limitations on: indebtedness; liens; restricted payments; fundamental changes (including certain changes in control); business activities; transactions with affiliates; restrictive agreements; changes in fiscal year; and use of proceeds.
Our Credit Agreements subject us to customary (i) affirmative covenants, including requirements with respect to certain reporting obligations on us and our subsidiaries, and (ii) negative covenants, including limitations on: indebtedness; liens; restricted payments; fundamental changes (including certain changes in control); business activities; transactions with affiliates; restrictive agreements; changes in fiscal year; and use of proceeds.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate action and greenhouse gas emissions, supply chain due diligence, human capital management, and diversity, equity and inclusion.
Many governments, regulators, investors, employees, customers and other stakeholders are focused on environmental, social and governance considerations relating to businesses, including climate action and greenhouse gas emissions, supply chain due diligence, human capital management, and diversity initiatives.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and business spending; disruptions to our global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; our ability to maintain or increase our prices, our ability to implement and execute our business strategy, disruptions in global supply chains, our exposure to foreign currency fluctuations, and constraints, volatility, or disruption in the capital markets, difficulty staffing and managing impacted operations, and the recoverability of assets in the region. 19 RISKS RELATED TO MACRO-ECONOMIC CONDITIONS AND POLICIES Prolonged unfavorable economic and market conditions could adversely affect our business.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and business spending; disruptions to our global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; our ability to maintain or increase our prices, our ability to implement and execute our business strategy, disruptions in global supply chains, our exposure to foreign currency fluctuations, and constraints, volatility, or disruption in the capital markets, difficulty staffing and managing impacted operations, and the recoverability of assets in the region.
For example, the current conflict between Russia and Ukraine, has and may continue to adversely affect our business and results of operations.
For example, the continuing conflict between Russia and Ukraine has affected, and may continue to adversely affect our business and results of operations.
Moreover, our Restated Credit Agreement and the indentures governing our Senior Notes permit us to incur substantial additional indebtedness, which may further contribute to, or exacerbate the impact of, the foregoing impacts. 23 The indentures for our outstanding Senior Notes and our Restated Credit Agreement contain various covenants that limit our management’s discretion in the operation of our businesses.
Moreover, our Credit Agreements and the indentures governing our Senior Notes permit us to incur substantial additional indebtedness, which may further contribute to, or exacerbate the impact of, the foregoing impacts. The indentures for our outstanding Senior Notes and our 2022 and 2024 Credit Agreements contain various covenants that limit our management’s discretion in the operation of our businesses.
Accordingly, our business may be adversely impacted by disruptions to our own or third-party information technology infrastructure, which could result from cybersecurity incidents, including, but not limited to, unauthorized access to the Company’s information technology systems, data access or acquisition, and/or encryption of the Company’s environment.
Accordingly, our business may be adversely impacted by disruptions to our own or third-party information technology infrastructure, which could result from cybersecurity incidents, including, but not limited to, unauthorized access to the Company’s information technology systems, data access or acquisition, and/or encryption of the Company’s environment. For instance, we have experienced cyber-security incidents that have impacted the Company's network.
In addition, many of our customers place orders for products on an as-needed basis and operate in cyclical industries. As a result, customer order levels have varied from period to period in the past and may vary significantly in the future. Such customer orders are dependent upon their markets and customers and may be subject to delays and cancellations.
In addition, many of our customers place orders for products on an as-needed basis and operate in cyclical industries. As a result, customer order levels have varied from period to period in the past and may vary significantly in the future. Such customer orders may be subject to delays and cancellations based on various market- and customer-specific conditions.
To the extent that these factors result in continued instability of capital markets, shortages of raw materials or component parts, longer sales cycles, deferral or delay of customer orders or an inability to market our products effectively, our business and results of operations could be materially adversely affected.
To the extent that these factors result in continued instability of capital markets, shortages of raw materials or component parts, longer sales cycles, deferral or delay of customer orders or an inability to market our products effectively, our business and results of operations could be materially adversely affected. 17 We may be exposed to raw material shortages, supply shortages, fluctuations in raw material, energy and commodity prices, and inflationary pressure.
There can be no assurance that there will not be further, or deeper, supply chain disruptions, or that the steps we are taking to mitigate such disruptions will be effective or achieve their desired results in a timely fashion.
There can be no assurance that supply chain disruptions will not occur from time to time, or that the steps we take to mitigate such disruptions will be effective or achieve their desired results in a timely fashion.
We cannot assure that we will be able to consummate any future acquisitions, joint ventures or other business combinations. If we are unable to identify or consummate suitable acquisitions, joint ventures or alliances, we may be unable to fully implement our business strategy, and our business and results of operations may be adversely affected as a result.
If we are unable to identify or consummate suitable acquisitions or joint ventures, we may be unable to fully implement our business strategy, and our business and results of operations may be adversely affected as a result.
Unfavorable general economic and market conditions in the United States and internationally, particularly in our key end markets, could have a negative impact on our sales and operations.
RISKS RELATED TO MACRO-ECONOMIC CONDITIONS AND POLICIES Prolonged unfavorable economic and market conditions could adversely affect our business. Unfavorable general economic and market conditions in the United States and internationally, particularly in our key end markets, could have a negative impact on our sales and operations.
At December 31, 2023, we had total debt of $4.1 billion, primarily related to Senior Notes. Being indebted could have important consequences to us.
At December 31, 2024, we had total debt of $4.0 billion, primarily related to Senior Notes, and the 2022 and 2024 Credit Agreements ("Credit Agreements"). Being indebted could have important consequences to us.
The incidents did not have a material impact on our business, operations or financial results. A successful exploitation of our own or our vendors’ information technology infrastructure could result in service interruptions, safety hazards, misappropriation of confidential information, process failures, security breaches or other operational difficulties.
However, a successful exploitation of our own or our vendors’ information technology infrastructure could result in service interruptions, safety hazards, misappropriation of confidential information, process failures, security breaches or other operational difficulties.
Such disruptions could interrupt our business operations and significantly harm our results of operations, financial condition and cash flows. Regional and international conflicts, such as the ongoing conflict between Russia and Ukraine and turmoil in the Mideast Region, may adversely affect our business and results of operations.
Such disruptions could interrupt our business operations and significantly harm our results of operations, financial condition and cash flows. Regional and international conflicts may adversely affect our business and results of operations.
As was evidenced by the COVID-19 pandemic, public health crises have the potential to dramatically impact the global health and economic environment and to trigger significant economic volatility and operational uncertainty.
As was evidenced by the COVID-19 pandemic, public health crises have the potential to dramatically impact the global health and economic environment and to trigger significant economic volatility and operational uncertainty. Future public health emergencies, and unpredictable responses by authorities around the world could negatively impact our global operations, customers and suppliers.
In addition, we are required to maintain (i) a ratio of EBITDA to interest expense of at least 3.00 to 1.00 over each period of four consecutive fiscal quarters ending on the last day of a fiscal quarter and (ii) a Leverage Ratio, calculated by Net Debt as of the last day of such fiscal quarter to EBITDA for the four quarters then ended, of 3.5 or less.
In addition, we are required to maintain (i) an Interest Coverage Ratio of at least 3.00 to 1.00, calculated using an earning metric as defined in the agreement compared to Interest Expense for the four quarters then ended and (ii) a Leverage Ratio, calculated by net debt (total debt, net of up to $300 million of unrestricted cash) as of the last day of such fiscal quarter to the defined earnings metric for the four quarters then ended, of 3.5 or less.
Any laws or regulations that may be adopted to restrict or reduce emissions of greenhouse gas could require us to incur increased operating costs and could have an adverse effect on demand for our products.
While we are carefully monitoring developments, at this time, we cannot predict the ultimate impact of climate change and climate change regulation on our operations. Any laws or regulations that may be adopted to restrict or reduce emissions of greenhouse gas could require us to incur increased operating costs and could have an adverse effect on demand for our products.
In addition, although in some cases we may be indemnified by non-affiliated entities that retain liabilities in connection with specific matters, there can be no assurance that these indemnitors will remain financially viable and capable of satisfying their obligations. 21 Any litigation, even a claim without merit, could result in substantial costs and diversion of resources and could have a material adverse effect on our business and results of operations.
In addition, although in some cases we may be indemnified by non-affiliated entities that retain liabilities in connection with specific matters, there can be no assurance that these indemnitors will remain financially viable and capable of satisfying their obligations.
The potential challenges posed by evolving climate change policy and prospective legislation are heavily dependent on the nature and degree of such legislation and the extent to which it applies to our industry. Although uncertain, these developments could increase costs or reduce the demand for the products the company sells.
The potential challenges posed by evolving climate change policy and prospective regulation are heavily dependent on the nature and degree of such legislation, the consistency (or lack of consistency) of legislation across jurisdictions in which we operate, and the extent to which such regulation and legislation applies to our industry.
Additionally, broad-based inflation, escalation of diesel, utilities, energy, metals and other commodities costs, transportation and logistics costs, labor costs, and foreign currency exchange rate fluctuations have persisted.
Additionally, market factors, such as broad-based inflation, escalation of commodities costs, transportation and logistics costs, labor costs, and foreign currency exchange rate fluctuations may exacerbate the impacts of such disruptions.
Our manufacturer’s warranties or product liability may expose us to potentially significant claims. We warrant the workmanship and materials of many of our products.
Any litigation, even a claim without merit, could result in substantial costs and diversion of resources and could have a material adverse effect on our business and results of operations. Our manufacturer’s warranties or product liability may expose us to potentially significant claims. We warrant the workmanship and materials of many of our products.
In the aftermath of the disruptions caused by the COVID-19 pandemic, various disruptive forces have continued to impact some of our supply chains, particularly in China, India, the U.S., and Europe. Supply chain disruptions and labor availability constraints have caused component, raw material and chip shortages resulting in an adverse effect on the timing of the Company’s revenue generation.
For example, the COVID-19 pandemic caused supply chain disruptions, particularly with respect to channels in China, India, the U.S. and Europe, and labor availability constraints that resulted in component, raw material and chip shortages.
International agreements, domestic legislation and regulatory measures to limit greenhouse gas emissions are currently in various phases of discussion or implementation. While we are carefully monitoring developments, at this time, we cannot predict the ultimate impact of climate change and climate change legislation on our operations.
Although uncertain, these developments could increase costs or reduce the demand for the products the company sells. International agreements, domestic legislation and regulatory measures to limit greenhouse gas emissions are currently in various phases of discussion or implementation.
Removed
While our operations have generally stabilized since the peak of the COVID-19 pandemic, future public health emergencies, which could include a resurgence of COVID-19, and unpredictable responses by authorities around the world could negatively impact our global operations, customers and suppliers.
Added
In addition, we may fail to consummate future acquisitions, joint ventures or other business combinations for a variety of reasons, including the failure to satisfy closing conditions, potential regulatory interventions, or the possibility of competing bidders presenting a superior offer.
Removed
The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control, including inflationary pressure.
Added
Potential regulation addressing climate change may affect the Company's operations and products in certain jurisdictions.
Removed
Management believes it is reasonably likely that the scientific and political attention to issues concerning the existence and extent of climate change, and the role of human activity in it, will continue, with the potential for further regulation that affects the company’s operations and products.
Added
We have also been indirectly affected by vulnerabilities in third-party systems used for certain Wabtec products. In each instance, the Company has promptly activated incident response protocols and completed a thorough investigation. Such incidents have not had a material impact on our business, operations or financial results.
Removed
The Company’s manufacturing and service operations typically result in emissions of greenhouse gases. Likewise, emissions arise from midstream and downstream operations, including operations of our locomotives and other products. Finally, although beyond the control of the company, the use of fuels and related products by operators also results in greenhouse gas emissions that may be regulated.
Removed
For instance, during 2021, one of our vendors publicly disclosed vulnerabilities in its operating system that we use for certain Wabtec products. Additionally, during 2022, the Company detected a cyber-security incident which impacted the Company’s network. The Company promptly activated incident response protocols and completed a thorough investigation.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company also conducts ongoing cyber security reviews which includes updates on the Company’s enterprise cybersecurity risk and product cybersecurity risk. Risk is assessed utilizing internal key performance indicators and external 24 evaluations to determine the Company’s cybersecurity score in comparison to its peer group. Wabtec's Board of Directors participates in all enterprise annual security awareness training and phishing campaigns.
Biggest changeThe Company also conducts ongoing cyber security reviews which includes updates on the Company’s enterprise cybersecurity risk and product cybersecurity risk. Risk is assessed utilizing internal key performance indicators and external evaluations to determine the Company’s cybersecurity score in comparison to its peer group. Wabtec's Board of Directors participates in all enterprise annual security awareness training and phishing campaigns.
Throughout the year, as appropriate, in addition to regularly scheduled updates, the Audit Committee, CIO, and CISO maintain an ongoing dialogue regarding the Company’s cybersecurity risk and posture. The cybersecurity framework is also supported by Wabtec's broader enterprise risk management process to ensure alignment of the Company’s cybersecurity efforts with the Company’s overall enterprise risk management.
Throughout the year, as appropriate, in addition to regularly scheduled updates, the Audit Committee, CIO, and CISO maintain an ongoing dialogue regarding the Company’s cybersecurity risk and posture. The cybersecurity framework is also supported by Wabtec's broader enterprise risk management process to ensure alignment of the Company’s cybersecurity efforts with the Company’s overall enterprise risk management. 22

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES Facilities The following table provides certain summary information about the principal facilities owned or leased by the Company as of December 31, 2023. The Company believes that its facilities and equipment are generally in good condition and that, together with scheduled capital improvements, they are adequate for its present and immediately projected needs.
Biggest changeItem 2. PROPERTIES Facilities The following table provides certain summary information about the principal facilities owned or leased by the Company as of December 31, 2024. The Company believes that its facilities and equipment are generally in good condition and that, together with scheduled capital improvements, they are adequate for its present and immediately projected needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS Information with respect to material pending legal proceedings is included in Note 18 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report and incorporated by reference herein. Item 4. MINE SAFETY DISCLOSURES Not applicable. 25 PART II
Biggest changeItem 3. LEGAL PROCEEDINGS Information with respect to material pending legal proceedings is included in Note 18 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report and incorporated by reference herein. Item 4. MINE SAFETY DISCLOSURES Not applicable. 23 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 23 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. [Reserved] 25 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.
Financial Statements and Supplementary Data 44 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 83 Item 9A. Controls and Procedures 83 Item 9B. Other Information 83 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 83 PART III
Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 83 Item 9A. Controls and Procedures 83 Item 9B. Other Information 83 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 83 PART III

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph below compares the total stockholder return through December 31, 2023, of Wabtec’s common stock to (i) the S&P 500, (ii) the S&P 500 Industrials and, (iii) our peer group of manufacturing companies which consists of the following publicly traded companies: AGCO, AMETEK, Borg Warner, CSX, Dover, Emerson Electric, Fortive, Greenbrier Companies, Howmet Aerospace, Illinois Tool Works, Ingersoll-Rand, Norfolk Southern, Oshkosh, Parker-Hannifin, Rockwell Automation, Terex, Textron, Trinity Industries, and Xylem. 26 Issuer Purchases of Common Stock Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs (1) In millions October 2023 — $ — — $ 588 November 2023 819,918 $ 111.55 819,918 $ 496 December 2023 565,029 $ 115.92 565,029 $ 431 Total quarter ended December 31, 2023 1,384,947 $ 113.33 1,384,947 $ 431 (1) As of December 31, 2023, approximately $431 million was remaining under the stock repurchase plan.
Biggest changeThe graph below compares the total stockholder return through December 31, 2024, of Wabtec’s common stock to (i) the S&P 500, (ii) the S&P 500 Industrials and, (iii) our peer group of manufacturing companies which consists of the following publicly traded companies: AGCO, AMETEK, CSX, Dover, Eaton Corporation, Emerson Electric, Illinois Tool Works, Ingersoll Rand Inc., Jacobs Solutions Inc., Norfolk Southern Corporation, Oshkosh Corporation, Parker-Hannifin Corporation, Rockwell Automation Inc., Snap-on Incorporated, Stanley Black & Decker Inc., Textron, Inc., The Timken Company, The TransDigm Group, and Xylem.
The Company has historically paid quarterly dividends to shareholders, subject to quarterly approval by our Board of Directors, currently at a rate of approximately $142 million annually. The declaration and payment of future dividends are at the discretion of the Board of Directors.
The Company has historically paid quarterly dividends to shareholders, subject to quarterly approval by our Board of Directors, currently at a rate of approximately $171 million annually. The declaration and payment of future dividends are at the discretion of the Board of Directors.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Common Stock of the Company is listed on the New York Stock Exchange under the symbol “WAB.” As of February 9, 2024, there were 177,028,765 shares of Common Stock outstanding held by approximately 96,274 holders of record.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Common Stock of the Company is listed on the New York Stock Exchange under the symbol “WAB.” As of February 7, 2025, there were 170,848,147 shares of Common Stock outstanding held by approximately 90,831 holders of record.
Purchases of shares may be made by open market purchases or privately negotiated purchases and may be made pursuant to Rule 10b5-1 plan or otherwise.
The Company may repurchase shares in the future at any time, depending upon market conditions, our capital needs and other factors. Purchases of shares may be made by open market purchases or privately negotiated purchases and may be made pursuant to Rule 10b5-1 plan or otherwise.
No time limit was set for the completion of the program which conforms to the requirements under the Restated Credit Agreement and the indentures for the Senior Notes currently outstanding. The Company may repurchase shares in the future at any time, depending upon market conditions, our capital needs and other factors.
This new authorization provides an additional $1.0 billion that became available for repurchases after the remaining availability as of December 3, 2024 was expended. No time limit was set for the completion of the program which conforms to the requirements under the 2022 Credit Agreement, the 2024 Credit Agreement and the indentures for the Senior Notes currently outstanding.
Removed
On February 9, 2024, the Board of Directors reauthorized its stock repurchase program to refresh the amount available for stock repurchases to $1 billion of the Company’s outstanding shares. This new stock repurchase authorization supersedes the previous authorization of $750 million, of which approximately $333 million remained at the reauthorization date.
Added
For 2024, changes to the Peer Group were made for better industry alignment and financial comparability considerations. 24 Issuer Purchases of Common Stock Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs (1) In millions October 2024 — $ — — $ 123 November 2024 — $ — — $ 123 December 2024 609,972 $ 201.64 609,972 $ 1,000 Total quarter ended December 31, 2024 609,972 $ 201.64 609,972 $ 1,000 (1) On December 3, 2024, the Board of Directors authorized an additional $1.0 billion to the Company's existing stock repurchase program for stock repurchases of the Company’s outstanding shares.
Added
As of December 31, 2024, approximately $1.0 billion was remaining under the stock repurchase plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFreight Segment operating expenses increased by $87 million primarily driven by: • Higher SG&A expenses of $56 million resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions • Higher amortization expense of $28 million, due to Portfolio Optimization costs and increased expense from acquisitions Freight Operating expenses for the year ended December 31, 2023 includes $28 million of restructuring costs related to Integration 2.0 and Portfolio Optimization. 33 Transit Segment The following table shows our Consolidated Statements of Operations for our Transit Segment for the periods indicated: For the year ended December 31, In millions 2023 2022 Change % Change Net sales $ 2,715 $ 2,350 $ 365 15.5 % Cost of sales (1,961) (1,706) 255 14.9 % Cost of sales (% of Net sales) 72.2 % 72.6 % (0.4) Gross profit 754 644 110 17.1 % Operating expenses (465) (413) 52 12.6 % Income from operations ($) $ 289 $ 231 $ 58 25.1 % Income from operations (% of net sales) 10.7 % 9.8 % 0.9 The following table shows the major components of the change in net sales for the Transit Segment in 2023 from 2022: In millions 2022 Net Sales $ 2,350 Foreign Exchange 25 Changes in Sales by Product Line: Original Equipment Manufacturing 132 Aftermarket 208 2023 Net Sales $ 2,715 Net sales Transit segment organic sales increased $340 million driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for heating, ventilation and air conditioning (HVAC) and brake systems, increased infrastructure investment, and the easing of supply chain disruptions.
Biggest changeFreight SG&A expenses for the years ended December 31, 2024 and 2023 included $3 million and $5 million, respectively, of restructuring costs related to Integration 2.0 in 2023 and Portfolio Optimization in 2024. 32 Transit Segment The following table shows our Consolidated Statements of Operations for our Transit Segment for the periods indicated: For the year ended December 31, In millions 2024 2023 Change % Change Net sales $ 2,919 $ 2,754 $ 165 6.0 % Cost of sales (2,076) (1,991) 85 4.3 % Cost of sales (% of Net sales) 71.1 % 72.3 % (1.2) Gross profit 843 763 80 10.5 % Operating expenses (505) (468) 37 7.9 % Income from operations ($) $ 338 $ 295 $ 43 14.6 % Income from operations (% of Net sales) 11.6 % 10.7 % 0.9 The following table shows the major components of the change in Net sales for the Transit Segment in 2024 from 2023: In millions 2023 Net sales $ 2,754 Acquisitions 3 Foreign Exchange (1) Changes in Net sales by Product Line: Original Equipment Manufacturing 42 Aftermarket 121 2024 Net sales $ 2,919 Net sales Transit Segment organic sales increased $163 million driven by strong Aftermarket and Original Equipment Manufacturing sales.
Wabtec’s long-term financial goals are to drive strong cash flow conversion, maintain a strong credit profile while minimizing our overall cost of capital, increase margins through strict attention to cost controls, drive improved efficiencies across the business, and increase revenues through a focused growth strategy, including product innovation and new technologies, global and market expansion, aftermarket products and services, and strategic acquisitions.
Wabtec’s long-term financial goals are to increase revenues through a focused growth strategy, including product innovation and new technologies, global and market expansion, aftermarket products and services, and strategic acquisitions, increase margins through strict attention to cost controls, drive improved efficiencies across the business, drive strong cash flow conversion, and maintain a strong credit profile while minimizing our overall cost of capital.
Financing activities In 2023, cash used for financing activities was $(633) million, which included $42 million from net changes in debt, $(409) million of stock repurchases, $(123) million of dividend payments, $(112) million of contingent consideration payments related to the GE Transportation acquisition, $(17) million of distributions to noncontrolling interest, and $(16) million of payments for income tax withholding on share-based compensation.
In 2023, cash used for financing activities was $(633) million which included $42 million from net changes in debt, $(409) million of stock repurchases, $(123) million of dividend payments, $(112) million of contingent consideration payments related to the GE Transportation acquisition, $(17) million of distributions to noncontrolling interest, and $(16) million of payments for income tax withholding on share-based compensation .
Judgments and Uncertainties The estimate of our tax obligations are uncertain because management must use judgment to estimate the exposures associated with our various filing positions, as well as realization of our deferred tax assets. ASC 740-10 establishes a recognition and measurement threshold to determine the amount of tax benefit that should be recognized related to uncertain tax positions.
Judgments and Uncertainties The estimate of our tax obligations are uncertain because management must use judgment to estimate the exposures associated with our various filing positions, as well as realization of our deferred tax assets. ASC 740-10 40 establishes a recognition and measurement threshold to determine the amount of tax benefit that should be recognized related to uncertain tax positions.
(2) Operating leases represent multi-year obligations for rental of facilities and equipment. 38 (3) Pension and postretirement benefit payments includes expected payments to participants out of plan assets and corporate assets. The benefit payments are based on actuarial estimates using current assumptions for discount rates, expected return on long-term assets and rate of compensation increases.
(2) Operating leases represent multi-year obligations for rental of facilities and equipment. (3) Pension and postretirement benefit payments includes expected payments to participants out of plan assets and corporate assets. The benefit payments are based on actuarial estimates using current assumptions for discount rates, expected return on long-term assets and rate of compensation increases.
Areas of uncertainty that require judgments, estimates and assumptions include the accounting for allowance for doubtful accounts, inventories, business combinations, goodwill and indefinite-lived intangible assets, warranty reserves, income taxes, and revenue recognition.
Critical areas of uncertainty that require judgments, estimates and assumptions include the accounting for allowance for doubtful accounts, inventories, business combinations, goodwill and indefinite-lived intangible assets, warranty reserves, income taxes, and revenue recognition.
Additional information with respect to credit facilities and long-term debt is included in Note 9 of "Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report.
Additional 34 information with respect to credit facilities and long-term debt is included in Note 9 of "Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report.
In addition to Integration 2.0, Wabtec is focused on exiting various low margin product offerings through Portfolio Optimization to improve profitability while reducing manufacturing complexity. Wabtec expects to incur approximately $85 million in net exit charges related to Portfolio Optimization, which will be predominately non-cash asset write downs.
In addition to Integration 2.0, Wabtec is focused on exiting various low margin product offerings through Portfolio Optimization to improve profitability while reducing manufacturing complexity. Wabtec now expects to incur approximately $70 million in net exit charges related to Portfolio Optimization, which will be predominately non-cash asset write downs.
These forward-looking statements are subject to various risks, uncertainties and assumptions about us, including, among other things: Economic and industry conditions • changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, inflation, supply chain disruptions, foreign currency exchange, and industry consolidation; • prolonged unfavorable economic and industry conditions in the markets served by us, including North America, South America, Europe, Australia, Asia and Africa; • decline in demand for freight cars, locomotives, passenger transit cars, buses and related products and services; • reliance on major original equipment manufacturer customers; • original equipment manufacturers’ program delays; • demand for services in the freight and passenger rail industry; • demand for our products and services; • orders either being delayed, canceled, not returning to historical levels, or being reduced, and/or economic conditions affecting the ability of our customers to pay timely for goods and services delivered; • consolidations in the rail industry; • continued outsourcing by our customers; • industry demand for faster and more efficient braking equipment; • fluctuations in interest rates and foreign currency exchange rates; • availability of credit or difficulty in obtaining debt or equity financing; • changes in market consensus as to what attributes are required for projects to be considered "green" or "sustainable" or negative perceptions regarding determinations in such regard with respect to our Green Finance Framework or ESG strategy; or • changes in the ESG topics that have the highest relative priority for Wabtec's external stakeholders; Operating factors • supply disruptions; • technical difficulties; • changes in operating conditions and costs; • increases in raw material costs; • successful introduction of new products; 39 • performance under material long-term contracts; • labor availability and relations; • the outcome of our existing or any future legal proceedings, including litigation involving our principal customers and any litigation with respect to environmental matters, asbestos-related matters, pension liabilities, warranties, product liabilities, competition and anti-trust matters or intellectual property claims; • completion and integration of acquisitions; • the development and use of new technology; or • cybersecurity and data protection risks; Competitive factors • the actions of competitors; or • the outcome of negotiations with partners, suppliers, customers or others; Political/governmental factors • political stability in relevant areas of the world, including the impacts of war, conflicts, global military action, and acts of terrorism; • future regulation/deregulation of our customers and/or the rail industry; • levels of governmental funding on transit projects, including for some of our customers; • political developments and laws and regulations, including those related to Positive Train Control; • federal and state income tax legislation; • sanctions imposed on countries and persons; or • the outcome of negotiations with governments; Natural hazards / health crises • impacts of climate change, including evolving climate change policy; • disruptive natural hazards, including earthquakes, fires, floods, tornadoes, hurricanes or weather conditions; • epidemics, pandemics, or similar public health crises; • deterioration of general economic conditions as a result of natural hazards or health crises; • shutdown of one or more of our operating facilities as a result of natural hazards and health crises; or • supply chain and sourcing disruptions as a result of natural hazards and health crises; Statements in this Form 10-K apply only as of the date on which such statements are made, and except as required by law, we undertake no obligation to update any statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
These forward-looking statements are subject to various risks, uncertainties and assumptions about us, including, among other things: Economic and industry conditions • changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, inflation, supply chain disruptions, foreign currency exchange, and industry consolidation; • prolonged unfavorable economic and industry conditions in the markets served by us, including North America, South America, Europe, Australia, Asia and Africa; • decline in demand for freight cars, locomotives, passenger transit cars, buses and related products and services; • reliance on major original equipment manufacturer customers; • original equipment manufacturers’ program delays; • decreased demand for services in the freight and passenger rail industry; • decreased demand for our products and services; • orders either being delayed, canceled, not returning to historical levels, or being reduced, and/or economic conditions affecting the ability of our customers to pay timely for goods and services delivered; • consolidations in the rail industry; • continued outsourcing by our customers; • industry demand for faster and more efficient braking equipment; • fluctuations in interest rates and foreign currency exchange rates; • availability of credit or difficulty in obtaining debt or equity financing; • changes in market consensus as to what attributes are required for projects to be considered "green" or "sustainable" or negative perceptions regarding determinations in such regard with respect to our Green Finance Framework or ESG strategy; or • changes in the ESG topics that have the highest relative priority for Wabtec's external stakeholders; Operating factors • supply disruptions; • technical difficulties; • changes in operating conditions and costs; • increases in raw material costs; • challenges associated with the successful introduction of new products; • product safety, quality and reliability; • performance under material long-term contracts; • labor availability constraints and labor relations challenges; • the outcome of our existing or any future legal proceedings, including litigation involving our principal customers and any litigation with respect to environmental matters, asbestos-related matters, pension liabilities, warranties, product liabilities, competition and anti-trust matters or intellectual property claims; • our ability to successfully complete and integrate acquisitions; • risks associated with the development and use of new technology; or 38 • cybersecurity and data protection risks; Competitive factors • the actions of competitors; or • adverse outcomes of negotiations with partners, suppliers, customers or others; Political/governmental factors • political instability in relevant areas of the world, including the impacts of war, conflicts, global military action, and acts of terrorism; • future regulation/deregulation of our customers and/or the rail industry; • decreases in levels of governmental funding on transit projects, including for some of our customers; • political developments and laws and regulations, including those related to Positive Train Control; • consequences of federal and state income tax legislation; • sanctions imposed on countries and persons; or • the outcome of negotiations with governments; Natural hazards / health crises • impacts of climate change, including evolving climate change policy; • disruptive natural hazards, including earthquakes, fires, floods, tornadoes, hurricanes or weather conditions; • epidemics, pandemics, or similar public health crises; • deterioration of general economic conditions as a result of natural hazards or health crises; • shutdown of one or more of our operating facilities as a result of natural hazards and health crises; or • supply chain and sourcing disruptions as a result of natural hazards and health crises; Statements in this Form 10-K apply only as of the date on which such statements are made, and except as required by law, we undertake no obligation to update any statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
The amount of purchase price which is in excess of the fair values of assets acquired and liabilities assumed is recognized as goodwill. Judgments and Uncertainties Discounted cash flow models are used to estimate the fair values of acquired contract backlog, customer relationships, intellectual property intangibles and trade names.
The amount of purchase price which is in excess of the fair values of assets acquired and liabilities assumed is recognized as goodwill. Judgments and Uncertainties Discounted cash flow models are used to estimate the fair values of acquired intangible assets such as contract backlog, customer relationships, intellectual property, and trade names.
Based on the Company's assessment, the incident has not had a significant financial impact and the Company does not believe the incident will have a material impact on its business, operations or financial results. The Company maintains cyber insurance, subject to certain deductibles and policy limitations typical for its size and industry.
Based on the Company's assessment, the incident did not have a significant financial impact and the Company does not believe the incident will have a material impact on its business, operations or financial results. The Company maintains cyber insurance, subject to certain deductibles and policy limitations typical for its size and industry.
As customers pay their balances, we transfer additional receivables into the program, which could result in our gross receivables sold being higher or lower than customer collections remitted to the financial institution for any applicable period. Net cash (remitted)/received from the revolving receivables program was $(60) million and $60 million for the years ended December 31, 2023 and 2022, respectively.
As customers pay their balances, we transfer additional receivables into the program, which could result in our gross receivables sold being higher or lower than customer collections remitted to the financial institution for any applicable period. Net cash remitted from the revolving receivables program was $(20) million and $(60) million for the years ended December 31, 2024 and 2023, respectively.
During 2022, the Company made three strategic acquisitions in the Freight Segment for a combined purchase price of $89 million. Two of the acquisitions are reported in the Digital Intelligence product line and one is reported in the Services product line. Each of the acquisitions in 2022 are individually and collectively immaterial.
During 2022, the Company made three strategic acquisitions in the Freight Segment for a combined purchase price of $89 million, net of cash acquired. Two of the acquisitions are reported in the Digital Intelligence product line and one is reported in the Services product line. Each of the acquisitions in 2022 are individually and collectively immaterial.
Business Combinations: Description The Company accounts for business acquisitions in accordance with ASC 805, Business Combinations, which requires the purchase price of the acquired business to be allocated to tangible and intangible assets acquired and liabilities assumed based on the respective fair values.
Business Combinations: Description The Company accounts for business acquisitions in accordance with Accounting Standard Codification ("ASC") 805, Business Combinations, which requires the purchase price of the acquired business to be allocated to tangible and intangible assets acquired and liabilities assumed based on the respective fair values.
These actions include implementing price escalations and surcharges, driving operational efficiencies through various cost mitigation efforts and discretionary spend management, strategically sourcing materials, reviewing and modifying distribution logistics, and accelerating integration synergies through Integration 2.0. A portion of our workers are represented by labor unions.
These actions include implementing price escalations and surcharges, driving operational efficiencies through various cost mitigation efforts and discretionary spend management, strategically sourcing materials, reviewing and modifying distribution logistics, and accelerating integration synergies through our restructuring programs. A portion of our workers are represented by labor unions.
Wabtec is a global company with operations in over 50 countries and our products can be found in more than 100 countries throughout the world. In 2023, approximately 55% of the Company’s Net sales came from customers outside the U.S.
Wabtec is a global company with operations in over 50 countries, and our products can be found in more than 100 countries throughout the world. In 2024, approximately 53% of the Company’s Net sales came from customers outside the U.S.
The discussion comparing our results for the year ended December 31, 2022 to the year ended December 31, 2021 is included within Management's Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 15, 2023.
The discussion comparing our results for the year ended December 31, 2023 to the year ended December 31, 2022 is included within Management's Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 14, 2024.
As a result of the change in ownership interest and obtaining control of LKZ, Wabtec's previously held equity interest balance was remeasured to fair value, resulting in a gain of approximately $35 million recorded to Other income, net.
As a result of the change in ownership interest and obtaining control of LKZ in late 2023, Wabtec's previously held equity interest balance in LKZ was remeasured to fair value, resulting in a gain of approximately $35 million recorded to Other income, net in the prior year.
At December 31, 2023, the total value of these bank guarantees and letters of credit were $855 million and expire on various dates through 2034. Amounts include interest payments based on contractual terms and the Company’s current interest rate.
At December 31, 2024, the total value of these bank guarantees and letters of credit were $931 million and expire on various dates through 2034. Amounts include interest payments based on contractual terms and the Company’s current interest rate.
Warranty Reserves: Description The Company provides warranty reserves to cover expected costs from repairing or replacing products with durability, quality or workmanship issues occurring during established warranty periods. Judgments and Uncertainties In general, reserves are provided for as a percentage of sales, based on historical experience.
Warranty Reserves: Description The Company provides warranty reserves to cover expected costs from repairing or replacing products with durability, quality or workmanship issues occurring during established warranty periods. Judgments and Uncertainties In general, reserves are provided for as a percentage of sales, based on historical experience. In addition, specific reserves are established for known warranty issues and their estimable losses.
Cost of sales for the years ended December 31, 2023 and 2022 included $25 million and $28 million, respectively, of restructuring costs, primarily related to Integration 2.0 for headcount actions and footprint rationalization in Europe.
Transit Cost of sales for the years ended December 31, 2024 and 2023 included $19 million and $25 million of restructuring costs, respectively, primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0.
ACQUISITIONS During the fourth quarter of 2023, the Company purchased the remaining ownership shares of LKZ, a locomotive manufacturing and assembly company located in Kazakhstan for $111 million, at which time it became a wholly owned subsidiary of the Company.
Each of the acquisitions in 2024 are individually and collectively immaterial. During the fourth quarter of 2023, the Company purchased the remaining ownership shares of LKZ, a locomotive manufacturing and assembly company located in Kazakhstan for $111 million, at which time it became a wholly owned subsidiary of the Company.
While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States net of any 35 tax impacts. As of December 31, 2023, approximately $5 million of the Company's $620 million cash balance was classified as restricted cash.
While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States net of any tax impacts. As of December 31, 2024, approximately $9 million of the Company's $715 million cash balance was classified as restricted cash.
Unaudited Issuer and Guarantor In millions Year Ended December 31, 2023 Net sales to non-guarantor subsidiaries $ 38 Purchases from non-guarantor subsidiaries 153 Unaudited Issuer and Guarantor In millions December 31, 2023 Amount due to non-guarantor subsidiaries $ 11,112 Contractual Obligations and Off-Balance Sheet Arrangements The Company is obligated to make future payments under various contracts such as purchase, debt and lease agreements and has certain contingent commitments.
Unaudited Issuer and Guarantor In millions Year Ended December 31, 2024 Net sales to non-guarantor subsidiaries $ 46 Purchases from non-guarantor subsidiaries 141 Unaudited Issuer and Guarantor In millions December 31, 2024 Amount due to non-guarantor subsidiaries $ 8,449 Contractual Obligations and Off-Balance Sheet Arrangements The Company is obligated to make future payments under various contracts such as purchase, debt and lease agreements and has certain contingent commitments.
Unaudited Parent Company and Guarantor Subsidiaries In millions Year Ended December 31, 2023 Net sales to non-guarantor subsidiaries $ 956 Purchases from non-guarantor subsidiaries $ 1,571 Unaudited Parent Company and Guarantor Subsidiaries In millions December 31, 2023 Amount due to non-guarantor subsidiaries $ 10,208 Summarized Financial Information—Euro Notes The obligations under Wabtec Netherlands’ Euro Notes are fully and unconditionally guaranteed by the Parent Company.
Unaudited Parent Company and Guarantor Subsidiaries In millions Year Ended December 31, 2024 Net sales to non-guarantor subsidiaries $ 875 Purchases from non-guarantor subsidiaries $ 1,170 Unaudited Parent Company and Guarantor Subsidiaries In millions December 31, 2024 Amount due to non-guarantor subsidiaries $ 13,697 Summarized Financial Information—Euro Notes The obligations under Wabtec Netherlands’ Euro Notes are fully and unconditionally guaranteed by the Parent Company.
Summarized Statement of Income Unaudited Issuer and Guarantor In millions Year Ended December 31, 2023 Net sales $ 562 Gross profit $ 104 Net loss attributable to Wabtec shareholders $ (370) 37 Summarized Balance Sheet Unaudited Issuer and Guarantor In millions December 31, 2023 December 31, 2022 Current assets $ 493 $ 264 Noncurrent assets $ 651 $ 770 Current liabilities $ 1,272 $ 733 Long-term debt $ 3,287 $ 3,740 Other non-current liabilities $ 84 $ 128 The following is a description of the transactions between the combined Wabtec Netherlands, as the Issuer of the Euro Notes, and the Parent Company, as the parent Guarantor, with the subsidiaries of Westinghouse Air Brake Technologies Corp., other than Wabtec Netherlands, none of which are guarantors of the Euro Notes.
Summarized Statement of Income Unaudited Issuer and Guarantor In millions Year Ended December 31, 2024 Net sales $ 577 Gross profit $ 90 Net loss attributable to Wabtec shareholders $ (209) 36 Summarized Balance Sheet Unaudited Issuer and Guarantor In millions December 31, 2024 December 31, 2023 Current assets $ 546 $ 493 Noncurrent assets $ 646 $ 651 Current liabilities $ 1,014 $ 1,272 Long-term debt $ 3,479 $ 3,287 Other non-current liabilities $ 49 $ 84 The following is a description of the transactions between the combined Wabtec Netherlands, as the Issuer of the Euro Notes, and the Parent Company, as the parent Guarantor, with the subsidiaries of Westinghouse Air Brake Technologies Corp., other than Wabtec Netherlands, none of which are guarantors of the Euro Notes.
In addition, specific reserves are established for known warranty issues and their estimable losses. 41 Effect if Actual Results Differ From Assumptions If actual results are not consistent with the assumptions and judgments used to calculate our warranty liability, the Company may be exposed to the expense of increasing our reserves for warranty expense.
Effect if Actual Results Differ From Assumptions If actual results are not consistent with the assumptions and judgments used to calculate our warranty liability, the Company may be exposed to the expense of increasing our reserves for warranty expense.
Operating expenses Operating expenses as a percentage of sales for the Transit Segment were 17.1% and 17.6% for the years ended December 31, 2023 and 2022, respectively.
Operating expenses Operating expenses as a percentage of Net sales for the Transit Segment were 17.3% and 17.0% for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, the Company held approximately $620 million of cash, cash equivalents, and restricted cash, of which approximately $190 million was held within the United States and approximately $430 million was held outside of the United States, primarily in India, Europe, Brazil, and Kazakhstan.
As of December 31, 2024, the Company held approximately $715 million of cash, cash equivalents, and restricted cash, of which approximately $417 million was held within the United States and approximately $298 million was held outside of the United States, primarily in India, Europe, China and Brazil.
Investing activities In 2023 and 2022, cash used for investing activities was $(492) million and $(235) million, respectively. During 2023, Wabtec acquired L&M Radiator, Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers, for net cash of approximately $(229) million and the remaining ownership shares of LKZ for net cash of approximately $(81) million.
During 2023, Wabtec acquired L&M Radiator, Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers, for net cash of approximately $(229) million and the remaining ownership shares of LKZ for net cash of approximately $(81) million. During 2023, Wabtec also used $(186) million for additions to property, plant and equipment.
Beginning September 15, 2023, the effective interest rates for the 2024 Notes and the 2028 Notes were each reduced by 0.25% due to a favorable change in Wabtec's corporate credit rating and the rating of the aforementioned notes.
Beginning September 15, 2023, the effective interest rates for the 2024 Notes and the 2028 Notes were each reduced by 0.25% due to a favorable change in Wabtec's corporate credit rating and the rating of the aforementioned notes. The Company borrows and repays against the Revolving Credit Facility for added flexibility in liquidity to manage cash during the operating cycle.
The scope of the review includes consolidating our operating footprint, reducing headcount, streamlining the end-to-end manufacturing process, restructuring the North America distribution channels, expanding operations in low-cost countries and simplifying the business through systems enablement, including the source-to-pay process. Management will also consider additional capital investments to further simplify and streamline the business.
The scope of the review included consolidating our operating footprint, reducing headcount, streamlining the end-to-end manufacturing process, restructuring the North America distribution channels, expanding operations in low-cost countries and simplifying the business through systems enablement.
During the twelve months ended December 31, 2023, the Company incurred one-time restructuring charges for programs included in the initiative of approximately $49 million which were primarily for employee-related costs and asset write downs associated with site consolidations in Europe. Programs approved to date are expected to result in approximately 15 facility closures and impact approximately 1,100 employees.
During the twelve months ended December 31, 2024 and 2023, the Company incurred one-time restructuring charges for programs included in the initiative of approximately $28 million and $49 million, respectively, primarily for employee-related costs and asset write downs associated with site consolidations in Europe.
The Company compares inventory components to prior year sales history, current backlog and anticipated future requirements. To the extent that inventory parts exceed estimated usage and demand, a reserve is recognized to reduce the carrying value of inventory. Also, specific reserves are established for known inventory obsolescence, a decline in market value, or loss of a customer with specific inventory.
The Company compares inventory components to prior year sales history, current backlog and 39 anticipated future requirements. To the extent that inventory parts exceed estimated usage and demand, a reserve is recognized to reduce the carrying value of inventory.
The following is a summary of selected cash flow information and other relevant data: For the year ended December 31, In millions 2023 2022 Cash provided by (used for): Operating activities $ 1,201 $ 1,038 Investing activities $ (492) $ (235) Financing activities $ (633) $ (708) Operating activities In 2023, cash provided by operating activities was $1,201 million, primarily from $1,298 million attributable to Net income and other changes in the related statements of income amounts.
The following is a summary of selected cash flow information and other relevant data: For the year ended December 31, In millions 2024 2023 Cash provided by (used for): Operating activities $ 1,834 $ 1,201 Investing activities $ (343) $ (492) Financing activities $ (1,371) $ (633) Operating activities In 2024, cash provided by operating activities was $1,834 million compared to $1,201 million in 2023.
During the first quarter of 2022, Wabtec announced Integration 2.0, a three-year strategic initiative to target incremental run rate synergies estimated to be between $75 million and $90 million in 2025.
During the first quarter of 2022, Wabtec announced Integration 2.0, a multi-year strategic initiative to target incremental run rate synergies now estimated to be approximately $100 million by the end of 2026.
For additional information related to these acquisitions refer to Note 3 of "Notes to Consolidated Financial Statements" included in Part II, Item 8 of this report. 29 RESULTS OF OPERATIONS Consolidated Results 2023 COMPARED TO 2022 The following table shows our Consolidated Statements of Operations for the years indicated.
For 27 additional information related to these acquisitions refer to Note 3 of "Notes to Consolidated Financial Statements" included in Part II, Item 8 of this report.
Cost of sales Cost of sales for the year ended December 31, 2023 increased by $911 million, or 15.6%, to $6.73 billion compared to the same period in 2022. The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of sales was 69.6% for the years ended December 31, 2023 and 2022.
The increase is primarily due to the increase in Net sales. Cost of sales as a percentage of Net sales was 67.6% and 69.6% for the years ended December 31, 2024 and 2023, respectively.
Judgments and Uncertainties The allowance for doubtful accounts receivable reflects our best estimate of expected losses inherent in our receivable portfolio determined on the basis of historical experience, relevant credit forecast information, changes to customer's solvency and other currently available evidence. 40 Effect if Actual Results Differ From Assumptions If our estimates regarding the collectability of troubled accounts, and/or our actual losses within our receivable portfolio exceed our estimated losses, we may be exposed to the expense of increasing our allowance for doubtful accounts and loss of cash flows.
Judgments and Uncertainties The allowance for doubtful accounts receivable reflects our best estimate of expected losses inherent in our receivable portfolio determined on the basis of historical experience, relevant credit forecast information, changes to customer's solvency and other currently available evidence.
Summarized Statement of Income Unaudited Parent Company and Guarantor Subsidiaries In millions Year Ended December 31, 2023 Net sales $ 5,742 Gross profit $ 1,454 Net income attributable to Wabtec shareholders $ 481 36 Summarized Balance Sheet Unaudited Parent Company and Guarantor Subsidiaries In millions December 31, 2023 December 31, 2022 Current assets $ 1,513 $ 1,328 Noncurrent assets $ 2,196 $ 2,384 Current liabilities $ 2,443 $ 1,881 Long-term debt $ 2,739 $ 3,209 Other non-current liabilities $ 662 $ 551 The following is a description of the transactions between the combined Parent Company and guarantor subsidiaries with non-guarantor subsidiaries.
The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries. 35 Summarized Statement of Income Unaudited Parent Company and Guarantor Subsidiaries In millions Year Ended December 31, 2024 Net sales $ 5,948 Gross profit $ 2,399 Net income attributable to Wabtec shareholders $ 788 Summarized Balance Sheet Unaudited Parent Company and Guarantor Subsidiaries In millions December 31, 2024 December 31, 2023 Current assets $ 1,604 $ 1,513 Noncurrent assets $ 2,049 $ 2,196 Current liabilities $ 2,242 $ 2,443 Long-term debt $ 2,962 $ 2,739 Other non-current liabilities $ 697 $ 662 The following is a description of the transactions between the combined Parent Company and guarantor subsidiaries with non-guarantor subsidiaries.
Cost of sales for the years ended December 31, 2023 and 2022 included $38 million and $43 million, respectively, of restructuring costs primarily for footprint rationalization and headcount actions, primarily related to Integration 2.0. Operating expenses Total operating expenses increased $149 million, or 9.7%, for the year ended December 31, 2023 compared to the same period in 2022.
Cost of sales for the years ended December 31, 2024 and 2023 included $37 million and $38 million, respectively, of restructuring costs, primarily for headcount actions and footprint rationalization related to Integration 2.0 and Portfolio Optimization.
Operating expenses as a percentage of sales was 17.3% and 18.3% for the years ended December 31, 2023 and 2022, respectively. Selling, general and administrative expenses ("SG&A") increased $110 million for the year ended December 31, 2023 compared to the same period in 2022.
Operating expenses Total operating expenses increased $79 million, or 4.7%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to the increase in Net sales. Operating expenses as a percentage of Net sales was 16.9% and 17.3% for the years ended December 31, 2024 and 2023, respectively.
For the year ended December 31, In millions 2023 2022 Net sales: Sales of goods $ 7,647 $ 6,459 Sales of services 2,030 1,903 Total net sales 9,677 8,362 Cost of sales: Cost of goods (5,581) (4,791) Cost of services (1,152) (1,031) Total cost of sales (6,733) (5,822) Gross profit 2,944 2,540 Operating expenses: Selling, general and administrative expenses (1,139) (1,029) Engineering expenses (218) (209) Amortization expense (321) (291) Total operating expenses (1,678) (1,529) Income from operations 1,266 1,011 Other income and expenses: Interest expense, net (218) (186) Other income, net 44 29 Income before income taxes 1,092 854 Income tax expense (267) (213) Net income 825 641 Less: Net income attributable to noncontrolling interest (10) (8) Net income attributable to Wabtec shareholders $ 815 $ 633 The following table shows the major components of the change in net sales in 2023 from 2022: In millions Freight Segment Transit Segment Total 2022 Net Sales $ 6,012 $ 2,350 $ 8,362 Acquisitions 109 — 109 Foreign Exchange (23) 25 2 Organic 864 340 1,204 2023 Net Sales $ 6,962 $ 2,715 $ 9,677 The following discussion compares our results for the year ended December 31, 2023 to the year ended December 31, 2022.
For the year ended December 31, In millions 2024 2023 Net sales: Sales of goods $ 8,434 $ 7,647 Sales of services 1,953 2,030 Total Net sales 10,387 9,677 Cost of sales: Cost of goods (5,918) (5,581) Cost of services (1,103) (1,152) Total Cost of sales (7,021) (6,733) Gross profit 3,366 2,944 Operating expenses: Selling, general and administrative expenses (1,248) (1,139) Engineering expenses (206) (218) Amortization expense (303) (321) Total Operating expenses (1,757) (1,678) Income from operations 1,609 1,266 Other income and expenses: Interest expense, net (201) (218) Other income, net 2 44 Income before income taxes 1,410 1,092 Income tax expense (343) (267) Net income 1,067 825 Less: Net income attributable to noncontrolling interest (11) (10) Net income attributable to Wabtec shareholders $ 1,056 $ 815 The following table shows the major components of the change in Net sales in 2024 from 2023: In millions Freight Segment Transit Segment Total 2023 Net sales $ 6,923 $ 2,754 $ 9,677 Acquisitions 78 3 81 Foreign Exchange (32) (1) (33) Organic 499 163 662 2024 Net sales $ 7,468 $ 2,919 $ 10,387 The following discussion compares our results for the year ended December 31, 2024 to the year ended December 31, 2023.
The Company expects to contribute $2 million to pension plan investments in 2024. (4) Interest payments on the Senior Notes and the amount borrowed under the Delayed Draw Term Loan as of December 31, 2023 are based on interest rates in effect as of December 31, 2023 and are calculated on debt with maturities that extend to 2028.
The Company does not expect material contributions to pension plan investments in 2025. 37 (4) Interest payments on the Senior Notes and the amounts borrowed under the 2024 and 2022 Credit Agreements as of December 31, 2024 are based on interest rates in effect as of December 31, 2024 and are calculated on debt with maturities that extend to 2034.
The increase is primarily from costs incurred to support the higher sales volume, higher employee compensation and benefit costs, and higher professional services spend. Restructuring costs included in SG&A were $18 million and $9 million for the years ended December 31, 2023 and 2022, respectively, primarily for headcount actions and footprint rationalization programs, primarily related to Integration 2.0.
Restructuring costs included in SG&A were $18 million for the years ended December 31, 2024 and 2023, primarily for headcount actions and footprint rationalization programs related to Integration 2.0 in both years and Portfolio Optimization in 2024.
Interest expense, net Interest expense, net, increased $32 million to $218 million for the year ended December 31, 2023 over the same period in 2022 primarily attributable to higher effective interest rates and higher average overall debt balances in the current year.
Interest expense, net Interest expense, net, decreased $17 million to $201 million for the year ended December 31, 2024 over the same period in 2023 primarily due to lower weighted average debt balances throughout the current year, partially offset by higher effective interest rates.
Net sales Net sales for the year ended December 31, 2023 increased by $1.32 billion, or 15.7%, to $9.68 billion compared to the same period in 2022. Organic sales increased $1.20 billion which was attributable to both the Freight and Transit Segments.
Net sales Net sales for the year ended December 31, 2024 increased by $710 million, or 7.3%, to $10.39 billion compared to the same period in 2023. Organic sales increased $662 million which was attributable to both the Freight and Transit Segments. Freight Equipment sales increased from higher North American and international locomotive sales and increased mining sales.
Wabtec recorded charges of approximately $28 million in the fourth quarter of 2023 for asset write downs related to Portfolio Optimization. Future macroeconomic volatility, supply chain disruptions and labor availability could cause component and raw material shortages resulting in an adverse effect on the timing of the Company’s revenue and cash flows.
Estimates for these programs could change based on the specific programs approved or changes to the scope of the review. Future macroeconomic volatility, supply chain disruptions and labor availability could cause component and raw material shortages resulting in an adverse effect on the timing of the Company’s revenue and cash flows.
In 2022, cash used for financing activities was $(708) million which included $(30) million from net changes in debt, $(473) million of stock repurchases, $(111) million of dividend payments, and $(101) million of contingent consideration payments related to the GE Transportation acquisition.
Financing activities In 2024, cash used for financing activities was $(1,371) million, which included $(64) million from net changes in debt, $(1,097) million of stock repurchases, $(140) million of dividend payments, $(42) million of contingent consideration payments related to the GE Transportation acquisition, $(25) million of payments for income tax withholding on share-based compensation, and $(6) million of distributions to noncontrolling interest.
Operating expenses Operating expenses as a percentage of sales for the Freight Segment were 16.1% and 17.2% for the years ended December 31, 2023 and 2022, respectively.
Cost of sales for the years ended December 31, 2024 and 2023 included $18 million and $13 million, respectively, of restructuring costs, primarily related to Integration 2.0 and Portfolio Optimization. Operating expenses Freight Segment Operating expenses as a percentage of Net sales were 14.7% and 16.1% for the years ended December 31, 2024 and 2023, respectively.
See Note 11 of "Notes to Consolidated Financial Statements" included in Part II, Item 8 of this report for additional information. 31 Freight Segment The following table shows our Consolidated Statements of Operations for our Freight Segment for the periods indicated: For the year ended December 31, In millions 2023 2022 Change % Change Net sales: Sales of goods $ 4,945 $ 4,125 $ 820 19.9 % Sales of services 2,017 1,887 130 6.9 % Total net sales 6,962 6,012 950 15.8 % Cost of sales: Cost of goods (3,630) (3,098) 532 17.2 % Cost of services (1,142) (1,018) 124 12.2 % Total cost of sales (4,772) (4,116) 656 15.9 % Cost of Sales (% of Net sales) 68.5 % 68.5 % — Gross profit 2,190 1,896 294 15.5 % Operating expenses (1,119) (1,032) 87 8.4 % Income from operations ($) $ 1,071 $ 864 $ 207 24.0 % Income from operations (% of Net sales) 15.4 % 14.4 % 1.0 The following table shows the major components of the change in net sales for the Freight Segment in 2023 from 2022: In millions 2022 Net Sales $ 6,012 Acquisitions 109 Foreign Exchange (23) Changes in Sales by Product Line: Services 444 Equipment 250 Components 150 Digital Intelligence 20 2023 Net Sales $ 6,962 Net sales Freight Segment organic sales increased by $864 million driven primarily by: • Services sales from higher deliveries of locomotive modernizations and overhauls and higher parts sales • Equipment sales from higher North America and international locomotive sales and increased mining sales • Components sales from higher original equipment railcar build and increased market share for certain products due to product availability and increased demand for industrial products Additionally, Freight Segment sales also benefited from our strategic acquisitions, primarily from L&M Radiator Inc., by $109 million.
See Note 11 of "Notes to Consolidated Financial Statements" included in Part II, Item 8 of this report for additional information. 30 Freight Segment The following table shows our Consolidated Statements of Operations for our Freight Segment for the periods indicated: For the year ended December 31, In millions 2024 2023 Change % Change Net sales: Sales of goods $ 5,524 $ 4,906 $ 618 12.6 % Sales of services 1,944 2,017 (73) (3.6) % Total Net sales 7,468 6,923 545 7.9 % Cost of sales: Cost of goods (3,848) (3,600) 248 6.9 % Cost of services (1,097) (1,142) (45) (3.9) % Total Cost of sales (4,945) (4,742) 203 4.3 % Cost of sales (% of Net sales) 66.2 % 68.5 % (2.3) Gross profit 2,523 2,181 342 15.7 % Operating expenses (1,101) (1,116) (15) (1.3) % Income from operations ($) $ 1,422 $ 1,065 $ 357 33.5 % Income from operations (% of Net sales) 19.0 % 15.4 % 3.6 The following table shows the major components of the change in Net sales for the Freight Segment in 2024 from 2023: In millions 2023 Net sales $ 6,923 Acquisitions 78 Foreign Exchange (32) Changes in Net sales by Product Line: Services 132 Equipment 328 Components 23 Digital Intelligence 16 2024 Net sales $ 7,468 Net sales Freight Segment organic sales increased by $499 million driven primarily by Equipment sales from higher North American and international locomotive sales and increased mining sales, and Services sales from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales.
Transit Segment operating expenses increased by $52 million primarily driven by: • Higher SG&A expenses of $44 million to support higher sales volume and higher employee compensation and benefit costs, partially offset by benefits from structured cost actions taken through prior years' restructuring and integration projects, including Integration 2.0 • An increase in engineering expense of $6 million due to investments in new technology Transit Operating expenses for the years ended December 31, 2023 and 2022, includes $15 million and $9 million, respectively, of restructuring costs primarily related to Integration 2.0 for footprint rationalization and headcount actions in Europe. 34 Liquidity and Capital Resources Liquidity is provided by operating cash flows and borrowings under the Company’s Senior Notes and unsecured credit facility with a consortium of commercial banks.
Transit SG&A expenses for the years ended December 31, 2024 and 2023 included $13 million of restructuring costs primarily for footprint rationalization and headcount actions in Europe related to Integration 2.0. 33 Liquidity and Capital Resources Liquidity is provided by operating cash flows, borrowings under the 2022 Credit Agreement and the 2024 Credit Agreement, each with a consortium of commercial banks, and proceeds from the Company's Senior Notes.
Cost of sales Transit Segment Cost of sales increased by $255 million and Cost of sales as a percentage of sales decreased by 0.4 percentage points primarily due to higher sales volume partially offset by benefits from structured cost actions taken through prior years' restructuring and integration projects, including Integration 2.0.
This was partially offset by benefits from structured cost actions taken through prior years' restructuring and integration projects, primarily Integration 2.0.
The increase in Cost of sales was primarily driven by: • Higher sales volume 32 • Manufacturing inefficiencies primarily related to the strike at our Erie facility • Higher next generation product development costs in Digital Intelligence and Equipment Partially offset by: • Favorable mix within the Freight Segment product lines • Benefits from structured cost actions Cost of sales for the years ended December 31, 2023 and 2022 included $13 million and $15 million, respectively, of restructuring costs, primarily related to Integration 2.0 and Portfolio Optimization costs.
The improvement in gross margin is attributable to contract escalation clauses, favorable mix within the Freight Segment product lines, improved productivity and Integration 2.0 savings. Cost of sales for the year ended December 31, 2023 was also impacted by manufacturing inefficiencies related to labor negotiations at our Erie facility and costs related to next generation product development in Digital Intelligence.
Other income, net Other income, net, increased $15 million to $44 million for the year ended December 31, 2023 compared to the same period in 2022.
Other income, net Other income, net, decreased $42 million to $2 million for the year ended December 31, 2024 compared to the same period in 2023, primarily due to lower equity income during 2024 and a gain on equity interest in the prior year.
Sales from acquisitions contributed $109 million in the Freight Segment. Transit Segment organic sales increased by 30 $340 million primarily as a result of increased demand for Aftermarket and Original Equipment Manufacturing products driven by increased infrastructure investment.
Freight Services sales increased from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales. Transit sales increased primarily as a result of higher demand for Aftermarket and Original Equipment Manufacturing products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased 29 passenger ridership levels.
During 2023, Wabtec also used $(186) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes. During 2022, Wabtec made three strategic acquisitions for a combined purchase price of $(89) million and used $(149) million for additions to property, plant and equipment.
During 2024, Wabtec also used $(207) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes, received $19 million of net proceeds from dispositions of businesses, and received $13 million of proceeds from disposals of property, plant, and equipment.
The table below provides a summary of contractual obligations and off-balance sheet arrangements as of December 31, 2023: In millions Total 2024 2025-26 2027-28 2029+ Operating activities: Purchase obligations (1) $ 157 $ 137 $ 19 $ 1 $ — Operating leases (2) 341 61 102 64 114 Pension and postretirement benefit payments (3) 218 20 40 43 115 Interest payments (4) 501 140 225 136 — Financing activities: Long-term debt 4,084 781 1,250 2,053 — Dividends to shareholders (5) 142 142 — — — Contingent consideration (6) 42 42 — — — Total $ 5,485 $ 1,323 $ 1,636 $ 2,297 $ 229 (1) Purchase obligations represent non-cancelable contractual obligations at December 31, 2023.
The table below provides a summary of contractual obligations and off-balance sheet arrangements as of December 31, 2024: In millions Total 2025 2026-27 2028-29 2030+ Operating activities: Purchase obligations (1) $ 119 $ 117 $ 2 $ — $ — Operating leases (2) 345 63 101 67 114 Pension and postretirement benefit payments (3) 214 20 41 44 109 Interest payments (4) 684 156 268 134 126 Financing activities: Long-term debt 3,995 500 1,520 1,475 500 Dividends to shareholders (5) 171 171 — — — Total $ 5,528 $ 1,027 $ 1,932 $ 1,720 $ 849 (1) Purchase obligations represent non-cancelable contractual obligations at December 31, 2024.
(5) Shareholder dividends are subject to approval by the Company’s Board of Directors, currently at an annual rate of approximately $142 million beginning in 2024. (6) Contingent consideration represents the total remaining payable to General Electric (GE) resulting from the 2019 acquisition of GE Transportation.
(5) Shareholder dividends are subject to approval by the Company’s Board of Directors, currently at an annual rate of approximately $171 million beginning in 2025. The above table does not reflect uncertain tax positions of $19 million, the timing of which are uncertain.
The gain was partially offset by lower foreign exchange gains and lower equity income in the current year compared to the prior year. Income taxes The effective income tax rate was 24.5% and 25.0% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate in 2023 is primarily the result of earnings mix.
Income taxes The effective income tax rate was 24.3% and 24.5% for the years ended December 31, 2024 and 2023, respectively.
The Company anticipates that it will incur one-time restructuring charges of approximately $135 million to $165 million related to this initiative, of which approximately $118 million has been incurred through December 31, 2023. Total estimated initiative charges could change based on the specific programs approved or changes to the scope of the review.
The Company now expects to incur approximately $170 million of one-time restructuring charges related to Integration 2.0, of which approximately $146 million has been incurred through December 31, 2024. Approved programs resulted in approximately 15 facility closures and impacted approximately 1,000 employees.
Engineering expense increased $9 million primarily due to investments in new technology and Amortization expense increased $30 million, due to Portfolio Optimization costs and increased expense from acquisitions.
Engineering expenses decreased $12 million primarily due to the timing of investments in new technology, and Amortization expense decreased $18 million, primarily related to changes in accelerated amortization for business dispositions associated with Portfolio Optimization and lower amortization for the GE Transportation trade name.
Removed
Business Update During 2023, Wabtec continued to execute on our value creation framework by signing strategic orders for locomotive modernizations in North America that will span multiple years, new locomotives with a North American railroad, new locomotives in Brazil, long-term supply and maintenance agreement for brakes in India, and mining drive systems in high altitude applications.
Added
Business Update During 2024, Wabtec continued to execute on our value creation framework by signing several key agreements including: a multi-year Tier 4 locomotive order in North America for over $600 million, a multi-year locomotive order in Kazakhstan for over $400 million, international orders for new locomotives for $401 million across six customers, and multi-year orders for new locomotives in Africa for approximately $525 million.
Removed
We announced our largest certified pre-owned order for 69 locomotives for a North American customer and won a contract to supply pantograph and Passenger Information Systems for up to 504 transit cars.
Added
Additionally, Wabtec won a long-term parts agreement with a Class I railroad for over $300 million, signed its first multi-year service contract with a customer in Brazil worth over $240 million, won signaling contracts with Transit customers in North America, and secured a long-term parts agreement with a customer in Asia.
Removed
Wabtec completed the strategic acquisition of L&M Radiator, Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers for the mining sector, and acquired the remaining 50% ownership interest in Lokomotiv Kurastyru Zauyty (LKZ), a locomotive manufacturing and assembly plant in Kazakhstan.
Added
Operationally, Wabtec began commercial operations for its Green Friction braking solution in Paris and launched the next generation of railcar movers with its Shuttlewagon Commander NXT.
Removed
We delivered our 500th locomotive in Kazakhstan for the CIS region and our 500th locomotive to Indian Railways, which was a significant milestone in our 10-year contract. Our senior unsecured debt was upgraded by Moody's, which reflects resiliency of the business, our balance sheet strength and strong cash generation.
Added
Additionally, as a result of Wabtec's strong revenue and profitable growth over the past few years, rating agencies have made the following changes to our credit ratings: both Fitch Ratings and S&P Global Ratings upgraded Wabtec's credit rating from BBB- to BBB with a Stable outlook, and Moody's updated Wabtec's outlook to positive from stable.
Removed
Additionally, Wabtec rebranded our Digital Electronics product line to Digital Intelligence, a change that more accurately reflects the complete digital products and services portfolio offered to our customers. The Digital Intelligence portfolio was also expanded with entry into the railcar telematics market.
Added
For the years ended December 31, 2024 and 2023, Wabtec recorded charges of approximately $28 million primarily for asset write 26 downs related to Portfolio Optimization. Total one-time restructuring charges related to Portfolio Optimization to date are approximately $56 million.
Removed
Charges related to Integration 2.0 of 28 $46 million were recorded during the twelve months ended December 31, 2022, primarily for employee-related costs associated with site consolidations in Europe and costs related to the restructuring of North America distribution channels.
Added
In February 2025, Wabtec announced Integration 3.0, a three-year strategic initiative to target incremental run rate synergies estimated to be between $100 million to $125 million by 2028. The scope of the review includes consolidating our footprint via value chain improvement and facility rationalization, reducing headcount, expanding operating capacity in low-cost countries, and streamlining administrative and commercial activities.
Removed
On March 31, 2021, the Company acquired Nordco, a leading North American supplier of new, rebuilt and used maintenance of way equipment. The Company also made acquisitions during 2021 not listed above which are individually and collectively immaterial.
Added
Management will also consider additional capital investments to further simplify and streamline the business. The Company anticipates that it will incur charges of approximately $125 million to $155 million related to this initiative, of which approximately $80 million to $100 million are expected to be one-time restructuring charges.
Removed
Freight Segment organic sales increased by $864 million primarily driven by Services sales from higher parts sales and higher deliveries of locomotive modernizations and overhauls, Equipment sales from higher North American and international locomotive sales and increased mining sales, and Components sales due to a higher railcar build and growth in industrial end-markets.
Added
Concurrently, Wabtec announced an additional Portfolio Optimization initiative for 2025 targeting approximately $100 million of low margin revenues. The 2025 Portfolio Optimization actions are expected to result in approximately $40 million of net exit charges, primarily for non-cash asset write downs.
Removed
Cost of sales Freight Segment Cost of sales increased $656 million and Cost of sales as a percentage of sales remained consistent at 68.5%.
Added
During the first quarter of 2024, Company Management determined that certain parts of the business would be better aligned with Management oversight in different product lines. These changes were immaterial to the individual product lines and segments affected, and historical amounts have been reclassified to conform to the current period presentation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−0 removed1 unchanged
Biggest changeForeign Currency Exchange Rate Risk The Company is exposed to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. dollar. To reduce the impact of changes in currency exchange rates, the Company has periodically entered into foreign currency forward contracts.
Biggest changeAt December 31, 2023, the Company's outstanding variable rate debt was limited to the amount borrowed under the Delayed Draw Term Loan. Foreign Currency Exchange Rate Risk The Company is exposed to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. dollar.
Refer to "Summary of Significant Account Policies" in Note 2, “Fair Value Measurement and Derivative Instruments” in Note 17 and "Segment Information" in Note 19 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report for more information regarding foreign currency exchange risk and sales by geographic area. 43
Refer to "Summary of Significant Accounting Policies" in Note 2, “Fair Value Measurement and Derivative Instruments” in Note 17 and "Segment Information" in Note 19 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report for more information regarding foreign currency exchange risk and sales by geographic area. 41
At December 31, 2023, the Company's interest risk related to variable-rate debt is limited to the amounts borrowed under the Restated Credit Agreement, which was limited to the 42 amount borrowed under the Delayed Draw Term Loan. At December 31, 2022, the Company had no outstanding variable rate debt.
At December 31, 2024, the Company's interest risk related to variable-rate debt is limited to the amounts borrowed under the 2022 and 2024 Credit Agreements, which was limited to the amounts borrowed under the Delayed Draw Term Loan and the Term Loan.
Added
To reduce the impact of changes in currency exchange rates, the Company has periodically entered into foreign currency forward contracts.

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