# Westinghouse Air Brake Technologies (WAB) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/WAB/thesis · /stocks/WAB/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: WAB
step: "04"
title: Financial Snapshot
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### Income Statement Summary (3-Year View)

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Revenue | $8.06B | $9.65B | ~$10.0B |
| Revenue Growth YoY | +9.5% | +19.7% | ~+3-5% |
| Gross Profit | ~$2.5B | ~$3.0B | ~$3.2B |
| Gross Margin | ~31% | ~31% | ~32% |
| Adjusted EBITDA | ~$1.55B | ~$2.0B | ~$2.15B |
| Adjusted EBITDA Margin | ~19.2% | ~20.7% | ~21.5% |
| GAAP Operating Income | ~$700M | ~$1.1B | ~$1.25B |
| Adjusted Operating Income | ~$1.25B | ~$1.6B | ~$1.75B |
| GAAP Net Income | ~$380M | ~$720M | ~$820M |
| Adjusted Net Income | ~$870M | ~$1.15B | ~$1.25B |
| Diluted EPS (GAAP) | ~$2.54 | ~$4.78 | ~$5.50+ |
| Adjusted EPS | ~$5.83 | ~$7.67 | ~$8.30+ |

*Note: FY2024 figures based on guidance and trajectory; verify against reported results*

#### Revenue by Segment

| Segment | FY2022 | FY2023 | Growth |
|---------|--------|--------|--------|
| Freight | ~$5.95B | ~$7.2B | +21% |
| Transit | ~$2.11B | ~$2.45B | +16% |
| **Total** | **$8.06B** | **$9.65B** | **+19.7%** |

#### Margin Analysis

##### Gross Margin Drivers

Wabtec's gross margin of ~31% reflects the blended mix of:
- **Services/parts** (higher margin, ~38-42% gross margin): Proprietary parts, overhaul labor, LTSA contracts
- **New equipment** (lower margin, ~18-22% gross margin): Locomotives, transit systems (competitive pricing, high material content)

Gross margin expansion trajectory: The business mix is shifting toward services, which should drive gradual gross margin expansion toward 33-35% over 5 years.

##### EBITDA Bridge (FY2022 → FY2023)

Revenue growth of ~$1.6B drove the largest component of EBITDA expansion. Key drivers:
1. Volume leverage on fixed manufacturing costs
2. Services revenue growing faster than equipment (mix shift)
3. Integration synergies from GE Transportation merger continuing to compound
4. Pricing power in aftermarket exceeding cost inflation

##### Merger Integration Savings

The GE Transportation merger identified $250M+ in annual synergy targets:
- **Cost synergies**: Manufacturing footprint consolidation, procurement scale, overhead reduction
- **Revenue synergies**: Cross-selling (Wabtec brake/door products on GE locomotive programs; Trip Optimizer on legacy Wabtec transit products)

By FY2023, Wabtec indicated run-rate synergies were substantially achieved. Remaining synergy opportunities are more modest (incremental procurement and digital).

#### Profitability Quality

##### GAAP vs. Adjusted Gap

The gap between GAAP and adjusted earnings is significant and reflects:
- **Purchase price amortization (PPA)**: The GE Transportation acquisition generated ~$3-4B in identified intangibles (customer relationships, technology, trademarks) being amortized over 5-20 years — adding ~$200-300M/year in non-cash charges
- **Restructuring charges**: Ongoing integration/optimization costs (~$50-100M/year in early post-merger years)
- **Transaction-related costs**: Largely completed by 2021

Analysts typically focus on **adjusted EPS** (excluding PPA amortization) as the better representation of economic earnings power. However, investors should note that PPA amortization is a real economic cost reflecting the value paid for acquired assets.

##### Free Cash Flow Conversion

| Metric | FY2022 | FY2023 |
|--------|--------|--------|
| Adjusted EBITDA | ~$1.55B | ~$2.0B |
| Less: CapEx | ~$190M | ~$230M |
| Less: Interest (net) | ~$220M | ~$210M |
| Less: Cash Taxes | ~$200M | ~$270M |
| Free Cash Flow (approx.) | ~$940M | ~$1.3B |
| FCF Conversion (vs. Adj. EBITDA) | ~61% | ~65% |

Free cash flow conversion is improving as the merger integration costs wind down and EBITDA scales. The business is becoming an increasingly strong cash generator.

#### Key Financial Ratios (FY2023 Approximate)

| Ratio | Value | Commentary |
|-------|-------|------------|
| EV/EBITDA | ~18-22x | Premium for quality; services mix |
| P/E (Adjusted) | ~22-27x | Justified by compounding profile |
| P/FCF | ~18-22x | Attractive vs. earnings multiple |
| Net Debt/EBITDA | ~2.0-2.5x | Declining; well within target range |
| Gross Margin | ~31% | Below software peers; above typical industrials |
| EBITDA Margin | ~20-21% | Expanding; trajectory matters |
| ROIC (adjusted) | ~10-13% | Improving; well above WACC |

#### Notable FY2023 Highlights

- Revenue reached record levels post-merger at ~$9.65B
- Adjusted EPS of ~$7.67 represented ~31% growth over FY2022 (strong operating leverage)
- Backlog remained robust at $22-23B
- Net debt declined meaningfully as FCF generation accelerated
- Services revenue outpaced equipment revenue growth
- International orders remained strong, particularly in Australia and India

#### FY2024 and Forward Outlook

Management guidance and analyst consensus for FY2024 pointed toward:
- Revenue in the $10.0-10.5B range (~5% growth)
- Adjusted EBITDA margins approaching 22% (continued margin expansion)
- Adjusted EPS of $8.00-8.50 (~5-10% growth)
- FCF of $1.2-1.4B

Growth beyond FY2024 is expected to moderate toward GDP-plus rates (5-7% revenue, higher EPS from buybacks) as the GE Transportation synergy tailwind normalizes. The long-term margin target is management's ~23-24% adjusted EBITDA margin.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/WAB/fundamental

## Navigation

- Overview: /stocks/WAB
- Financials (this page): /stocks/WAB/financials
- Thesis: /stocks/WAB/thesis
- Investment Memo: /stocks/WAB/memo
- Coverage universe: /stocks