WAB Q1 Earnings Call: International Strength, Cost Controls, and Tariff Uncertainty Shape Outlook

April 24, 2025 at 10:39 AM EDT

WAB Cover Image

Rail equipment company Westinghouse Air Brake Technologies (NYSE: WAB) fell short of the market’s revenue expectations in Q1 CY2025 as sales rose 4.5% year on year to $2.61 billion. The company’s full-year revenue guidance of $10.88 billion at the midpoint came in 0.8% below analysts’ estimates. Its non-GAAP profit of $2.28 per share was 12.5% above analysts’ consensus estimates. The stock traded up 7.3% to $184.40 after reporting and hosting the earnings call.

Is now the time to buy WAB? Find out in our full research report (it’s free).

Wabtec (WAB) Q1 CY2025 Highlights:

Revenue: $2.61 billion vs analyst estimates of $2.63 billion (4.5% year-on-year growth, 0.8% miss)
Adjusted EPS: $2.28 vs analyst estimates of $2.03 (12.5% beat)
Adjusted EBITDA: $608 million vs analyst estimates of $561 million (23.3% margin, 8.4% beat)
The company reconfirmed its revenue guidance for the full year of $10.88 billion at the midpoint
Management raised its full-year Adjusted EPS guidance to $8.65 at the midpoint, a 1.2% increase
Operating Margin: 18.2%, up from 16.5% in the same quarter last year
Free Cash Flow Margin: 5.6%, down from 12.1% in the same quarter last year
Backlog: $22.3 billion at quarter end
Organic Revenue rose 5.3% year on year (11.9% in the same quarter last year)
Market Capitalization: $31.14 billion

StockStory’s Take

Westinghouse Air Brake Technologies’ first quarter results reflected growth in international sales, higher-margin service activity, and proactive expense management in response to a volatile economic environment. Management also took defensive steps to optimize operational spending, reallocating production capacity between services and new equipment to adapt to market demand.

Looking ahead, guidance is being influenced by both persistent uncertainties and areas of opportunity. Santana emphasized caution due to ongoing tariff volatility, particularly in North America, and highlighted the company’s ability to take pricing and sourcing actions to mitigate these impacts. The leadership team expects continued strength from its international installed base and ongoing integration and portfolio optimization efforts to underpin earnings growth, while remaining focused on driving profitable growth into 2026 and beyond.

Key Insights from Management’s Remarks

Management’s remarks centered on the impact of international markets, cost initiatives, and segment mix. The quarter’s upside in margins and adjusted EPS was largely credited to operational adjustments and external market forces.

International market outperformance: Management noted that international regions, including Africa and Asia-Pacific, contributed higher growth and delivered better profitability than North America. This was attributed to expanding installed base, infrastructure investment, and favorable market dynamics.
Service-driven sales mix: A significant portion of first-quarter growth was driven by the services group, benefiting from timing of overhauls and modernizations. This mix shift temporarily boosted margins, though management expects a return to new locomotive production in coming quarters.
Proactive cost controls: The leadership team amplified cost management in light of economic and tariff uncertainty. Initiatives included tightening discretionary spending, holding positions open, and scrutinizing new investments—measures described as incremental to structural integration and portfolio optimization programs.
Portfolio and integration initiatives: The company advanced integration 3.0 and portfolio optimization strategies, aiming to eliminate low-margin revenue and reduce manufacturing complexity. These efforts are expected to yield $100–125 million in cost savings over time.
Tariff and supply chain mitigation: Management discussed ongoing actions to offset tariff-related cost pressures, including USMCA (United States-Mexico-Canada Agreement) exemptions, local sourcing, and price adjustments. While reciprocal tariffs remain a risk, the company believes it can maintain margins through these levers.

Drivers of Future Performance

Management’s outlook for the rest of the year is shaped by tariff-related risk, international strength, and the company’s ability to manage business mix and operational efficiency.

International installed base expansion: Continued growth in international locomotive and transit markets is expected to drive higher-margin sales and increase demand for aftermarket services, supporting both revenue and profitability.
Tariff and economic volatility: Leadership highlighted uncertainty surrounding additional tariffs, especially reciprocal measures, as a potential headwind impacting both costs and customer investment timing, particularly in North America.
Cost discipline and integration savings: The ongoing focus on cost controls and execution of integration and portfolio optimization initiatives is expected to support margin resilience and offset external pressures.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch closely for (1) further evidence that international installed base growth is sustaining higher-margin service revenue, (2) the company’s ability to offset tariff headwinds through pricing and sourcing actions, and (3) execution of integration and portfolio optimization initiatives that deliver targeted cost savings. Progress in these areas will be critical for maintaining profit growth amid persistent economic and policy uncertainties.

Should you jump in or cash out of WAB? See for yourself in our free research report.

Our Favorite Stocks Right Now

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today.

About Us

Laser Focus World Membership

Magazine Subscription

Newsletter Subscription

The Daily Beam

Product Watch

Bio & Life Sciences Product Watch

Laser Processing Product Watch

Get Published!

Photonics Hot List

Following the Photons: A Photonics Podcast

Social Media

Meet the Laser Focus World Team

Editorial

Sales

Editorial Advisory Board