Wabtec CEO Says Order Coverage Is 'The Strongest It's Ever Been' Even As Railroads Hold Buying Habits
Rafael Santana said Wabtec has seen no shift in Class 1 buying despite 3.5% carload growth, while the 12-month backlog dipped from the prior quarter.
Wabtec Chairman and CEO Rafael Santana said on the company's third-quarter earnings call that its order coverage "is the strongest it's ever been," and that North American railroads have not changed how they buy even as freight traffic grows. Carload traffic in North America rose 3.5% in the quarter, he said.
What Santana said about coverage and buying
Santana defined coverage as orders in hand that match product lead times. For long-lead products such as new locomotives, that means orders 24 to 36 months out, and he said teams have extended that visibility across the product mix.
Pressed by an analyst on Class 1 railroad ordering, he said Wabtec has not seen "change in buying behavior associated with the recent car load growth." He added that the picture is customer specific.
He called fleet renewal, tied to the age of the fleet, a "tailwind that's not included in our guidance." Later he pointed to fleets over 20 years old facing electronics obsolescence. Parts ordering, he said, is already rising to get parked units moving again.
In the quarter, Santana said, Wabtec converted over $600 million of pipeline into new locomotive and modernization orders from two Class 1 customers.
Backlog and the 30% outside it
Santana said the 12-month backlog was up 8.8% from a year earlier, and the multi-year backlog topped $31 billion, up 22.9%. An analyst noted the 12-month figure slipped from the prior quarter.
CFO John Olin said that was expected, because Wabtec is lapping an acquisition that carried some backlog. He said acquisitions and currency drive most movement between quarters, and that 12-month backlog growth has run in the mid-single digits.
About 30% of revenue sits outside the backlog, Olin said, mainly railcar components and parts not under long-term contracts. That slice is exposed to railcar builds, which industry sources now put at about 23,000 for 2026, down from roughly 25,000 forecast last quarter and a 26% cut from last year. Olin cited a figure of about 27% when describing the decline.
What to watch
Santana said Wabtec expects approval from the Federal Railroad Administration on "zero to zero" and that investors will hear more. He also said the company will report back on Central Asia opportunities, after he visited the region earlier in the week.
The company raised its full-year adjusted earnings-per-share guidance to $10.85 to $11.05 and left revenue guidance unchanged.
Management expects to give its view of next year in February, an analyst noted on the call.
Sources
- Wabtec (NYSE:WAB) Reports Sales Below Analyst Estimates In Q3 2026 Earnings — Yahoo Finance
- Westinghouse Air Brake Technologies (WAB) Tops Q3 Earnings Estimates — Yahoo Finance
- Wabtec: Q3 Earnings Snapshot — Associated Press
- Westinghouse Air Brake Raises FY2026 Adj EPS ... — benzinga.com
- Wabtec raises 2026 EPS guidance to $11.05 at high end after Q3 growth, revenue misses estimates (WAB:NYSE) — seekingalpha.com
