Wabtec's Q2 2026 sales rose 17.5% to $3.18B (8.5% organic) on higher locomotive deliveries and acquisitions, GAAP EPS rose 18.9% to $2.33, and full-year guidance was raised, though the 12-month backlog dipped from March.
Revenue
$3.2B
+17.5% YoY
Net income
$395M
+17.6% YoY
Diluted EPS
$2.33
+18.9% YoY
Operating margin
18.9%
How WAB compares with Industrials peers
Figure
WAB
Peer median
Rank
Revenue growth (YoY)
+17.5%
+8.5%
17th of 79
Operating margin
18.9%
17.9%
31st of 78
EPS growth (YoY)
+18.9%
+13.4%
34th of 77
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Industrials companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Wabtec, which builds freight locomotives, rail parts and signalling, plus braking and coupling systems for passenger trains, grew second-quarter 2026 sales 17.5% to $3.18 billion. Half of that growth was bought: acquisitions (Inspection Technologies, Frauscher Sensor Technologies and Dellner Couplers) added $232 million, or 8.6%, while the existing business grew 8.5% "organically" (excluding acquisitions, divestitures and currency). More locomotive deliveries and wider gross margins lifted GAAP operating income 27% to $600 million, and the company raised its full-year revenue and adjusted EPS guidance.
At a glance
$9.14 billion 12-month backlog, up 11.3% — orders Wabtec expects to turn into sales over the next year, a leading indicator of revenue. It is up $930 million from a year ago but slipped $107 million from March, so Q2 shipments ran slightly ahead of new near-term orders.
36.5% gross margin, up 1.8 points — the company kept more of each sales dollar after production costs, which the 10-Q attributes to productivity, restructuring savings and higher-margin acquisitions, partly offset by tariff-driven inflation.
$441 million operating cash flow, more than double last year's $209 million — Q2 cash finally tracked profits after a weak first quarter; year-to-date conversion is still only 61%.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$3,179M
$2,706M
+17.5%
Organic sales growth
+8.5%
—
—
Gross margin
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Operating margin is the share of sales left after running the business (production, selling, engineering and amortization of acquired intangibles), before interest and tax.
Freight: locomotives up, rebuilds down
Freight sales rose 16.9% to $2,243 million, with segment operating margin up 0.9 points to 22.5% (25.8% adjusted). Inside the segment, the four product lines moved in very different directions:
Freight product line
Q2 2026
Q2 2025
Change
Equipment (mainly new locomotives, mining)
$737M
$546M
+35.0%
Services (incl. locomotive modernizations)
$748M
$781M
-4.2%
Components
$398M
$401M
-0.7%
Digital Intelligence
$360M
$191M
+88.5%
The 10-Q attributes the 8.2% organic Freight growth to "higher North American and international locomotive deliveries and higher mining sales, partially offset by decreased Services sales from lower deliveries of locomotive modernizations." Modernizations — rebuilding a railroad's existing locomotives rather than selling new ones — are the reason the historically steadier Services line shrank; management had flagged the decline as expected. Digital Intelligence nearly doubled almost entirely because of the Inspection Technologies and Frauscher acquisitions (acquisitions added $163 million to Freight), so that growth rate is not a read on underlying demand. Components, the parts business most tied to freight-car building, was flat.
The mix matters for margins: the filing says Freight's gross margin gain came "partially offset by... unfavorable mix," meaning more new-locomotive sales (lower margin) and fewer modernizations.
Transit: the stronger quarter on margins
Transit sales rose 18.9% to $936 million (17.7% at constant currency, i.e. excluding exchange-rate moves). Of the $149 million increase, $71 million (9.0%) was organic, $69 million came from Dellner Couplers (closed February 10, 2026 for about $1.053 billion) and $10 million from currency. Aftermarket sales — replacement parts and service for trains already running — grew 21.0% to $525 million, faster than new-equipment (OEM) sales, up 16.4% to $411 million.
Transit's GAAP operating margin rose 1.7 points to 15.6% and its adjusted margin 2.5 points to 17.7%, a larger improvement than Freight's. Transit has long been the lower-margin half of Wabtec; this quarter narrowed the gap to Freight's adjusted margin from 9.8 points to 8.1 points.
What the headline numbers hide
Growth is half acquired. Organic sales grew 8.5%; the other 8.6 points came from deals, plus 0.9 points from currency and a 0.4-point drag from exits. Inspection Technologies closed July 1, 2025, so from Q3 it no longer counts as acquired growth — reported growth should slow in the second half even if the underlying business holds up.
GAAP vs adjusted. Adjusted EPS ($2.76) is $0.43 above GAAP ($2.33). Almost all of the gap ($0.41) is non-cash amortization of intangibles bought in acquisitions ($91 million pre-tax, up from $69 million as deals were added), plus a $5 million inventory purchase-accounting charge. Transaction costs, which were $25 million a year ago, fell to $1 million. These are standard adjustments for an acquisitive company, and the amortization is real in the sense that the acquisitions were paid for in cash and debt.
A prior-year gain flatters the comparison the other way. Q2 2025 included a $32 million net gain on derivatives tied to the Dellner and Frauscher purchases; its absence is why "other income" swung from +$24 million to -$2 million. That, plus $34 million more interest expense ($80 million vs $46 million) on acquisition debt, is why GAAP net income grew 17.6% while operating income grew 27.1%.
EPS growth came from operations, not financial engineering. Diluted shares fell only 0.9% (169.6 million vs 171.2 million) despite $457 million of buybacks in the first half, and the effective tax rate eased to 23.4% from 24.8% (the 10-Q cites prior-period audit settlements). Pre-tax income grew 15.1% ($518 million vs $450 million); the lower tax rate, smaller minority interest and share count lift that to 18.9% EPS growth, so about 4 points came from below the operating line. Operating profit, up 27.1%, did the heavy lifting, partly masked by the higher interest bill and the missing derivative gain.
Cash conversion recovered, but only partly. Operating cash flow was 82% of net income plus depreciation and amortization in Q2, up from 46% a year ago; for the half it was 61%. Receivables rose to $2,169 million from $1,897 million at year-end (+14% in six months, partly from Dellner), a drag of $229 million on cash, and lower customer deposits cost another $70 million.
Leverage went up to fund the deals. First-half investing outflow was $1,160 million, including $1,062 million for acquisitions (mostly Dellner), funded by $1,049 million of net new debt. Total debt was $6.57 billion at June 30 against $0.67 billion of cash.
Tariffs are a cost, not yet a hit. The 10-Q says the company "experienced increased tariff costs which unfavorably impacted" results and cash in the first half, but does not expect a material impact on 2026 results after price surcharges and other mitigation.
Takeaway: Wabtec's margin story is ahead of its order story this quarter. Gross margin rose 1.8 points in both segments and adjusted EPS grew 21.6%, but the 12-month backlog dipped $107 million from March, and the record $30.9 billion multi-year backlog barely moved in Q2 (+$130 million) after the large mining and Australian orders booked earlier in the year. The near-term sales pipeline is still 11% larger than a year ago; what to watch is whether new orders resume outpacing shipments.
Capital allocation
Wabtec bought back $215 million of stock in Q2 ($457 million in the first half) and paid $53 million in dividends. In February the board refreshed the buyback authorization to $1.2 billion; about $760 million remained at June 30. Alongside that, it spent over $1 billion on Dellner. Buybacks this size only trim the share count about 1% a year, so they support EPS at the margin rather than drive it.
Outlook
Management raised 2026 guidance:
Revenue: $12.30–12.60 billion, up $110 million at the midpoint; the $12.45 billion midpoint would be 11.5% above 2025's $11.17 billion.
Adjusted EPS: $10.60–10.90, up $0.30 at the midpoint; the $10.75 midpoint would be 19.9% above 2025's $8.97.
With $6.13 billion of sales and $5.46 of adjusted EPS already booked in the first half, the range implies second-half sales of $6.17–6.47 billion (versus $5.85 billion in H2 2025) and adjusted EPS of $5.14–5.44 (versus $4.42). That is 5–11% sales growth and 16–23% EPS growth, slower on the top line than the first half's 15.3% because Inspection Technologies laps its acquisition date.
Our read: the guidance looks reachable. The $9.14 billion 12-month backlog, against $6.17–6.47 billion of required second-half sales, gives good visibility (though not all of it ships by December), and the first-half margin gains came from productivity and restructuring rather than one-offs. The risks are the ones the filing names — a weaker mix as locomotive deliveries rise and modernizations fall, tariff costs, and interest on the higher debt load. The data points to watch in the Q3 report are organic growth once Inspection Technologies is in the base, whether Services sales stabilise as the EVO modernization program ramps, and whether the 12-month backlog grows again from $9.14 billion.