Westinghouse Air Brake Technologies WAB · USD

SEGMENT INFORMATIONThe Company has two reportable segments—the Freight Segment and the Transit Segment. The key factors used to identify these reportable segments are the organization and alignment of the Company’s internal operations, the nature of the products and services and customer type.The Freight Segment builds, rebuilds, upgrades, and overhauls locomotives, services locomotives and freight cars, and provides a range of component and digital solutions for customers in the freight and transit rail, mining, and marine industries. It also manufactures and services components for new and existing freight cars and locomotives, supplies railway electronics, positive train control equipment, signal design and engineering services, maintenance of way, and provides heat exchange and cooling systems for locomotives and power generation equipment. Customers include large, publicly traded railroads, leasing companies, manufacturers of original equipment such as locomotives and freight cars, and utilities, and also serves companies in the mining, marine, and industrial markets and applications. We refer to sales of both goods, such as spare parts and equipment upgrades, and related services, such as monitoring, maintenance and repairs, as sales in our Services product line.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. It also refurbishes subway cars and provides heating, ventilation, and air conditioning equipment and doors for buses and subway cars. 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.Wabtec’s chief operating decision maker ("CODM") is the Company’s Chief Executive Officer, Rafael Santana. Mr. Santana utilizes Income (loss) from operations as the primary reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources. For both of the Company’s segments, the CODM uses segment Income (loss) from operations to make operational and personnel related decisions across the business.

COMMITMENTS AND CONTINGENCIESThe Company is subject to a variety of environmental laws and regulations governing discharges to air and water, the handling, storage and disposal of hazardous or solid waste materials and the remediation of contamination associated with releases of hazardous substances. The Company believes its operations currently comply in all material respects with all of the various environmental laws and regulations applicable to our business; however, there can be no assurance that environmental requirements will not change in the future or that we will not incur significant costs to comply with such requirements.Claims have been filed against the Company and certain of its affiliates in various jurisdictions across the United States by persons alleging bodily injury as a result of exposure to asbestos-containing products. The vast majority of the claims are submitted to insurance carriers for defense and indemnity, or to non-affiliated companies that retain the liabilities for the asbestos-containing products at issue. We cannot, however, assure that all of these claims will be fully covered by insurance, or that the indemnitors or insurers will remain financially viable. Our ultimate legal and financial liability with respect to these claims, as is the case with other pending litigation, cannot be estimated. A limited number of claims are not covered by insurance, nor are they subject to indemnity from non-affiliated parties. Management believes that the costs of the Company’s asbestos-related cases will not be material to the Company’s overall financial position, results of operations and cash flows. During the third quarter of 2023, a competitor of the Company, Progress Rail (“Progress”), which is a Caterpillar Inc. company, sued the Company in the U.S. District Court for the District of Delaware asserting antitrust, breach of contract, unfair competition law, defamation and false advertising claims. The complaint challenges the Wabtec-GE Transportation merger and contends that since the merger, Wabtec has unlawfully monopolized the markets for long-haul freight locomotives, Tier IV long-haul freight locomotives and energy management systems by, among other things, failing to ensure that Progress’ products are interoperable with Wabtec’s locomotives and cab electronics.

LONG-TERM DEBTLong-term debt consisted of the following: December 31,EffectiveInterestRate20252024In millionsFaceValueBookValueFairValue 1BookValueFairValue 12025 Credit Agreement:Revolving Credit Facility6.0 %N/A$— $— $— $— Term Loan Facility, due 20305.6 %$725 721 725 — — 2025 Term Credit Agreement:Term Loan, due 20264.9 %$500 500 500 — — 2024 Credit Agreement:Term Loan— %$— — — 224 225 2022 Credit Agreement:Delayed Draw Term Loan— %$— — — 250 250 Senior Notes:3.20% Senior Notes, due 2025— %$— — — 500 496 3.45% Senior Notes, due 20263.5 %$750 750 746 750 732 1.25% Senior Notes (EUR), due 20271.5 %€500 583 575 514 495 4.70% Senior Notes, due 20284.8 %$1,250 1,247 1,266 1,246 1,239 4.90% Senior Notes, due 20305.1 %$500 496 512 — — 5.611% Senior Notes, due 20345.7 %$500 496 526 496 507 5.50% Senior Notes, due 20355.6 %$750 743 783 — — Other Borrowings5 5 — — Total5,541 5,638 3,980 3,944 Less: current portion(1,250)(1,246)(500)(496)Long-term portion$4,291 $4,392 $3,480 $3,448 1. See Note 17 for information on the fair value measurement of the Company's long-term debt.Variances between Face Value and Book Value are the result of unamortized discounts and debt issuance costs as well as foreign exchange on the Euro Notes. Amortization of discounts and debt issuance fees are included in the calculation of Effective Interest Rate.The Company borrows and repays against the Revolving Credit Facility and an uncommitted money market line for added flexibility in liquidity to manage cash during the operating cycle. The proceeds from borrowing and the repayments are included within the Financing Activities section of the Consolidated Statements of Cash Flows. As of December 31, 2025, the annual repayment requirements for debt obligations are as follows:In millions2026$1,250 2027589 20281,251 20291 20301,226 Thereafter1,250 Total$5,567 The Company has debt issuance costs related to certain financing transactions which are amortized through interest expense. As of December 31, 2025 and 2024, the Company had total unamortized debt issuance costs and discounts of $26 million and $15 million, respectively. Credit AgreementsOn November 28, 2025, the Company entered into a new stand-alone credit agreement (the "2025 Term Credit Agreement") for a term loan of $500 million. Borrowings under the 2025 Term Credit Agreement bear interest at a base rate plus an interest rate spread up to 1.

INCOME TAXESThe Company is responsible for filing consolidated U.S. federal, foreign and combined, unitary or separate state income tax returns. The Company is responsible for paying the taxes relating to such returns, including any subsequent adjustments resulting from the redetermination of such tax liabilities by the applicable taxing authorities.In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update required prospective changes to certain annual income tax disclosures and are effective for Wabtec's annual reporting periods beginning January 1, 2025. As such, the impacted disclosures for 2025 are reflected below in accordance with the updated requirements. These updates include specific categories and presentation within the income tax rate reconciliation and enhanced disaggregation of disclosures about income taxes paid and income tax expense, among other changes. As allowed under the ASU, Wabtec has not applied these changes retroactively. The amendments in this update did not affect the recognition, measurement, or financial statement presentation of income taxes.The components of the income before income taxes for the Company’s domestic and foreign operations for the years ended December 31 are provided below:For the year endedDecember 31,In millions202520242023Domestic$938 $782 $506 Foreign654 628 586 Income before income taxes$1,592 $1,410 $1,092 The consolidated provision for income taxes included in the Consolidated Statements of Income consisted of the following:For the year endedDecember 31,In millions202520242023Current tax expense Federal$146 $106 $148 State36 26 29 Foreign216 160 148 398 292 325 Deferred tax expense (benefit) Federal28 26 (50)State(8)9 1 Foreign(9)16 (9) 11 51 (58)Total provision$409 $343 $267 A reconciliation of the United States federal statutory income tax rate to the effective income tax rate on operations for the years ended December 31 is provided below:For the year endedDecember 31,$ in millions2025U.S. federal statutory rate$334 21.0 %State and local income tax, net of federal income tax effect24 1.5 Foreign tax effects64 4.0 Effect of cross-border tax laws:Foreign branch income19 1.2 Other17 1.1 Tax credits:Foreign tax credits(48)(3.0)Other(10)(0.6)Nontaxable or nondeductible items4 0.3 Changes in unrecognized tax benefits17 1.0 Other adjustments(12)(0.8)Effective rate$409 25.

STOCK-BASED COMPENSATION PLANSAs of December 31, 2025, the Company maintains employee stock-based compensation plans for stock options, restricted stock, and incentive stock units as governed by the 2011 Stock Incentive Compensation Plan, as amended and restated (the “2011 Plan”) and the 2000 Stock Incentive Plan, as amended (the “2000 Plan”). The 2011 Plan has a term through May 15, 2030, and as of December 31, 2025, the number of shares available for future grants under the 2011 Plan was approximately 3.9 million shares. The Company also maintains a 1995 Non-Employee Directors’ Fee and Stock Option Plan as amended and restated (“the Directors Plan”). The Directors Plan, as amended, authorizes a total of 1.1 million shares of Common Stock to be issued. Under the Directors Plan, options issued become exercisable over a three-year vesting period and expire ten years from the date of grant, and restricted stock issued under the plan vests one year from the date of grant. The amount of restricted stock issued to non-employee directors as compensation for directors’ fees was as follows: 7,861 shares for 2025; 9,320 shares for 2024; and 14,856 shares for 2023. The total number of shares issued under the Directors Plan as of December 31, 2025 was approximately 1.0 million shares. Stock-based compensation expense for all of the plans was $94 million, $85 million and $59 million for the years ended December 31, 2025, 2024 and 2023, respectively. Associated tax benefits related to the stock-based compensation plans were approximately $11 million for the year ended December 31, 2025 and not material for the years ended December 31, 2024 and 2023. Included in the stock-based compensation expense for 2025 above is $46 million of expense related to incentive stock units, $32 million of expense related to non-vested restricted stock, $14 million related to restricted stock units, and $2 million related to units issued for Directors’ fees. At December 31, 2025, unamortized compensation expense related to those non-vested restricted shares and incentive stock units expected to vest totaled $85 million and will be recognized over a weighted period of 1.3 years.Stock Options Stock options are granted to eligible employees and directors at fair market value, which is the average of the high and low Wabtec stock price on the date of grant.

The following table summarizes the restricted stock and incentive stock units activity and related information for the years ended December 31:RestrictedStockand UnitsIncentiveStockAwardsWeightedAverage GrantDate FairValueOutstanding at December 31, 2022689,420 744,844 $84.73 Granted368,209 192,751 $104.70 Vested(262,339)(265,678)$81.00 Adjustment for incentive stock awards expected to vest— 31,011 $88.02 Canceled(34,721)(10,196)$93.44 Outstanding at December 31, 2023760,569 692,732 $93.65 Granted310,461 193,661 $142.55 Vested(296,463)(298,756)$87.23 Adjustment for incentive stock awards expected to vest— 313,519 $118.53 Canceled(46,531)(24,092)$105.98 Outstanding at December 31, 2024728,036 877,064 $115.71 Granted290,724 163,207 $187.97 Vested(394,667)(298,747)$100.41 Adjustment for incentive stock awards expected to vest— 138,432 $147.20 Canceled(31,517)(7,903)$146.57 Outstanding at December 31, 2025592,576 872,053 $147.

LEASESThe Company leases certain property, buildings and equipment. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments. Many of the Company's leases include rental escalation clauses, renewal options, and/or termination options that are factored into our determination of lease payments when appropriate. The Company does not separate lease and non-lease components. Operating lease expense for the years ended December 31, 2025, 2024, and 2023 was $72 million, $71 million, and $64 million, respectively. During 2025 and 2024, new operating leases of $149 million and $76 million, respectively, were added during the year. As most of the Company's leases do not provide a readily stated discount rate, the Company must estimate the rate to discount lease payments using its incremental borrowing rate. Wabtec does not have material financing leases, short-term or variable leases or sublease income. Scheduled payments of operating lease liabilities are as follows:In millionsOperating Leases2026$77 202766 202857 202950 203043 Thereafter156 Total lease payments449 Less: Present value discount(57)Present value lease liabilities$392 The following table summarizes the remaining lease term and discount rate assumptions used to develop the present value of operating lease liabilities:December 31, 2025December 31, 2024Weighted-average remaining lease term (years)7.97.9Weighted-average discount rate3.6 %2.

ACQUISITIONS2025On December 1, 2025, Wabtec acquired Frauscher Sensor Technology Group GmbH ("Frauscher"), a global market leader in train detection, wayside object control solutions and axle counting systems for approximately $792 million. The acquisition positions Wabtec for accelerated, profitable growth, and further strengthens the Company’s product portfolio by adding highly attractive and complementary railway signaling technologies. Frauscher reports within the Digital Intelligence product line of the Freight Segment. The acquisition was funded with a combination of cash on hand, proceeds from the 2025 Term Credit Agreement and borrowings under other sources of available liquidity.The following table summarizes the preliminary fair value of the Frauscher assets acquired and liabilities assumed: In millionsAssets acquiredCash and cash equivalents $27 Accounts receivable 48 Inventory 48 Other current assets 5 Property, plant and equipment 14 Goodwill 368 Other intangible assets393 Other noncurrent assets 24 Total assets acquired 927 Liabilities assumedCurrent liabilities 34 Noncurrent liabilities 101 Total liabilities assumed 135 Net assets acquired $792 As of December 31, 2025, the measurement period remains open, and the Company has not finalized the purchase accounting for the acquisition. Certain information necessary to complete the purchase price allocation is not yet available, including, but not limited to, valuations of assets acquired and liabilities assumed and final income tax computations. The amounts recognized for the assets acquired and liabilities assumed are provisional and may be adjusted as the Company continues to obtain and evaluate information about facts and circumstances that existed as of the acquisition date and complete the valuations of assets acquired and liabilities assumed, consistent with the measurement‑period guidance in ASC 805. Any necessary adjustments will be finalized within one year from the date of acquisition, once the Company has received the necessary information. Intangible assets acquired include customer relationships and acquired technology that are subject to amortization, and trade names that were assigned an indefinite life and are not subject to amortization. The fair value of these intangibles are preliminary in nature and subject to adjustments, which could be material as the Company has not completed its valuation of acquired assets and liabilities.