Wabtec (WAB): Q3 adjusted profit per share rises 22% and backlog climbs to $31.4bn, so it raises its 2026 profit forecast
Wabtec, the US maker of locomotives, braking systems and rail signalling, reported third-quarter sales of $3.12bn, up 8.1%, and adjusted profit per share of $2.83, up 22.0%. Its order backlog reached $31.4bn, and it lifted its 2026 adjusted profit forecast to $10.85 to $11.05 a share while leaving its sales forecast unchanged.
What happened
On 21 October 2026, Westinghouse Air Brake Technologies, known as Wabtec, published results for the three months to 30 September 2026 and filed them with the US Securities and Exchange Commission (SEC) on Form 8-K, the form used to report major events. Unless we say otherwise, figures are in US dollars. Sales were $3,120m. Profit per share under US accounting rules (GAAP) was $2.42, and adjusted profit per share, which leaves out items the company chooses to list such as restructuring and acquisition costs, was $2.83. The adjusted figure is the company's own measure, not a GAAP number. Chief executive Rafael Santana called it "another strong quarter".
The company also changed its outlook. It now expects adjusted profit per share of $10.85 to $11.05 for 2026, up from $10.60 to $10.90 given in July, and still expects sales of $12.30bn to $12.60bn. On the earnings call, as summarised by Yahoo Finance, management reported about $1bn of international locomotive and service orders and more than $600m of North American locomotive and modernization orders. It also said some locomotive deliveries slipped from the third quarter into the fourth for timing and customer acceptance reasons, and that this does not change its full-year sales forecast.
The numbers, explained
Start with sales: $3,120m against $2,886m a year earlier is a rise of $234m, or 8.1% (234 / 2,886). Acquisitions of Frauscher, which makes rail sensors, and Dellner, which makes train couplers, added $114m ($49m in Freight and $65m in Transit). Taking that out leaves about $120m of growth, roughly 4.2% (120 / 2,886), before any currency effects. That is our working, not a company figure. Freight sales rose 6.9% to $2,237m, and Transit, which serves passenger trains and metros, rose 11.3% to $883m; together they sum to the $3,120m total. Digital Intelligence, the software and sensor business, rose 24.2% to $369m from $297m.
Now profit. Adjusted operating income, profit from running the business before interest and tax with the listed items removed, was $715m against $607m, up 17.8% (108 / 607). The adjusted operating margin, the share of each $1 of sales kept as that profit, was 22.9% (715 / 3,120) against 21.0%, an improvement of 1.9 percentage points. GAAP operating income was $625m against $491m, up 27.3% (134 / 491), a 20.0% margin against 17.0%. Adjusted profit per share rose from $2.32 to $2.83 (22.0%), and GAAP from $1.81 to $2.42 (33.7%). Gross margin, the share of sales left after direct production costs, was 37.3% against 34.7% on a GAAP basis. The company says higher net tariffs and raw material costs weighed on gross profit in the quarter, partly offset by pricing and mix.
The backlog is orders signed but not yet delivered. Total backlog at 30 September was $31,435m against $25,577m a year earlier, up $5,858m or 22.9% (5,858 / 25,577). Of that, Freight was $25,765m and Transit $5,670m, which sum to the total. The part due within 12 months was $8,992m against $8,267m, up 8.8%, which is about 29% of the total (8,992 / 31,435). Cash from operations was $455m against $367m, up $88m or 24%. The company's own cash conversion measure was 82% against 83%. Year to date it has spent $762m on share buybacks and $158m on dividends, $920m in all.
Why it matters
Wabtec earns money in three ways: it sells new locomotives and transit equipment, it supplies parts and components, and it earns recurring revenue from servicing the trains it has already sold, which is its largest Freight line at $794m this quarter. Long-lived locomotives mean service and upgrade work can continue for decades, which is why a growing backlog matters. Backlog is not guaranteed future profit, and the company says about 30% of its revenue, including railcar-related business and some parts sales, is not captured in it.
For customers such as freight railroads and transit agencies, the picture is of a supplier with a large order book and rising prices partly passing on tariff costs. For the wider rail sector, industry sources cited on the call now expect about 23,000 North American railcar deliveries in 2026, down from about 25,000 expected a quarter ago, so demand is uneven across the chain. The 12-month backlog also grew far more slowly (8.8%) than the multi-year backlog (22.9%), meaning much of the order growth is for work further out.
What to watch next
The company's forecast assumes tariffs in force as of 21 October 2026 and excludes any refunds of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in the fourth quarter. Combining the nine-month adjusted profit per share of $8.29 with the new range implies a fourth quarter of $2.56 to $2.76 (10.85 - 8.29 and 11.05 - 8.29), and nine-month sales of $9,249m imply $3,051m to $3,351m (12,300 - 9,249 and 12,600 - 9,249). These are our arithmetic from the company's forecast, not company guidance for the quarter, and they depend on the delivery timing noted above. We have not seen a confirmed date for fourth-quarter results, so we do not state one.
- Backlog: orders signed but not yet delivered
- Adjusted profit: profit excluding one-off items the company chooses to list
- Operating margin: the share of sales kept as profit from running the business
- Digital Intelligence: Wabtec's software and sensor business for rail
Sources
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