Wabtec Lifts Guidance as Rail Equipment Backlog Hits $6.54 Billion

Wabtec raised its full-year profit guidance on Wednesday after third-quarter operating income climbed 27% to $625 million on revenue of $3.12 billion, up 8% year over year. The railroad equipment maker now expects adjusted EPS of $10.85 to $11.05 for 2025 — growth of 21% to 23.2%, up from its previous forecast of 18.2% to 21.5%.

Earnings per share rose 34% to $2.42 in the quarter. The Pittsburgh-based company (NYSE: WAB) said growth spanned both of its reporting segments, with freight and transit backlogs expanding and acquisitions adding digital and coupler technology revenue.

"The strength of our performance reflects our momentum across the portfolio, disciplined execution by our teams, and the continued success of our strategic actions," Chairman and CEO Rafael Santana said in a release. "These actions enhance our growth profile, expand margins, and increase the earnings power of the company."

Santana added that Wabtec's teams "continue to translate healthy customer demand into profitable growth while investing in technologies that will advance the future of transportation."

Where the growth came from

The Freight segment, the larger of the two, grew revenue 6.9% in the quarter. Digital intelligence revenue surged 24.2%, helped by Wabtec's acquisition of Frauscher Sensor Technologies plus what the company described as strong underlying demand.

The segment's 12-month backlog rose 7.5% from a year earlier to $6.54 billion — roughly six and a half billion dollars of committed work, a figure that now covers more than two full years of the segment's quarterly revenue run rate. Wabtec also booked $633 million in new locomotive and modernization orders from two Class I railroads, which it did not name.

Transit performed even faster on a percentage basis. Segment revenue increased 11.3% to $883 million, driven by the acquisition of Sweden's Dellner Couplers and higher original equipment and aftermarket sales. The Transit backlog grew 12.2% year over year to $2.45 billion.

Parts are moving. New locomotives aren't — yet

Here's the nuance beneath the headline numbers. North American freight traffic has grown this year, and Class I railroads have responded by reactivating stored locomotives rather than buying new ones. That, Santana told investors and analysts on the earnings call, has driven increased parts orders to Wabtec.

But the volume recovery has not yet translated into orders for new locomotives, he said. Railroads are squeezing more work out of existing fleets first — a sensible move when traffic is improving but uncertain, and one that flatters Wabtec's aftermarket and parts business while leaving the new-build order book waiting.

What does this change for shippers and railroads?

For rail shippers, the report is a secondhand read on Class I health: railroads are running more of their stored power, which tracks with the volume gains reported by operators such as Union Pacific and Norfolk Southern this quarter. Equipment suppliers seeing parts demand rise is what a traffic recovery looks like from one step down the chain.

For Wabtec and its competitors, the open question is timing. When reactivated locomotives hit their service limits, replacement demand tends to follow — but Santana offered no sign that inflection has arrived. Until it does, growth rides on modernizations, digital retrofits and transit orders rather than fleet expansion.

The company's own guidance implies management expects the current formula to hold through year-end. Whether 2026 brings the new-locomotive cycle, or just more wrenches and sensors, depends on freight volumes staying strong enough to wear out the fleet railroads just switched back on.