AI Takeaway
WAB delivered strong Q2 FY2026 results with net sales up 17.5% YoY to $3.18B, gross margin expanding to 36.5%, and operating income growing 27.1% to $600M, driven by both organic growth (8.5%) and the Dellner Couplers acquisition, though higher debt from the $1.053B Dellner acquisition increased interest expense and leverage.
Revenue
$3.18B
++17.48% YoY
EPS (Basic)
$2.33
++18.88% YoY
Gross Margin
36.5%
++1.86% YoY
Operating Income
$600M
++27.12% YoY
Filed · Source: SEC EDGAR 10-Q filing
WAB reported Q2 FY2026 revenue of $3.18B, up 17.5% year over year. The company posted net income of $395M, up 17.6% from a year earlier, with diluted EPS of $2.33. Gross margin was 36.5%.
Total multi-year backlog increased $3.5 billion during the first six months of 2026 to a record $30.9 billion at June 30, 2026, driven by significant orders including a multi-billion-dollar mining contract, a $1.0 billion Australian order for locomotives and services, a $210 million U.S. locomotive modernization order, and a $184 million Positive Train Control (PTC) order.
Source: 10-Q Item 2 MD&A
Wabtec closed its acquisition of Dellner Couplers on February 10, 2026 for approximately $1.053 billion, which contributed $69 million to Transit Segment net sales in Q2 2026 and was funded partly through $1,049 million of net debt inflows during the six months ended June 30, 2026.
Source: 10-Q Item 2 MD&A
Cost of sales as a percentage of Net sales improved to 63.5% in Q2 2026 from 65.3% in Q2 2025, attributable to productivity and efficiency gains, restructuring savings, and accretion from recent acquisitions, partially offset by tariff-driven inflation and unfavorable mix within the Freight Segment.
Source: 10-Q Item 2 MD&A
Freight Segment income from operations increased 21.4% to $504 million (22.5% margin) while Transit Segment income from operations increased 33.9% to $146 million (15.6% margin) in Q2 2026 versus Q2 2025, with Transit organic sales up 9.0% driven by Aftermarket and OEM demand.
Source: 10-Q Item 2 MD&A
The Company has experienced increased tariff costs which unfavorably impacted operating results and cash from operations for the six months ended June 30, 2026, though management does not expect a material impact to full-year 2026 results due to mitigation efforts such as price escalations and strategic sourcing.
Source: 10-Q Item 2 MD&A
Long-term debt increased 37.4% YoY to $6.57B, and current liabilities rose 49.4% YoY to $5.39B, driven substantially by $1,049 million of net debt inflows used to fund the Dellner Couplers acquisition, pushing Debt-to-Equity to approximately 1.06x.
Source: 10-Q Item 2 MD&A / Balance Sheet (XBRL)
The Company has experienced increased tariff costs that unfavorably impacted operating results and cash from operations in the first six months of 2026, and management states it is unable to reasonably predict future impacts due to the volatility of trade policies despite ongoing mitigation efforts.
Source: 10-Q Item 2 MD&A
Investing activities used $1,160 million in cash for the six months ended June 30, 2026 versus just $98 million in the prior-year period, primarily reflecting $1,062 million spent on acquisitions (mainly Dellner Couplers), concentrating capital deployment risk around integration execution.
Source: 10-Q Liquidity and Capital Resources (MD&A)
Interest expense, net increased $34 million to $80 million in Q2 2026 compared to Q2 2025, due to higher average overall debt balances primarily related to acquisitions, which could continue to pressure net income if rates or debt levels remain elevated.
Source: 10-Q Item 2 MD&A
Higher Receivables decreased cash from operations by $229 million and lower Customer deposits decreased cash from operations by $70 million in the first six months of 2026, reflecting timing-related working capital drag despite overall growth in operating cash flow.
Source: 10-Q Item 2 MD&A
Reported EPS of $2.76 versus the $2.63 analyst consensus — a +4.9% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.18B | $2.71B | +17.48% |
Cost of Revenue | $2.02B | $1.77B | +14.14% |
Gross Profit | $1.16B | $938M | +23.77% |
Operating Income | $600M | $472M | +27.12% |
Net Income | $395M | $336M | +17.56% |
EPS (Basic) | $2.33 | $1.96 | +18.88% |
EPS (Diluted) | $2.33 | $1.96 | +18.88% |
R&D Expense | $70M | $50M | +40.00% |
SG&A Expense | $400M | $347M | +15.27% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $23.13B | $20.39B | +13.42% |
Current Assets | $6.04B | $6.35B | -4.93% |
Total Liabilities | $11.88B | $9.55B | +24.49% |
Current Liabilities | $5.39B | $3.61B | +49.39% |
Stockholders' Equity | $11.21B | $10.8B | +3.82% |
Long-Term Debt | $6.57B | $4.78B | +37.35% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $640M | $400M | +60.00% |
Investing Cash FlowYTD | $-1.16B | $-98M | -1083.67% |
Financing Cash FlowYTD | $408M | $454M | -10.13% |
Share BuybacksYTD | $457M | $148M | +208.78% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 36.5% | 34.7% | +1.86% |
Operating Margin | 18.9% | 17.4% | +1.43% |
Net Margin | 12.4% | — | — |
ROE | 3.5% | — | — |
ROA | 1.7% | — | — |
Current Ratio | $1.121 | — | — |
Debt to Equity | $1.06 | — | — |
Expected release date, analyst estimates & what to watch
Wabtec (WAB) delivered strong Q1 2026 results with revenue up 13.0% YoY to $2.95B and net income rising 12.4% to $362M, though a sharp surge in SG&A expenses (+30.6%) and a significant increase in long-term debt (+63.2%) warrant close monitoring.
WAB delivered strong FY2025 results with revenue growing 7.5% to $11.2B and net income rising 10.8% to $1.17B, driven by margin expansion, though a major acquisition significantly increased debt and investing outflows.
Other companies in Construction Machinery & Heavy Transportation Equipment
WAB's net sales increased 17.5% YoY to $3.18 billion in Q2 FY2026, driven by 8.5% organic growth, an 8.6% contribution from acquisitions (primarily Dellner Couplers), and a 0.9% favorable foreign exchange impact. Both the Freight Segment (+16.9% to $2.24B) and Transit Segment (+18.9% to $936M) contributed to the growth, per the 10-Q Item 2 MD&A.
Key highlights include net income growth of 17.6% YoY to $395M, gross margin expansion to 36.5% from 34.7%, and a record multi-year backlog of $30.9 billion as of June 30, 2026, up $3.5 billion during the first half of the year. The company also closed its $1.053 billion acquisition of Dellner Couplers, which boosted the Transit Segment.
WAB's MD&A notes that increased tariff costs unfavorably impacted operating results and cash from operations in the first six months of 2026, and management states it cannot reasonably predict future trade policy impacts. The company also carries elevated leverage, with long-term debt up 37.4% YoY to $6.57B following the debt-funded Dellner Couplers acquisition.
The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this 10-Q. However, WAB reported diluted EPS of $2.33, up 18.9% YoY, alongside 17.5% revenue growth and 27.1% operating income growth compared to Q2 FY2025.
WAB shows solid profitability with a 36.5% gross margin and 18.9% operating margin, but leverage has increased, with Debt-to-Equity at approximately 1.06x and a current ratio of 1.12 following the debt-funded Dellner Couplers acquisition. Total available liquidity stood at $2.02 billion as of June 30, 2026, down from $3.21 billion at year-end 2025.