Westinghouse Air Brake Technologies Corp.

The combined company created one of the world's largest providers of technology-enabled equipment, systems, and services for the locomotive, freight, and passenger rail industries with about $9 billion in revenue on a pro forma basis. In our view, the company's larger equipment-installed base will provide significant opportunities to increase its share in the higher-margin and less volatile aftermarket parts and services business. Longer term, we also think the combination of GET's global digital solutions and Wabtec's broad freight, transit, and electronics solutions positions the company to meet the growing demand from train intelligence and network optimization. Nevertheless, Wabtec's modernization business should help to alleviate some of the pressures from PSR. The combined company has an installed base of approximately 22,000

...The merger with GE Transportation (GET) significantly increases the company's scale and diversifies its business, but has resulted in stretched credit metrics. The merger, which closed in February of 2019, vastly improves Westinghouse Air Brake Technologies Corp.'s (Wabtec) scale, global footprint, and customer base, and provides engineering- and technology-sharing opportunities. The financing for the acquisition caused S&P Global Ratings' adjusted debt to EBITDA to rise above 3.5x at the close of the transaction, but we believe the company is committed to reducing its leverage. We believe adjusted leverage will improve to the mid-2x range in 2020. The combined company created one of the world's largest providers of technology-enabled equipment, systems, and services for the locomotive, freight, and passenger rail industries with about $9 billion in revenue on a pro forma basis. In our view, the company's larger equipment-installed base will provide significant opportunities to increase...

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