WABWabtec

Total operating Operating expenses increased $79 $256 million, or 4.7%, 14.6%, for the year ended December 31, 2024 2025 compared to the same period in 2023, primarily due to the increase in Net sales. Operating expenses as a percentage of Net sales was 16.9% and 17.3% for the years ended December 31, 2024 and 2023, respectively. 2024. Selling, general and administrative expenses ("SG&A") increased $109 $242 million for the year ended December 31, 2024 2025 compared to the same period in 2023. 2024. The increase is primarily from costs incurred to support the higher sales volume, transaction costs associated with completed and announced acquisitions, incremental expense from acquisitions, and higher employee compensation and benefit costs and higher professional fees related to acquisitions, costs, partially offset by the impacts of Integration 2.0. Restructuring restructuring initiatives. Transaction costs associated with completed and announced acquisitions included in SG&A were $18 $49 million for the years year ended December 31, 2025. SG&A for the year ended December 31, 2025 included $60 million of costs related to restructuring initiatives, including a $38 million loss on disposition of a business associated with Portfolio Optimization. SG&A for the year ended December 31, 2024 and 2023, primarily for headcount actions and footprint rationalization programs included $18 million of costs related to Integration 2.0 in both years and Portfolio Optimization in 2024. restructuring initiatives. Engineering expenses decreased $12 increased $17 million primarily due to the timing of incremental expense from acquisitions and increased investments in new technology, and Amortization expense decreased $18 million, primarily related to changes in accelerated amortization for business dispositions associated with Portfolio Optimization and lower amortization for the GE Transportation trade name. technology.

For instance, The security and functionality of our information technology systems, and the process of data by these systems, are critical to our business operations. If these systems are damaged, intruded upon, attacked, shutdown, or cease to function properly, and we suffer any resulting interruption in our ability to manage and operate our business, or if our products are affected, our results of operations and financial condition could be materially adversely affected. We have experienced cyber-security incidents that have impacted the Company's network. We have also been indirectly affected by vulnerabilities in third-party systems used for certain Wabtec products. In each instance, the Company has promptly activated incident response protocols and completed a thorough investigation. Such incidents have not had a material impact on our business, operations or financial results. However, a successful exploitation of our own own, our vendors’ or our vendors’ customers' information technology infrastructure could result in service interruptions, safety hazards, misappropriation of confidential information, process failures, security breaches or other operational difficulties. Such an event could result in decreased revenues and increased capital, insurance or operating costs, including the increased costs of security to protect the Company’s infrastructure, among other results. Insurance maintained by the Company to protect against loss of business and other related consequences resulting from cyber incidents may not be sufficient to cover all damages. A disruption or compromise of the Company’s technology systems, even for short periods of time, could have a material adverse effect.

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 misrepresentation 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. Progress seeks an order requiring Wabtec to divest GE Transportation, unspecified treble damages for its alleged lost profits from reduced sales of locomotive and cab systems, and attorneys’ fees and costs. It also asks the court to enjoin Wabtec from engaging in the conduct and require the Company to comply with its agreements with Progress. Wabtec intends to vigorously defend itself against this lawsuit and believes that it has meritorious defenses to the claims asserted by Progress. The case is still at an early stage; Wabtec filed a motion to dismiss, briefing on this motion was completed in early 2024. The Court has not yet issued a decision on Wabtec’s motion.

Revolving Receivables Program The Company utilizes a revolving facility to sell up to $350 million of certain receivables of the Company and certain of its subsidiaries (the "Originators"). The Originators contribute receivables to our bankruptcy-remote subsidiary, which sells the receivables to a financial institution on a recurring basis in exchange for cash equal to the gross receivables sold. The bankruptcy remote subsidiary is a separate legal entity with its own creditors, and its assets are not available to pay creditors of the Company or any other affiliates of the Company. As customers pay their balances, we transfer additional The receivables into the program, which could result in our gross receivables sold being higher or lower than customer collections remitted transferred to the financial institution for any applicable period. The sold receivables program are fully guaranteed by our bankruptcy-remote subsidiary, which holds additional receivables that are pledged as collateral under this facility. The Company has agreed to guarantee the performance of the Originators Originators' respective obligations under the revolving agreement. Neither the Company (except for the bankruptcy-remote consolidated subsidiary referenced above) nor the Originators guarantees the collectability of the receivables under the revolving agreements.