Westinghouse Air Brake Technologies : CORRECTED TRANSCRIPT_ Westinghouse Air Brake Technologies Corp., Q1 2024 Earnings Call, 24-April-2024 8_30 AM ET

Corrected Transcript

24-Apr-2024

Westinghouse Air Brake Technologies Corp. (W AB)

Q1 2024 Earnings Call

	Total Pages: 17
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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

CORPORATE PARTICIPANTS

Kyra Yates	John A. Olin
Vice President-Investor Relations, Westinghouse Air Brake	Chief Financial Officer & Executive Vice President, Westinghouse Air
Technologies Corp.	Brake Technologies Corp.
Rafael O. Santana
President, Chief Executive Officer & Director, Westinghouse Air Brake
Technologies Corp.

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OTHER PARTICIPANTS

Justin Long	Matthew Elkott
Analyst, Stephens, Inc.	Analyst, TD Cowen
Bascome Majors	Adam Roszkowski
Analyst, Susquehanna Financial Group LLLP	Analyst, BofA Securities, Inc.
Angel O. Castillo	Steve Barger
Analyst, Morgan Stanley & Co. LLC	Analyst, KeyBanc Capital Markets, Inc.

Ivan Yi

Analyst, Wolfe Research LLC

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MANAGEMENT DISCUSSION SECTION

Operator: Good morning, and welcome to the Wabtec First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kyra Yates, Vice President of Investor Relations. Please go ahead.

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Kyra Yates

Vice President-Investor Relations, Westinghouse Air Brake Technologies Corp.

Thank you, operator. Good morning, everyone, and welcome to Wabtec's first quarter 2024 earnings call. With us today are President and CEO, Rafael Santana; CFO, John Olin; and Senior Vice President of Finance, John Mastalerz.

Today's slide presentation along with our earnings release and financial disclosures were posted to our website earlier today and can be accessed on the Investor Relations tab on wabteccorp.com. Some statements we're making are forward-looking and based on our best view of the world and our business today. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics.

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

I will now turn the call over to Rafael.

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Rafael O. Santana

President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

Thanks, Kyra, and good morning, everyone. Let's move to slide 4. I'll start with an update on our business my perspectives on the quarter and progress against our long-term value creation framework. And then John will cover the financials.

Last quarter when we met, we talked about the strong momentum that we had when we exit 2023. Well, that momentum continues. Sales were $2.5 billion, which was up 13.8% versus prior year. Revenue growth was driven by strong performance largely from the Freight segment. And adjusted EPS was up 47.7% from the year ago quarter driven by increased sales and margin expansion.

Total cash flow from operations for the quarter was $334 million. The 12-month backlog was $7.7 billion, up 11% signifying continued momentum and visibility across the business and total multi-year backlog was $22 billion. Overall, we had a strong start to the year. The underlying strength and momentum across the business is evident. We remain confident in our ability to execute, to deliver for our customers and to continue to make progress against our long-term growth strategies.

Shifting our focus to slide 5. Let's talk about 2024 and market expectations in more details. While key metrics across our Freight business remain mixed, we are encouraged by the strength of our business, the strength of our international markets and our robust pipeline of opportunities across geographies.

North America carloads were up 1.8% in the quarter, despite this carload growth, the industry's active locomotive fleet was down when compared to last year's first quarter, while Wabtec's active fleet was higher. As we look forward, we continue to see significant opportunities across the globe in demand for new locomotives, modernizations and digital technologies as our customers invest in solutions that continue to drive reliability, productivity, safety and fuel efficiency.

Looking at the North American railcar build, last quarter we discussed the industry outlook for 2024 to be about 38,000 cars to be delivered, which has now been lowered by the industry sources to reflect an expected 36,000 cars.

Internationally, activity is strong across most of our core markets, significant investments to expand and upgrade infrastructure are supporting a robust international orders pipeline. In mining, commodity prices and an aging fleet are supporting activity to refresh and upgrade the truck fleet. Finally moving to the Transit sector, the mega trends of urbanization and decarbonization remain in place, driving the need for clean, safe and efficient transportation solutions around the globe.

Next, let's turn to slide 6 to discuss a few business highlights. Late in Q1, we signed a $270 million strategic order for new locomotives with a large mining customer in Africa. This coupled with a recent service order in the region for $64 million highlights the significant opportunity that we believe exists in Africa.

Within mining, we're seeing continued strength in the business, in particular aftermarket and the team has signed orders totaling over $250 million in the quarter. In Indonesia, we won a long-term parts agreement with PT KAI. And finally, our Maintenance of Way team launched its Shuttlewagon Commander NXT, the next generation of railcar movers. The new model was specifically designed for the needs of the customers to optimize tractive effort, reduce wheel slipping and extend tire life.

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

All of this demonstrates the continued momentum across the business, the team's relentless focus on execution, the strong pipeline of opportunities we continue to deliver on. Wabtec is well-positioned to capture profitable growth with innovative and scalable technologies that address our customers' most pressing needs.

Moving to slide 7, before turning it over to John, I want to briefly discuss our progress that we're making against one of our company's key strategies, which is to lead the decarbonization of rail. Our highly capable team, our installed base of locomotives and our advanced look more technologies puts Wabtec in a unique position to lead the industry on fuel efficiency and to reduce carbon emissions. With this in mind, we're driving progress on two fronts.

First, to enable our customers to transition to a near zero emissions using their current installed base of locomotives. Our focus here leverages our customers' existing fleets, and [indiscernible] (07:19) infrastructure. Our customers can improve fuel efficiency and carbon emission by up to 18% through replacing the older fleets with our Tier 4 and modernized locomotives, along with realizing improved durability, haulage ability, reliability and fuel efficiency.

We're also enabling our existing locomotive portfolio to be capable of reductions of up to 60% in carbon through the use of bio and renewable fuels. And when further mixed with hydrogen in the locomotives internal combustion engine, up to 80% total carbon reduction. In addition, we believe we have a competitive advantage given the fact that our locomotives are more fuel efficient and our four-stroke engine architecture facilitates the use of hydrogen in our internal combustion engines. And the best part of this approach is that it provides significant optionality for our customers. And this approach is completely reversible back to diesel if supplies of alternative fuels are not available or not economical.

On our second path to decarbonization, we're developing zero emissions technology and equipment. As you're aware, we recently introduced the world's first heavy haul battery electric locomotive to a mining customer in Australia. Given the customer's application they plan to operate this locomotive relying on regenerative braking to charge the batteries. And later this month, we will ship our first battery hybrid locomotive. Finally, we are investing and partnering with government agencies to develop heavy haul locomotives, powered by hydrogen fuel cells. We believe that the commercialization of hydrogen fuel cells for heavy haul locomotives is further down the road. Consequently, we are pacing our investments with our customers' readiness to adopt the technology.

With that, I'll turn the call over to John to review the quarter, segment results and our overall financial performance. John?

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John A. Olin

Chief Financial Officer & Executive Vice President, Westinghouse Air Brake Technologies Corp.

Thanks, Rafael, and hello, everyone. Turning to slide 8, I will review our first quarter results in more detail. In the first quarter, we continue to see the underlying momentum that we experienced as we exited last year. As expected, both revenue growth and operating margin growth were over shared in Q1 versus our expectations for full year growth. As we discussed in the last quarter call, we expected both revenue and margin growth to be higher in the first half versus the second half. While we continue to expect growth in the second half, we expect it to be at a much more tempered pace than the first half.

Sales for the first quarter were $2.5 billion, which reflects a 13.8% increase versus the prior year. Sales growth in the quarter was driven by the Freight segment, especially in our equipment and services groups. For the quarter, GAAP operating income was $412 million driven by higher sales, improved gross margin and focused cost

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

management. Adjusted operating margin in Q1 was 19.8%, up 3.4 percentage points versus the prior year. This increase was driven by improved gross margin of 2.4 percentage points and driven by operating expenses, which grew at a slower rate than revenue, increasing our Q1 margin by an additional 1.0 percentage points.

GAAP earnings per diluted share were $1.53 which was up 64.5% versus the first quarter a year ago. During the quarter we had pre-tax charges of $10 million for restructuring, which were primarily related to our Integration 2.0 and our portfolio optimization initiative to further integrate and streamline Wabtec's operations.

As you may recall, Integration 2.0 is expected to drive $75 million to $90 million of run rate savings by 2025. And our portfolio optimization initiative will eliminate roughly $110 million of low margin non-strategic revenue while reducing manufacturing complexity. In the quarter adjusted earnings per diluted share was $1.89, up 47.7% versus prior year. Overall Wabtec delivered another solid quarter demonstrating the underlying strength of the business.

Turning to slide 9, let's review our product lines in more detail. First quarter consolidated sales were up 13.8%. Equipment sales were up 30.2% from last year's first quarter, driven by robust sales of mining equipment and higher deliveries of new locomotives.

Components sales were up 13.6% versus last year driven by increased sales of industrial products, higher international sales and the acquisition of L&M in late Q2 of 2023, partially offset by lower North American railcar build.

Digital intelligence sales were down 5.9% from last year, where we continue to experience lower revenues in our North American market. But we do see growth in our next generation on-board locomotive products and digital mining.

Our services sales grew 17.3%. Services growth was driven by significantly higher year-over-year deliveries of mods, increased overhauls and parts sales. Our customers continue to recognize the superior performance, reliability and availability of our fleet. Across our Transit segment sales increased 5.5%, behind growth in our products and services businesses. The momentum in the Transit segment remains positive as secular drivers such as urbanization and decarbonization accelerate the need for investments in sustainable infrastructure.

Now moving to slide 10. Both GAAP and adjusted gross margin were up 2.4 percentage points during the quarter. In addition to higher sales gross margin benefited from improved pricing and favorable mix between segments. Mix within the Freight segment was also favorable despite significantly higher new loco and mod deliveries in the quarter.

During the quarter, we also benefited from favorable fixed costs absorption and benefits from Integration 2.0 as well as comparing against higher next generation digital development costs in the first quarter of 2023. Our team continues to execute well to mitigate the impact of continued cost pressures by driving operational productivity and lean initiatives.

Turning to slide 11. For the first quarter, GAAP operating margin was 16.5%, which was up 3.9 percentage points versus last year. Adjusted operating margin improved 3.4 percentage points to 19.8%. GAAP and adjusted SG&A expenses were down as a percentage of revenues as we leveraged higher sales with a strong focus on managing costs.

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

Engineering expense was $48 million, modestly lower than Q1 last year. We continue to invest engineering resources in current business opportunities, but more importantly, we are investing in our future as an industry leader in decarbonization and digital technologies that improve our customers' productivity, capacity utilization and safety.

Now let's take a look at the segment results on slide 12, starting with the Freight segment. As I already discussed Freight segment sales were up 17.2% during the quarter. GAAP segment operating income was $368 million for an operating margin of 20.2%, up 5.7 percentage points versus last year. GAAP operating income includes $3 million of restructuring costs, primarily related to Integration 2.0 and portfolio optimization costs.

Adjusted operating income for the Freight segment was $439 million, up 48.3% versus the prior year. Adjusted operating margin in the Freight segment was 24.1%, up 5.1 percentage points from prior year. The increase was driven by improved gross margin behind strong operational execution, favorable mix, improved pricing, Integration

2.0 savings, and as we left last year's investment in our next generation digital development costs. At the same time SG&A and engineering expenses were lower as a percentage of revenue.

Finally, segment 12-month backlog was $5.67 billion, up 14.5% from the same period a year ago. The multi-year backlog was $17.9 billion, down 2.3% from the prior year. Both our 12-month and multi-year backlogs demonstrate good visibility in 2024 and beyond.

Turning to slide 13, Transit segment sales were up 5.5% to $673 million. When adjusting for foreign currency, Transit sales were up 4.9%. GAAP operating income was $74 million, restructuring costs related to Integration 2.0 were $7 million in Q1.

Adjusted segment operating income was $86 million. Adjusted operating margin as a percent of revenue was 12.7%, down 0.2 percentage points from last year driven by unfavorable mix and higher input costs partially offset by Integration 2.0 savings. Finally, Transit segment 12-month backlog for the quarter was $2.04 billion, up 3.3% versus a year ago. The multi-year backlog was also up 4.2% to $4.19 billion.

Now let's turn to our financial position on slide 14. First quarter cash flow was $334 million. During the quarter cash flow benefited from higher earnings, improved working capital and increased securitization funding. We continue to expect greater than 90% cash conversion for the full year.

Our balance sheet and financial position continued to be strong. We ended the quarter with liquidity of $2.13 billion and our net debt leverage ratio was 1.7 times at the end of the first quarter, which was favorable versus the same quarter a year ago at 2.3 times debt leverage.

We continue to allocate capital in a disciplined and balanced way to maximize returns for our shareholders. During the quarter, we repurchased $175 million of our shares and paid $36 million in dividends, which was recently increased by our board of directors up 17.6% per share versus prior year.

With that, I'd like to turn the call back over to Rafael to talk about our 2024 financial guidance.

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Rafael O. Santana

President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

Thanks, John. Now let's turn to slide 15 to discuss our 2024 updated full year guidance. As you've heard today, our team delivered a very strong start to the year. We believe that the underlying customer demand for our products and solutions continues across our business.

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

Our orders pipeline and 12-month backlog continue to be strong, providing visibility for the profitable growth ahead. With these factors in mind, we are increasing our previous guidance. We now expect 2024 for sales of $10.4 billion at the midpoint up 7.5% from last year. And adjusted EPS to be between $7 and $7.40 per share up about 21.5% at the midpoint. Finally, we continue to expect cash flow conversion to be greater than 90%. Looking ahead, I am confident that Wabtec's well-positioned to drive profitable growth in 2024 and beyond.

Now let's wrap up on slide 16. As you've heard today, our team continues to deliver value for our stakeholders. Thanks in large part to our resilient install base, world class team, innovative technologies and our continued focus on our customers. Overall, we believe we have an opportunity to continue building significant long-term momentum with growth in modernizations in the locomotive sales, in digital solutions, and in transit systems. With solid underlying demand across the portfolio, increased visibility through our backlog and intense focus on continuous improvement and cost management Wabtec is well-positioned to drive profitable long-term growth and maximize shareholder returns.

With that, I want to thank you for your time this morning, and I'll turn now the call over to Kyra to begin the Q&A portion of our discussion. Kyra?

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Kyra Yates

Vice President-Investor Relations, Westinghouse Air Brake Technologies Corp.

Thank you, Rafael. We will now move on to questions. But before we do and out of consideration for others on the call, I ask that you limit yourself to one question and one follow-up question. And if you have additional questions, please rejoin the queue. Operator, we're ready for our first question.

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QUESTION AND ANSWER SECTION

Operator: We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Justin Long with Stephens. Please go ahead.

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Justin Long

Analyst, Stephens, Inc.

Thanks, and good morning.

Q

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John A. Olin

Chief Financial Officer & Executive Vice President, Westinghouse Air Brake Technologies Corp.

Good morning, Justin.

A

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Justin Long

Analyst, Stephens, Inc.

Q

So I think the most surprising part of this quarter was the big sequential improvement in Freight margins. And I wanted to ask if there was anything unique to this quarter that drove that improvement? Or does this just speak to the operating leverage in the business as equipment revenue ramps? And John, if there's anything you can share on how Freight margins are expected to progress over the rest of the year, what's baked in the guidance versus what we just saw in the fourth quarter, the 24%?

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024
John A. Olin	A
Chief Financial Officer & Executive Vice President, Westinghouse Air Brake Technologies Corp.

Hey, Justin. When we look at the Freight margins up 5.1 percentage points, we do not expect to end the year up

5.1 percentage points. There are a few things in there that are going to bring it down over the course of the back half. But overall, our margins are building from our guidance - from the last guidance to this guidance, we feel very good about the way the year is going. But specifically, Justin, on Freight margin, let's talk about a couple of those pieces.

One, there was great operational execution that led the increased productivity, that we would expect would continue. When we look at a couple of other things. One, mix was very favorable, and we expect mix to be favorable in the first half, but we do expect mix to turn unfavorable in the back half. So that will on be a drag on Freight margins a bit in the back half of the year. The second piece is that there was a fair amount of absorption in the quarter given the 13.8% - or the 17.2% growth of the Freight segment. We don't expect the back half of the year to have such rich revenue growth, and therefore we would expect that be more neutral in the back half.

And then finally, during the quarter, Justin, we lapped a one-time - an investment that we made in the year ago period, if you remember, for our next-generation digital development of a PDS software. And as lapping that in the first quarter of this year, that's adding about a third of the overall margin benefit to the enterprise overall, so a little bit more in the Freight group. So we don't expect that to repeat. But again, as we look to the back half of the year in Freight, we expect margins to be up, but just not the same extent as you're seeing in the first quarter.

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Justin Long

Analyst, Stephens, Inc.

Q

Okay, got it. Thanks. And I guess, secondly, we have the proposed locomotive regulations from CARB. I know the public comments around that were due to the EPA earlier this week. But do you have any color around the timing of a final decision on that front? And if the current proposal does pass any initial thoughts on how quickly this could impact your business based on some of the recent conversations you've had with customers?

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Rafael O. Santana

President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

A

So Justin, you're right there. I mean, the public comment period was due last Monday. They had a public hearing. I think the outcome here of the rule remains, I'll say quite fluid. What I'll tell you is we're technically very well- positioned here to support customers for all outcomes. We've got the best-in-class products. We've got the lowest emissions, the lowest fuel consumption, best reliability, ultimately best availability and value for customers there.

One thing that I would want to highlight is the EPA also recently finalized the new standards for highway vehicles, which requires manufacturers to reduce greenhouse gas by 25% for the heavy truck fleet. And the EPA also defined through that liquid hydrogen for internal combustion engines would be classified as zero emissions, despite of using some oil. And this is important as it allows, first, for our installed base, the internal combustion engines to use hydrogen which can be a transition to fuel cells ultimately. But I call this out because this definition of zero emissions, I think, plays well into our [ph] plans (25:55) to help railroads transition to near zero emissions with really a reversible solution here through that period.

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Justin Long

Analyst, Stephens, Inc.

Okay. Thanks for the time and congrats on the quarter.

Q

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024
Rafael O. Santana	A
President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

Thank you.

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Operator: Okay. The next question comes from Bascome Majors with Susquehanna. Please go ahead.

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Bascome Majors

Analyst, Susquehanna Financial Group LLLP

Q

Thanks for taking my questions. Just to follow up on that, John or Rafael, less about this year but more long-term, can you go a little bit deeper into the favorability of mix given the growth in some of the subsegments, be it equipment or the modification side of services that you've typically talked about as being a little bit lower mix than some of your businesses and how that was able to drive such meaningful gross profit expansion, not just the fixed cost absorption and just - how you view that in a longer term context relative to your long-term incremental margin guidance of the 25% to 30%? Thank you.

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Rafael O. Santana

President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

A

Bascome, let me start here, number one, we're confident on the fundamentals of the business. I mean we've had a strong performance and over the last years and now in this quarter, and hopefully comes through here, the team's commitment and the robustness of the strategy. I think we're continuously innovating. I think that's been a key piece, even if you think about mods or new locos. We're continuously adapting to some of these market changes to ensure we remain in a growth trajectory.

We've been actively managing our pipeline to really convert some of these opportunities into tangible results. I think we've also continued to take proactive steps when challenges arise in this process. I think it's important to highlight that you're going to continue to see variation on quarters' yearly results, but we're confident here in our ability to continue to drive profitable growth over time in the business. I'll let John comment on the specifics of the quarter and the half.

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John A. Olin

Chief Financial Officer & Executive Vice President, Westinghouse Air Brake Technologies Corp.

A

Yeah. Bascome, when we look at locos and mods over the long-term, we would expect it to provide a headwind on overall mix. And again, we talked about this, there's a good mix and bad mix, and this is a really good mix because it puts an asset out there that we're going to make money off of for decades to come. But if we look more nearer in, when we look at the - in the first quarter as well as the first half, we are actually getting some mix favorability from locos and mods, because of what we're comparing to in the year ago period.

If you remember in the year ago period, we had talked about an international order that was - that we delivered over four quarters, the back half of 2022 and the front half of 2023 and that was very low margin as we moved into a market. So that's providing some of the mix that you're seeing and that will - just be in the first half. And again, as I mentioned to Justin, we'll start to reverse in the back half.

I think, Bascome, the other thing I'd like to point out, as we look at the overall cadence of the year, we talked about this last quarter, but we do expect the significant majority of our revenue growth and our profit growth to be in the first half of the year. And this is really due to the production of those locos and mods.

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Westinghouse Air Brake Technologies Corp. (WAB)	Corrected Transcript
Q1 2024 Earnings Call	24-Apr-2024

As we came out of last year in the strike, we had the production or deliveries of our locos and mods being significantly lower in the first half of the year versus the back half of the year. And our aim this year is to more level load our quarters in that production. So with that, we expect locos and mods to be up about 30% in terms of deliveries in the first half of the year and down slightly in the back half. And what that's going to do is shift a fair amount of revenue into the first half and with that, will come that bad absorption that we talked about. And again, the mix is favorable in the first half and a little bit unfavorable in the back half.

When we look at the back half, we expect it to be favorable on a year-over-year basis, both for revenue growth and for margin growth, but at a much more tempered level than we see in the first half. Overall, leading to the guidance that we delivered, which is an improvement in revenue growth as well as more profit margin growth.

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Bascome Majors

Analyst, Susquehanna Financial Group LLLP

Thank you.

Q

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John A. Olin

Chief Financial Officer & Executive Vice President, Westinghouse Air Brake Technologies Corp.

Thanks.

A

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Operator: The next question comes from Angel Castillo with Morgan Stanley. Please go ahead.

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Angel O. Castillo

Analyst, Morgan Stanley & Co. LLC

Q

Hi. Thanks for taking the question and congrats on a solid quarter. Just wanted to talk about your decarbonization slide, very strong performance there and just the second half deliveries in terms of your targets for some of the alternative fuels is very impressive. So just curious, as you think about - or you have conversations with customers, what are you hearing in terms of the benefits of some of these improvements that you're making in enabling your engines to deliver some of these savings? How is that impacting overall kind of discussions, order patterns and kind of expectations as we think about the second half and then flowing into 2025?

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Rafael O. Santana

President, Chief Executive Officer & Director, Westinghouse Air Brake Technologies Corp.

A

Yeah. So, a couple of comments there. Number one, this has been really part of a long-term strategy on making sure that we have the most really fuel efficient and fuel is a significant part of the expenses for our customers. So we continue those investments there. I think there is [indiscernible] (31:25) continued opportunity to take advantage of both the Tier 4s and the mods and I do believe we have some of the best products there in the market. We see that playing not just in North America, we see that playing internationally as well.

We really like the opportunity here. And I think customers welcome the ability to transition from known core products and be able to really take advantage of that to significantly reduce carbon emissions. And our engines, say, are well prepared to take on both renewable and biofuels, and we're progressing here on really making sure hydrogen is also a part of that solution. So with that, I think we're very well-positioned to support customers through that transition.

But we're also working on, what I'll call, zero emissions technologies, which start with some of the elements of the hybrid units that we're delivering this quarter to New York and we're also delivering later this year, the first really heavy haul battery electric locomotive that's going to Australia, which we unveiled last year. So I think we're - with

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