GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill is reviewed annually during the fourth quarter for impairment. The Company has identified three reporting units for purposes of testing goodwill for impairment. Two reporting units exist within the Freight segment (the "Freight" and "Components" reporting units) and the Transit segment is also a reporting unit. In 2024, management elected to first assess qualitative factors to determine whether a quantitative goodwill impairment test is necessary for the Components and Freight reporting units. During the assessment, management evaluated all relevant events and facts that may impact the fair value or carrying value of the reporting units' goodwill and concluded that it was not more likely than not that the estimated fair values were less than the carrying values; therefore, no further analysis was required. For the Transit reporting unit, management elected to proceed directly to the quantitative impairment test. The discounted cash flow method and the market approach were used to estimate the fair value of the Transit reporting unit using a weighting of 75% and 25%, respectively. The discounted cash flow model requires several assumptions including future sales growth, EBIT (earnings before interest and taxes) margins, capital expenditures, a discount rate and a terminal revenue growth rate (the revenue growth rate for the period beyond the years forecasted by the reporting units) for the Transit reporting unit. The market approach requires several assumptions including EBITDA (earnings before interest, taxes, depreciation and amortization) multiples for comparable companies that operate in the same markets as the Company’s reporting units. For 2024, the discounted cash flow method was given more weight compared to the market approach due to variables between the operations of the guideline companies used in the analysis and Wabtec's operations, such as different reporting unit sizes, growth and business characteristics. Each valuation resulted in a conclusion that the estimated fair value of the Transit reporting unit was in excess of its carrying value, and no impairment existed.

The change in the carrying amount of goodwill by segment is as follows:


In millions	Freight Segment		Transit Segment		Total
Balance at December 31, 2022	$	7,067	$	1,441	$	8,508
Additions	215		—		215
Disposals	(4)		—		(4)
Foreign currency impact	16		45		61
Balance at December 31, 2023	$	7,294	$	1,486	$	8,780
Additions	31		54		85
Disposals	(5)		(1)		(6)
Foreign currency impact	(72)		(77)		(149)
Balance at December 31, 2024	$	7,248	$	1,462	$	8,710

The Company’s indefinite lived intangible assets are also reviewed annually during the fourth quarter for impairment. During 2024 and 2023, the Company proceeded directly to the quantitative impairment test for certain trade names with indefinite lives. Certain trade names that were associated with the Company’s current restructuring actions were tested and considered impaired. As such, for the years ended December 31, 2024 and 2023, approximately $6 million and $14 million, respectively, of amortization expense was recorded in "Amortization expense" on the Consolidated Statements of Income, primarily related to the Company's Portfolio Optimization. For the remaining trade names subject to the quantitative impairment test, the fair value exceeded each respective carrying value, resulting in a conclusion that no additional impairment existed. For trade names not subject to quantitative testing, the Company elected to perform a qualitative impairment assessment, resulting in a conclusion that it was not more likely than not that the estimated fair values of the trade names were less than their carrying values; therefore, no further analysis was required. The assessment of qualitative factors used in determining whether it is more likely than not that the fair value of a trade name is less than its carrying amount involves significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, Wabtec specific events, share price trends and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

As of December 31, 2024 and 2023, the Company’s trade names had a net carrying amount of $595 million and $612 million, respectively, and the Company believes these intangibles have indefinite lives, with the exception of the right to use the GE Transportation trade name, to which the Company had an original useful life of 5 years and has been fully amortized.

Intangible assets of the Company, other than goodwill and trade names, that are considered definitive lived consist of the following:


	December 31, 2024						December 31, 2023
In millions	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Backlog	$	1,415	$	(629)	$	786	$	1,431	$	(526)	$	905
Customer relationships	1,329		(480)		849		1,333		(431)		902
Acquired technology	1,318		(614)		704		1,283		(497)		786
Total	$	4,062	$	(1,723)	$	2,339	$	4,047	$	(1,454)	$	2,593

The remaining weighted average useful lives of backlog, customer relationships and acquired technology were 7 years, 14 years and 6 years, respectively. The backlog intangible asset primarily consists of in-place long-term service agreements acquired by the Company in conjunction with the acquisition of GE Transportation. Amortization expense for intangible assets was $303 million, $321 million, and $291 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Estimated amortization expense for the five succeeding years is as follows (in millions):


2025	$	277
2026	$	272
2027	$	267
2028	$	267
2029	$	266