Good day, and welcome to the Wabtec First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kristine Kubacki, Vice President of Investor Relations. Please go ahead. Thank you, operator. Good morning, everyone, and welcome to Wabtec's First Quarter 2022 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 on 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. I will now turn the call over to Rafael. Thanks, Kristine, and good morning, everyone. Let's move to slide four. I'll start with an update on our business, my perspectives on the quarter and progress on our long-term value framework. John will then cover the financials. Overall, we achieved significant progress against our long-term strategies that we detailed at our Investor Day in March. We delivered a strong first quarter, as shown by the 5% sales growth, adjusted operating margin expansion of 1.4 percentage points, and adjusted earnings per share growth of 27%. Total cash flow from operations was $161 million. Finally, we ended the quarter with about $23 billion of multi-year backlog, which was up $1.1 billion from last year. Overall, our team overcame a volatile and disruptive environment and delivered a strong first quarter despite challenges across the supply chain, higher costs, and the impact from the conflict in Ukraine. We are monitoring the devastating situation in Ukraine. Our hearts go out to the people there. Their resilience and courage are truly inspirational. For the year, we expected Russia to account for roughly 5% of our earnings. We do not expect our business in that market to return for the remainder of the year. Given the situation, our first priority is to continue to protect the safety of our employees in the region and abide by all sanctions. On the positive side, we do believe that the rail industry and Wabtec are well-poised to benefit from significantly higher energy prices and from the likelihood of shifting global commodity flows over the medium term. Rail's significant fuel advantage over truck is only widening with rising fuel prices, improving the value proposition for rail. We are enhancing our customers' productivity, capacity utilization, and safety through investments in decarbonization and digital technologies. The breadth of our portfolio, along with our unmatched technologies and deep expertise, means our order pipeline continues to strengthen, and our visibility beyond 2022 continues to increase. Our confidence in our company's future is reflected in our first quarter purchase of $296 million of Wabtec stock and in the increase of our first quarter dividend by 25%. Shifting our focus to slide five, let's talk about end market conditions in more detail. As we look at key metrics across our freight businesses, we are encouraged by the underlying momentum of our industry. Many key metrics are improving with the exception of North American carloads. Despite the slow start, we expect carloads to improve as the year progresses. Locomotive parkings continue to decline despite weaker freight traffic in the quarter. We expect demand for reliability, productivity, and fuel efficiency to continue to increase, placing our services business and modernization portfolio in a position of strength. When it comes to the North American railcar build, demand for railcars is increasing from what we believe are trough levels. Railcars in storage are below pre-COVID levels, with about 18% of the North American railcar fleet in storage. As a result, industry orders for new railcars continue to improve. The industry outlook for 2022 is for over 40,000 cars to be delivered. Internationally, freight activity continued to show growth in the first quarter across many of our major markets, and our order pipeline remains strong. We expect long-term revenue growth in the majority of our end markets. Transitioning to the transit sector, ridership trends continue to be uneven in various markets. However, infrastructure spending for green initiatives continue to be a bright spot, especially as governments globally invest in rail for clean, safe, and efficient transportation. Overall, the long-term market drivers for passenger transportation remain positive. Next, let's turn to slide six. When it comes to the long-term shareholder value, we are continuing to drive progress against our value creation framework, which is anchored around five key growth strategies. This includes accelerating the creation of innovative and scalable technologies and using these technologies to grow and refresh our expansive global install base, leading the decarbonization of rail, expanding high margin recurring revenue streams, which reduces our exposure to economic and industry cycles, and most importantly, driving continuous operational improvement. We are making strong progress against this strategy. In the first quarter, we won several strategic orders, including our largest digital order in India for online monitoring of rolling stock. This new automated system is part of Indian Railways's Smart Yard initiative, and it will improve the availability of the railway's fleet of coaches, wagons, and locomotives. We also won key digital orders with Class Ones for our next generation dispatch offering, as well as a fleet-wide PTC hardware upgrade. We also secured a strategic order for 330 locomotive modernizations with Norfolk Southern, and we've introduced a new locomotive model to Brazil's freight rail market with deliveries to Rumo, MRS, and Suzano. Finally, we launched our Integration 2.0 restructuring program, which as we outlined at our recent Investor Day, will drive continued footprint rationalization as well as manufacturing and engineering efficiencies across our operations. Through these efforts, we expect to deliver between $75 million-$90 million of additional run rate savings by 2025 and position Wabtec for continued growth. With that, I'll turn the call over to John to review the quarter, segment performance, and our overall financial position. John? Thanks, Rafael, and good morning, everyone. Turning to slide seven, I will review our first quarter results in more detail. We had another good quarter of operational and financial performance despite challenges in the supply chain, cost increases, and the impact of Russia. Sales for the first quarter were $1.93 billion, which reflects a 5.3% increase versus the prior year. Sales were positively impacted by the continued broad recovery in our Freight segment, higher pricing, and the acquisition of Nordco, partially offset by lower year-over-year sales in transit, driven by unfavorable foreign currency exchange and supply chain disruptions. We continue to experience adverse impacts to our sales results in both segments due to shortages across many component parts, including computer chips, which cause delays in production and customer delivery. For the quarter, adjusted operating income was $319 million, which was up 15.2% versus the prior year. We delivered strong margin expansion, up 1.4 percentage points on an adjusted basis. Margins were aided by mix favorability, increased pricing, and improved productivity driven by higher absorption of fixed manufacturing costs, partially offset by $45 million-$50 million of higher costs. The team achieved margin expansion even in the face of a highly disrupted supply chain and a challenging inflationary environment. In the first quarter, adjusted earnings per diluted share were $1.13, up 27% versus prior year. GAAP earnings per diluted share were $0.80, which was up 35.6% versus first quarter a year ago. During the quarter, we had charges of $7 million for restructuring and other one-time charges, largely related to our Integration 2.0 initiative to further integrate Wabtec operations and to drive $75 million-$90 million of run rate savings by 2025. As Rafael noted, we are pleased with our Q1 results, in particular our sales growth in the face of supply chain disruptions and unfavorable currency exchange and our margin growth in the face of continued cost increases. We remain diligent and proactive as we work to minimize these challenges. Turning to slide eight, let's review our product lines in more detail. First quarter consolidated sales were up 5.3% versus last year, driven by higher sales in the Freight segment, partially offset by lower transit segment sales. First quarter sales were adversely impacted by foreign currency exchange of two percentage points and continued supply disruptions. Equipment sales were up 4.6% year-over-year due to continued strong mining sales. We remain encouraged by the improving trends in our component business. Component sales continued to build momentum and were up 12.8% year-over-year, driven by higher OE railcar build, lower number of railcars in storage, and a strengthening recovery in industrial end markets. In line with an improving outlook for rail, our services sales grew 18.5% versus last year. The year-over-year increase was largely driven from higher sales from modernizations, the unparking of locomotives, and the acquisition of Nordco. The superior performance, reliability, and availability of our fleet continues to drive customer demand as railroads increasingly look for predictable outcomes across their fleets. Excluding Nordco, organic sales for the first quarter were up 11.5%. Digital electronic sales declined 1.9% versus prior year, driven primarily by ongoing shortages of chips. We continue to see improved demand for onboard locomotive products, and our backlog in digital continues to increase. Even more importantly, we continue to see a significant pipeline of opportunities in our digital electronics product line as customers globally focus on improved productivity, increased capacity utilization, and safety. Across our transit segment, sales decreased 6.5% versus prior year to $605 million. Sales were down versus last year due to supply chain issues, lapping the exit of low-margin U.K. contracts, and the negative impacts of foreign currency exchange. Foreign currency exchange alone adversely impacted revenues by 5.1 percentage points. We believe the medium and long-term outlook for this segment remain positive as infrastructure spending for green initiatives continue. Moving to slide nine. Our adjusted gross margin expanded 1.7 percentage points to 31.1%, driven by product mix, increased pricing, and favorable manufacturing costs, partially offset by higher raw material costs and unfavorable foreign currency exchange. Mix and pricing positively impacted our margins. Mix benefited margins as freight sales outpaced our transit sales. Additionally, higher pricing was realized from price escalations incorporated into many of our long-term contracts, along with other price actions that were implemented to recover increased costs. Raw material costs were again up significantly, led by increased metal costs, including steel, aluminum, copper, and dramatically higher fuel costs. Foreign currency exchange adversely impacted revenues by 2.0% and adversely impacted first quarter gross profits by $10 million. Finally, manufacturing costs were positively impacted by favorable absorption of fixed costs, partially offset by exponentially higher transportation and logistics costs. Current global container costs continue to be significantly higher than last year's average. In aggregate, the continuing effects of the supply chain disruptions, higher materials, transportation, and labor costs are estimated to be $45 million-$50 million higher than last year's first quarter. Our team continues to execute well to mitigate the impact of these cost pressures by triggering price escalation, implementing price surcharges, and driving operational productivity and lean initiatives. Turning to slide 10. For the first quarter, adjusted operating margin expanded 1.4 percentage points versus last year. Our margins benefited from higher adjusted gross margin, but were partially offset by higher engineering expenses from increased investment in future technologies. Adjusted SG&A was $236 million, which was up $13.0 million from the prior year due to, in part, the acquisition of Nordco. Engineering expense increased from last year according to plan. We continue to invest engineering resources in current business opportunities, but more importantly, are investing in our future as an industry leader in the decarbonization and digital technologies that improve our customers' productivity, capacity utilization, and safety. Now let's take a look at segment results on slide 11, starting with the Freight segment. As I already discussed, Freight segment sales improved for the quarter and segment adjusted operating income was $259 million for an adjusted margin of 19.6%, up 1.5 percentage points versus the prior year. The benefits of higher sales, improved mix, and increased pricing were partially offset by significantly higher input costs. Finally, segment backlog was $19.02 billion, up $1.02 billion from the end of the first quarter last year due to the broad multiyear order momentum that Rafael discussed earlier. Turning to slide 12. Transit segment sales were down 6.5%, driven by the negative effects of foreign currency exchange and supply chain disruptions. Adjusted segment operating income decreased by $5 million to $74 million, which resulted in adjusted operating margin of 12.3%, up 0.1 percentage points versus the prior year. Increased pricing and lower year-over-year SG&A were largely offset by significant increases in input costs and unfavorable foreign currency exchange. Across the segment, the team delivered a strong operational performance as we continue to focus on driving down costs, implementing lean, and improving operational efficiencies despite the volatile environment. Finally, transit segment backlog for the quarter was $3.74 billion, up slightly versus a year ago. Adjusting for the negative effect of foreign currency exchange, backlog would have been up roughly 5.5%. Now let's turn to our financial position on slide 13. During the quarter, we generated $161 million of operating cash flow, resulting in a cash conversion of 59%. Our cash conversion rate in Q1 was below our full-year target of being over 90%. Cash flow has historically been the lowest in Q1. This was compounded this quarter by proactively building inventories ahead of our strong growth expectations for the back half of the year and managing supply disruption of critical parts. Additionally, as expected, the payment of short-term incentives was considerably higher in Q1 of 2022 versus the COVID impacted Q1 2021 payment. Looking forward, we are confident we will generate strong cash flow for the year. Our adjusted net leverage ratio at the end of the first quarter declined to 2.5x, and liquidity is robust at $1.5 billion. Also, during the quarter, we returned more cash to our shareholders, repurchasing an additional $296 million of shares and paid dividends of $28 million, which was up 25% versus our prior year dividend rate. As you can see in these results, our financial position is strong and we are confident that we can continue to drive solid cash generation, giving us the liquidity and flexibility to allocate capital toward the highest return opportunities and to grow shareholder value. With that, I'd like to turn the call back to Rafael. Thanks, John. Let's flip to slide 14 to discuss our 2022 financial guidance. Last quarter, we issued guidance with sales growth at the midpoint of 8% and EPS of $4.65- $5.05, or up roughly 14% at the midpoint. Our guidance was based on improving industry momentum and strong underlying customer demand for our products. Despite headwinds from supply chain disruptions, unfavorable mix, and a still challenging cost environment with higher investments in technology, we are continuing to take action to drive margin expansion and grow our business over time. With the first quarter behind us, we feel strong about our businesses and delivered against our regional plan financials despite unplanned loss of business in Russia. I'm pleased with the strength and resilience of our business, and more importantly, I'm extremely proud that our teams found a path to deliver to our plan despite an ever-changing and challenging environment. The reality is that our business in Russia was expected to earn about $0.25 per share in 2022, which pressures the top end of our guidance range. However, despite this pressure and recognizing the strong underlying execution, the pipeline of opportunities in the business and the still volatile market conditions impacting 2022 and beyond, we are not changing our regional guidance. Now let's turn to the next slide. Our team delivered a very strong start to the year despite a challenging and rapidly evolving environment. I'm proud of their efforts to deliver for our customers, drive strong financial results, and further strengthen our financial position. As we look forward, the rail sector and Wabtec are well positioned to increase share and solve the critical issues facing the world's freight and logistics sector. We will continue to lean in the strong fundamentals of the industry and our company to drive long-term profitable growth. Our long-term strategy continues to be built on our deep industry expertise, grounded in innovation, breakthrough initiatives, and scalable technologies that drive value for our customers. These efforts will continue to be accelerated by our lean, continuous improvement culture and disciplined capital allocation. As we've said before, Wabtec's mission holds a larger purpose to move and improve the world. I am confident that this company will continue to deliver and lead the transition to a more sustainable future. With that, I'll turn the call back over to Kristine to begin the Q&A portion of our discussion. Kristine? Thank you, Rafael. We will now move on to questions. Before we do, and out of consideration for others on the call, I ask you that you limit yourself to one question and one follow-up question. If you have additional questions, please rejoin the queue. Operator, we are now ready for our first question. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Justin Long with Stephens. Please go ahead. Thanks and good morning. Good morning, Justin. Maybe to start on the guidance, Rafael, you mentioned that Russia was $0.25 of the original guidance for the full year. Just to be clear on that, are you now assuming that number is zero? If so, with the guidance range unchanged, can you talk about what the positive offsets are to that headwind in Russia? Yes. That's right. We are considering it, zero for the year at this point. I think the offsets, Justin, I'll start with the first quarter. Well, first, I think the business is operating well. Our teams have done strong execution. We've also seen positive coming from the unparking of locomotives with demands on the services business. We also have seen a stronger mining business than we had anticipated. If you think about the year, I think it's continuing to work to find offsets, not just tied to the loss of the business in Russia, but headwinds of inflation and supply chain, transportation costs, as well. I think with the first quarter behind us, I think the team continues to work on those offsets. The other thing that I would add is uncertainty has certainly increased since we last talked in February, but we have probably a stronger pipeline of opportunities in the business. I think despite of the volatile market conditions, we felt really strong about maintaining guidance at this point. Okay, great. Maybe following up on the pipeline, specifically on international locomotives, do you already have enough in the backlog at this point to say your deliveries will not only be up in 2022 but also in 2023, just from an international locomotive perspective? Are there any data points you can share on new contract wins that are in the market today that you're bidding on? Yes, Justin, number one, we have fundamentally the backlog in for what we need as far as new locomotives being delivered this year. It's actually a story that gains momentum through the year. If you look at the second half of the year, we're gonna actually be delivering more than 50% more locomotives than we did in the year before in the second half. I think that's one data point. I think what was more exciting about the quarter was really the backlog. It was a positive gain in the quarter. I think we see momentum in the order intake and growing backlog. The pipeline of deals has strengthened again, and this is probably the strongest pipeline of deals we've had over the last five years. Our commercial team here continues to be focused on converting this pipeline. I think you saw some of that progress with the things we announced here in the first quarter. The strength is also reflected on the 12-month backlog. This is certainly the highest we've had since the merger, and that's for both freight and transit. I think there's good momentum there, and I think some of the things I described to you certainly help, I think 2023, 2024 and beyond. Multiyear orders that really help us to continue to build momentum. That was something very positive we saw in the quarter. Okay, great to hear. I appreciate the time. Thank you. Our next question will come from Jerry Revich with Goldman Sachs. Please go ahead. Yes. Hi, good morning, everyone. Good morning, sir. Rafael, you know, one of the interesting developments that we've seen in your business over the years has been just the growth in mods and your strong mods market share. Can you just update us on what mod deliveries look like year-over-year in the first quarter? You know, what's the cadence look like over the balance of the year in light of the recent order strength you've had for mods specifically? Thanks. Jerry, double digits growth this year versus last year into the mods business. When you look at across the year, I think there's relative consistency. We could have variation just in terms of time of shipment, but double digits growth. I think what's more exciting is, I think I had mentioned that before on other calls. I think what we thought would have been a cap in terms of that volume in North America, we see the opportunity here to further expand that business. Internationally, I think some of the momentum continues. We see that business with a strong opportunity here to continue to grow moving forward. Okay, great. And then, yeah, can you talk about the earnings cadence over the course of the year? You know, when do you expect revenue burn to accelerate given the moving pieces that you spoke about earlier? Hi, Jerry, this is John. With regards to our earnings cadence, you know, we came out last quarter, and talked about we expected the first half to be a little bit lighter in terms of revenue growth and but heavier in terms of earnings growth, and that would reverse in the back half. The big difference between the two is what Rafael just talked about. As our equipment grows, it's gonna gain momentum through the back half. I think what we're seeing in the first quarter is very much in line with that overall sequence. We had revenue growth of 5.5% and margin growth of 1.4 percentage points. As we look to the back half, we would expect to see significant revenue growth. However, our overall margin growth is gonna be lower on a year-over-year basis than it is in the first half. I'm sorry, on a year-over-year basis. That's driven, Jerry, by three things. One is the mix shift because of us shipping in a much higher percentage of equipment sales. The second is tougher comps in the back half by about 1.5 percentage points. The other is what Rafael mentioned as well, we'd expect more cost pressure in the back half because of the most recent cost surge that happened in Q1 with the invasion of Ukraine. Okay. I appreciate the discussion. Thanks. Thank you. Our next question will come from Scott Group with Wolfe Research. Please go ahead. Yes, good morning. This is Ivan Yi for Scott Group. First on Russia, I understand that- Morning. Good morning. I understand you're expecting zero for Russia this year, but how are you treating this exposure in your multi-year backlog? Thanks. With regards to, number one, the business in Russia, we are complying with all sanctions and legal requirements. We are committed again to the safe operations of equipment in the region, and we have, to some extent, provided nominal support, for this purpose. Given the uncertainty, given the conflict, we have, removed Russia from our backlog. Thank you. My follow-up, can you quantify the number or percentage of locomotive on parkings in Q1? What are your expectations for second quarter? Thank you. What I'll tell you there is, we continue to see on parking. We're back to numbers that are comparable to the third quarter of 2019. That's, I think, a good and a positive for the business. Some of those fleets that are on park, they've been parked for quite a bit of time, and they demand some level of investment. I think most importantly, when you look at the fluidity, the velocity in the network, I think the demands for really reliable power and continued investment for our customers in order to continue to improve those metrics, I think that's something that we certainly have, I think, a lot of the solutions for it. Thank you. Our next question will come from Courtney Yakavonis with Morgan Stanley. Please go ahead. Hi, good morning, guys. I hate to belabor Russia, but just a couple quick follow-ups. I think you had mentioned at the analyst day that the majority of the impact was supposed to hit Q1 from Russia. I just wanted to confirm that and so, you know, the majority or the rest of the year will be less impacted from that headwind. Then secondly, if you could just comment at all on freight versus transit exposure. I think you also mentioned that you had removed Russia from the backlog. You know, just any impact to those to the segment level backlogs. Hi, Courtney. This is John. Courtney, what we had talked about in Investor Day is that we would be a little bit overshared in the first quarter in terms of earnings expectations. We did not say the majority of our earnings would be in the first quarter. On a full year basis, we had planned for $0.25. In the first quarter, we probably $0.03 or $0.04, we shipped before the conflict began, but it was just a little bit overweighted versus you know an even split across all quarters. The other piece is yes, Russia is out of the backlog, and we took that out during the quarter, this quarter. Okay, gotcha. Then just on share repurchases, I think that was a little bit higher than we were expecting. I think you had a $750 million reauthorization that you had announced, and now it's close to halfway done. You know, just as we think about the pace for the rest of the year, any guidance you can give to that and, you know, if that was a key offset as well in maintaining the guidance. That was not a key offset to maintaining the guidance, but we're very pleased to have purchased 300 million. Largely, Courtney, it's going back. We came out of what we believe is the trough in 2021. We feel confident in the future, and we wanted to get off to a good start to the year, and we're able to repurchase 300 million shares. As we look forward, I think I would go back to what we had said at Investor Day with regards to capital allocation, that we are, you know, gonna focus on making sure that we have a strong balance sheet, we invest in the business, in terms of capital and technology spend, which you saw in the first quarter, and the dividend and protecting the dividend. From there, we would prioritize and continue to prioritize acquisitions as long as they're strategic and accretive over share repurchases. Finally, barring that, any excess cash will come back to our shareholders in the form of share repurchases. Thank you. Thank you. Our next question will come from Chris Wetherbee with Citi. Please go ahead. Hi. Thanks. Good morning, guys. Eli Winski on for Chris. Maybe we can start with the OEM side. We saw that the revenues were higher in this quarter than the prior quarters in 2021, 2020. Could you talk about what the cadence of the growth in that segment might look like, given some of the congestion and some of the supply chain issues there? Are you referring to the Transit segment? I am. Right. Well, what we're seeing as far as transit is overall revenues were down 6.5%. As we had mentioned, 5.1 percentage points of that is due to currency. The other drag that we had with regards to revenue is, well, not about, a year ago, first quarter, we exited a lot of our U.K. operations on the service side, so in aftermarket, that was basically our Brush product line. By the time we exited that business, it was the end of the third quarter, and right now we're lapping those higher revenues from a year ago as we exit that business. That's roughly about the same impact that currency had on our transit business. The third element, obviously, is the supply disruptions continue to hit that business a little bit more than others. Excluding those, we would have seen good underlying growth in the transit business. Got it. Thanks. Maybe jumping up to services and the acquisition of Nordco. How are the expenses coming out of that business now with some of the synergies from that acquisition? It's probably likely that you should be seeing that start to fade off here more so now in some of the first quarters, correct? Right. During the acquisition, we had looked to take $10 million of cost out of that business over the next couple of years, and we are tracking with that. I mean, that's coming out certainly in operational efficiencies that would hit gross margin as well as a lot of duplicate SG&A expenses are coming out as well. This will be the last quarter that we're lapping that acquisition. With that, we did see higher SG&A in the quarter, as you'd expect. Got it. Thank you. Thank you. Our next question will come from Rob Wertheimer with Melius Research. Please go ahead. Yes. Hi, good morning, everybody. Hi, Rob. Morning, Rob. I had, I guess two on transit, one short and one long-term. Just short term, just any comment on it seems like backlog's progressing pretty well, but on transit customer sentiment on, you know, uncertainty in Europe, if that, you know, affects anything, perhaps stuff has been delayed and it's, you know, pent up. Just any comments on that short-term demand picture around the backlog. Then second, just a more structural question, just as you've narrowed focus over the years on transit. You know, what is the feeling on wins, on market share, on, you know, just how the competitive balance is playing out? I will stop. Thanks. Yeah. I'd say ridership trends continue to be uneven across various markets there. We're not seeing any signs of slowdown of the market. I think to some extent, the current crisis favors rail as the energy intensity of rail is a fraction of if you were to compare to either passenger cars or well, even trucking into the Freight segment. I think the other element I'd mention is certainly in Europe, but a lot of parts of the world, the hybrid work model may also increase demand for intercity trains. On one side, infrastructure spending continues to be a positive with governments investing in rail. We'll see that in the short term. We could continue to see some delay in project execution due to supply chain disruptions, but largely the fundamentals of the business remain the same, strong, consistent with what you might have heard from other customers and OEMs in that sector. Perfect. Just any comments on competitive balance if your backlog's growing in line, market share is holding, growing, contracting? I think we have largely been holding market share positions. It of course varies product line by product line. I think one of the things we made it clear up front was really working towards the quality of the backlog which has improved over the last couple of years. That comes down to also making some of those choices and working in that direction. We're continuing to improve those numbers. All right. Thank you. Thanks. Again, if you have a question, please press star then one. Our next question will come from Allison Poliniak-Cusic with Wells Fargo. Please go ahead. Hi. Good morning. Good morning, Allison. Just wanna go to Digital Electronics. Obviously, the chip shortage is, you know, certainly impacting your growth there. Is there any way to quantify what that headwind to growth has been for Digital Electronics? As you look through obviously a volatile supply chain environment still, but do we expect those chip shortages to start to ease? Are you building inventory there? Just any color that can help. Yeah. Allison, two things. I think we've made some decisions last year in terms of, well, trying to anticipate some of this, but the lack of computer chips have had a significant impact for the business in the year. We still expect that business to grow. I think some of the good signs are tied to the double-digit order growth you saw last year. Some were really multi-year agreements. We saw, again, a strong book-to-bill in the first quarter, which was above two for the business. I think again, a focus area for our team is to make sure that we continue to drive convertibility into 2022 with additional orders. I think the other comment I'd make is North America continues to be slow despite of some of the announcements here with May. We're continuing to gain momentum internationally. I think there's some significant opportunities tied to, well, PTC adoption internationally and some of the other technologies that we have. Great. Just a high-level question. You know, one of the pushbacks we often get, you know, with this local and parking and the storage number for the rail cars coming in is that it's just being, you know, masked or any improvements being masked by the rail service challenges, like that's why we're seeing those numbers. Just any high-level color from your perspective, what you're seeing. Is there real demand behind what's going on, or does this seem feel like a temporary surge at this point? Just any thoughts there. Yeah. Let me start with what we're seeing, and this is broad, and it's more than the North American market. If you think about freight internationally, I think across our key geographies, we see demands are really tied to commodities flow. So think about volume dynamics are positive. If you looked at some of the data that we shared in both Kazakhstan and India, I think we have inquiries for new equipment to be delivered in Africa. We have a number of projects under discussion in Australia, in Asia as well, as a function of that. Even despite of the volume drop you saw in Brazil, I'd say trends are positive, tied to the mid, long term and new concessions. You mentioned North America. I think we see sequential improvement of on parking of both freight cars and locomotives. I think the expectation there is that the investment will continue in terms of customers needing reliable and efficient power to solve some of the things that we described. We certainly expect carloads to continue to improve throughout the year. That's maybe just with regards to that part. I think I've made some of the comments on transit, but this is broader than, I think, North America, and I think that goes into some of the comments I made around really the momentum that we saw in the quarter again, with regards to the growing backlog. Great. Thank you. Very helpful. I'll pass it along. Thank you. Our next question will come from Matt Elkott with Cowen. Please go ahead. Good morning. Thank you. Rafael, I think the average content in locomotives, freight locomotives in North America prior to GE, might have been around $100,000 range. Can you give us an update on where you see the content opportunity going, you know, once there are orders in North America, again, as it relates to diesel locomotives? Also on the FLXdrive, can you remind us, you know, how much of the component content on the FLXdrive is actually from Wabtec legacy versus you know, outside suppliers? I'll start with the FLXdrive, which I think as being a new product, really provides data opportunities for us to bring the full integration of the suite of products we have and translate that to ultimately value for the customer. We have a very significant opportunity of expanding that number there. When you think about, I'll call our legacy products, we have the opportunity to grow that as well. We've been doing that in the international markets. Some of that's gonna be dependent on the sizes of fleets customers are looking at, and really making sure that as you introduce some of these components, it comes with scale, yet it comes with I'll call the right support from a service capability behind it. You'll see that ultimately reflected on digital opportunities, which will continue to grow here. You've seen some of the numbers we've highlighted in terms of the momentum in orders for that business. Okay. That's helpful. One other question on the consolidation front. I think before GE, the rate was, you know, two or one to three, you know, bolt-on acquisitions per year. Should we expect you guys to ease yourself back into that kind of pace eventually? Can you give us an update on any potential opportunities you're, you know, eyeing right now? Is there a pool of potential targets that you're examining? Just anything on the, you know, M&A front or the consolidation front would be helpful. I'd say we're continuing to explore acquisitions. We're gonna be opportunistic here. It's gotta come with the right returns on investment. This is not about the number of acquisitions that we do. This is about really value creation and really very consistent with the capital allocation framework that we shared with you guys during Investor Day. Right. Matt, I think we've got a very robust process at looking at the opportunities. Again, it's not one to three or how many, it's the quality, how accretive they are and how on strategy they are. I think Nordco, which we did, about a year ago at this time, is a great example of the value that we can drive through, our M&A activity. More recently, we just had one with Beena Vision and certainly MASU at the end of the year. We feel very good about where we're at, as well as our pipeline as we look forward, and it certainly is a priority for the company, to continue to do accretive M&A transactions. Is it safe to assume that freight is the priority when it comes to evaluating M&A? No, I think the priority is to find good quality, accretive deals that we can grow beyond what the previous owner was able to do to drive overall value for the company. Thanks so much, guys. Appreciate it. Thank you. Thank you, Matt. This concludes our question and answer session. I would like to turn the conference back over to Kristine Kubacki for any closing remarks. I'd like to thank everybody for your participation today, and we look forward to speaking with you next quarter. Thank you. Goodbye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.