Greetings. Welcome to FreightCar America's Second Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I'll now the conference over to your host, Lisa Fortuna. Thank you. You may begin.

Thank you and welcome. Joining me today are Jim Meyer, President and Chief Executive Officer; Terry Rogers, Chief Financial Officer; and Matt Tonn, Chief Commercial Officer. I'd like to remind everyone that statements made during this conference call relating to the company's expected future performance, future business prospects or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Participants are directed to FreightCar America's 2020 Form 10-K for a description of certain business risks, some which may be outside of the control of the company that may cause actual results to materially differ from those expressed in the forward-looking statements. We expressly disclaim any duty to provide updates to our forward-looking statements, whether as a result of new information, future events or otherwise. During today's call, there will also be a discussion of some items that do not conform to U.S. Generally Accepted Accounting Principles or GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the press release issued this morning. Our earnings release for the second quarter 2021 is posted on the company's website at freightcaramerica.com and our 10-Q will be posed later today after the market close. With that, let me now turn the call over to Jim few opening remarks.

Thank you, Lisa. Good morning and thank you all for joining us today. Over the last year, we have talked extensively about the transformational journey that we are on and that our investors should measure us by the progress we make each quarter. I'm proud to say that the second quarter was a very strong example of making progress and also in continuing to build momentum. To execute such a sizable transformation, which has included the radical overhaul of our manufacturing footprint and creating our Costanos Mexico facility, there will always be successes and challenges along the way. However, in order to claim victory, the successes will need to significantly outweigh the challenges. And our second quarter was a great example of this. Let's go through the quarter and talk about what it means for the future. First, our revenue was up 114% year-over-year and 15% sequentially. We delivered 313 rail cars versus 100 in the same period last year. What does this mean to us? It means that our brand new footprint is up and running and capable. It also means that our customers are embracing the new footprint. We delivered our third consecutive quarter of positive gross margin at $3.6 million. This is significant and that our cost structure is now right side up instead of upside down. Our factory size and fixed cost are much more closely aligned to our needs. Also significant and for the first time in three years, we were profitable at the manufacturing operating income level. That's right. And that is also significant in that it is the next step and our return to company level profitability. The significance of this is that we are now approaching a phase where a little more of the right volume can push us across the line.…

Thanks, Jim. And good morning to everyone. So as Jim alluded to, our business is reaching a turning point, and we are excited about our long-term growth prospects. Turning to our financial results, consolidated revenues were $37.4 million in the second quarter of 2021 compared to $32.4 million in the first quarter of 2021 and $17 million in the second quarter of 2020. The company delivered 313 rail cars in the second quarter of 2021 compared to 309 rail cars in the first quarter of 2021 and a 100 rail cars in the second quarter of 2020. Our gross margin in the second quarter was $3.6 million, the third consecutive quarter of positive gross margin for the business as Jim previously noted. Gross margin was higher compared to $2.6 months in the first quarter, 2021. The first quarter included the final transition costs associated with the move to Castonas from shells and the second quarter included the effect of a challenging new product launch. SG&A for the second quarter, totalled $6.3 million down from $9.2 million in the first quarter of 2021 and $6.5 million in the second quarter of 2020. The quarter-over-quarter decrease can be attributed to non-cash compensation accruals, and higher professional fees that were recognized last quarter. Consolidated operating loss for the second quarter of 2021 was $2.5 million compared to an operating loss of $13.2 million in the first quarter of 2021 and operating loss of $12.9 million in the second quarter of 2020. The operating loss in the second quarter included $0.1 million of restructuring and impairment gains while operating loss in the first quarter of 2021 included $6.7 million of restructuring impairment charges and operating loss for the second quarter of 2020 included $0.3 million of restructuring and impairment charges. Manufacturing operating income for…

Thanks, Jerry and good morning. As Jim mentioned, we continue to see encouraging signs in the overall economy, as well as the rail car industry. Rail cars and storage declined for the 12th consecutive month. Fleet utilization trends remain positive and car strapping is on the rise signaling an improving rail environment. Again, these are all key indicators that we track and its evidence that the industry is on the recovery trajectory. Order in freight levels during the quarter were up sequentially versus the first quarter of 2021 and double that of any quarter since 2018. In the second quarter of 2021, we booked 1133 car orders compared to 300 in the first quarter and zero in the second quarter of 2020. Clearly this was a significant jump sequentially as we successfully converted a good number of inquiries to orders during the quarter. The ongoing strength of inquiries in order activity are positive indications that we are starting to enter a market upturn. Inquiries and orders for conversions also continue to be robust given FreightCar America's variety of conversion options in engineering expertise in this segment. As the industry leader of rail car conversions, we will continue to invest in this space, including our infrastructure capabilities of Castonas in expansion of our offerings, leveraging both our engineering and manufacturing expertise. As we have previously stated, our conversion capabilities provide our customers solutions to upgrade utilized rail assets into the latest car designs that generate new revenue opportunities for them. As we've discussed in previous calls, pricing pressures remain a headwind, and we expect this to continue for the balance of the year as the market ramps up in rail car builders and look to fill line space. Raw material price volatility increased freight costs and higher component pricing or additional headwinds anticipated for the remainder of 2021. With that said, the Castonas footprint allows us to be flexible and focus on the orders that are best suited and most profitable for the company. The efficient footprint of Castonas not only lend itself to deliver our broad product portfolio, but is also designed with the flexibility to change car types more quickly and run efficiently at lower volumes than in facilities. As Jim had already mentioned, we have raised our 2021 outlook for the second consecutive quarter to between 1750 and 1,850 rail car deliveries up from our most recent guidance of between 1600 and 1750 rail cars. With that, I'll now turn the call back over to Jim for a few closing remarks. Jim?

Thanks, Matt. To conclude, this quarter included multiple steps forward along with some challenges still to overcome as any transformation of this magnitude would. But our long term successes far outweigh the short term -- the short term challenges that we see and our momentum is clearly up and to the right. Our industry appears to be in the early stages of a strong cyclical upturn and our timing and building, and now expanding the newest purpose-built manufacturing facility in North America puts us in a strong position to drive long-term growth and profitability as we advance our journey. We have moved the company from struggling to transforming, so as Terry put it, starting to play offensive. On this note, and then one final piece of news worth sharing, we received AAR approval for our first tank car design in May. We look forward to continuing to share our progress with you? That concludes our prepared remarks. And I'll now turn the call over to the operator for Q&A.

Okay. At this time we will be conducting a question and answer session. [Operator instructions] Our first question is from Justin Long of Stephen Inc. Please state your question.

Thanks and good morning. I wanted to start with the question on the orders in the quarter. Is there any additional color you can provide on the car types that were ordered and maybe the size of the orders as well? Just curious if there was a large order included in that total or if it was more a kind of a group of smaller orders.

Good morning, Justin, this is Matt. Yeah, we don't typically provide that type of granular detail on order activity. I can tell you that order were represented by car types that we are shown in have historical -- history of building that meet our financial objectives. I would say overall the inquiries have been, as I mentioned in my opening comments, they've been strong. We had good success in converting those into orders for the quarter.

Okay. And I guess go ahead, Jim. Sorry.

Yeah, I was just going to say, I think it's fair to say without elaborating too much that the types of orders and size of each individual order is very representative of the place in the market where we've been targeting and have discussed in the past.

Okay. And subsequent to quarter in, is there anything you can share on the level of quarter activity and maybe just looking at the guidance, anything you can share on the cadence of deliveries in the third and the fourth quarter, if it will be pretty even, or if we are going to see a discrepancy between the two quarters,

I think what you'll see in the second half of the year, you'll see a ramp up of production and deliveries as a result of order activity that we've had earlier in the year.

Okay. And then in terms of orders, subsequent to quarter end, is there anything you can share now that we're halfway through the third quarter, have there been meaningful orders received?

Yeah, this is Jim again, Justin, I don't think we're going to give a lot of information today on what's happened beyond the quarter end other than this say that our next several quarters are fully booked and we're now taking orders out into next year at this point.

Okay. And I guess last question from me and then I'll pass it on, but could you just share where you're getting the most traction with customers right now in terms of just that the mix of customers, whether it's rails, leasing companies, shippers, if it's all three would, would love to just get some more color around that.

Yeah, Justin, I think you can, you can say that we're seeing now positive traction with all three. There's a good activity by each of those customer segments, as they look at their fleets and look at how cars are being scrapped and where they need to replace.

Okay. That's good to hear. I appreciate the time.

[Operator instructions] There are no more questions at this time. We have reached the end of the question-and-answer session. I will now turn the call back over to Jim Meyer for closing remarks.

Thank you all again for joining us today. Now more than ever, we're excited about the future of FreightCar America and truly believe we are on the path to sustaining long-term growth. Thank you and have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.