Greetings, and welcome to FreightCar America's Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. For those of you participating on the conference call, there will be an opportunity for your questions at the end of today's prepared remarks. Please note, this conference is being recorded. An audio replay of the conference will be available on the company's website within a few hours after this call. I would now like to turn the call over to Chris O'Dea with Riveron Investor Relations. Please go ahead.

Thank you and welcome. Joining me today are Nick Randall, Chief Executive Officer, Mike Riordan, Chief Financial Officer, and Matt Tonn, Chief Commercial Officer. I would like to remind everyone that statements made during this conference call related to the company's expected future performance, future business prospects, 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 Form 10-K for a description of certain business risks, some of which may be outside of the control of the company and may cause actual results to materially differ from those expressed in the forward-looking statements. We expressly disclaim any duty to provide any 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 US Generally Accepted Accounting Principles or GAAP. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the earnings release issued yesterday afternoon. The earnings release for the fourth quarter of 2024 is posted on the company's website at freightcaramerica.com, along with our 10-K, which was filed yesterday after market. With that, I will now turn the call over to Nick for opening remarks.

Thank you, Chris. Good morning, everyone, and thank you all for joining us today. As we close out 2024, I want to reflect on a significant year of relentless execution and achievement for the company. We set ambitious goals throughout the year and exceeded expectations as we continue to leverage our unique vertically integrated pure-play manufacturing presence. During the fiscal year 2024, we achieved a 57% increase in market share on orders won across our addressable market, despite our addressable market being down 45% year on year. We delivered 56% revenue growth for the year and exceeded our adjusted EBITDA guidance, delivering $43 million, representing a 114% increase over the prior year. On a per railcar basis, adjusted EBITDA per car also improved dramatically, up 48% to $9,858, up from $6,658 in the prior year, underscoring the strength of our operational efficiency and profitability initiatives. Lastly, we have generated $45 million in cash flow for the full year and $22 million in adjusted free cash flow, representing a significant step up as we continue to generate profitable growth from our facility. Simply put, we are in a much stronger position as we enter 2025 and are positioned to deliver sustainable results ahead. Looking back on the year, our ability to execute at a high level was evident across the board. Our team consistently delivered on our operational and commercial commitments at our facility, a testament to the strength of our operations. Additionally, 2024 marked a successful launch into the tank car segment, proving as an entry point as we look to expand our reach and our competitive advantages in this higher-margin space. Alongside our operational success, we also took key steps to strengthen our financial foundations further. We had previously committed to in 2024, we've redeemed all outstanding preferred shares…

Thanks, Nick, and good morning, everybody. Throughout 2024, we experienced strong and sustained inquiry activity reflecting the continued demand for high-quality, purpose-built railcars. For the full year, we secured orders totaling 4,245 railcars, valued at approximately $447 million. We maintained our leading position in open-top hoppers, driven in part by our continued success and strong customer preference for our VersaFLOOD aggregate hopper car. VersaFLOOD's versatile design, featuring both transverse and longitudinal discharge options, superior payload capacity, and enhanced durability through its hybrid steel and aluminum construction, has enabled us to effectively meet diverse customer requirements for transporting a wide range of aggregates and minerals. Additionally, we saw notable gains across flat cars, gondolas, and medium to large covered hoppers, further demonstrating the breadth of our product portfolio and the responsiveness of our team to evolving customer needs. Our ability to translate this demand into meaningful order wins underscores the strength of our commercial strategy and differentiated market position. We closed the year with a robust backlog of 2,797 units valued at approximately $267 million, providing a strong foundation as we enter 2025. With overall industry railcar deliveries held steady at roughly 42,000 units, order activity for the trailing twelve months totaled around 25,000 units, well below typical replacement demand. Despite these shifting industry dynamics, we successfully increased our market share, underscoring the effectiveness of our commercial strategy, agile manufacturing presence, and resilient supply chain capabilities. In 2024, we achieved a 21% share within our addressable market segments and captured approximately 12% of the total railcar market, demonstrating our ability to compete and consistently win in this dynamic environment. From a broader industry perspective, we continue to see sustained long-term demand, with forecasts projecting annual industry deliveries in the range of 35,000 to 40,000 railcars, driven primarily by replacement cycles as cars approach mandated retirement thresholds. These structural factors reinforce the ongoing need for the high-quality, versatile railcar solutions that we are uniquely positioned to deliver. Our continued focus remains on manufacturing excellence, delivering the industry's finest products and engineering expertise, and deepening our longstanding customer relationships. Our strategic approach emphasizes tailored offerings rather than a one-size-fits-all model, enabling us to effectively address specific product and order requirements. Importantly, our unique operational flexibility sets us apart and allows us to rapidly ramp production, efficiently switch between railcar types, and accommodate smaller, specialized production runs. This agility, combined with the versatility of our four active production lines and an optional fifth line, positions us extremely well to respond swiftly and effectively as tariff-related uncertainties dissipate and customer demand increases. Our steadfast commitment to operational excellence and innovation remains confident in our ability to capitalize on emerging opportunities ahead of the competition. I'll now turn the call over to Mike for comments related to our financial performance.

Thanks, Matt, and good morning, everyone. I'd like to begin with an overview of our full-year 2024 financials and then share a few fourth-quarter highlights. For the full year, we achieved revenues of $559.4 million, representing a 56% growth over the prior year. These results reflect some minor timing delays for the fourth quarter, resulting in some delivery fulfillment getting pushed into early Q1. It is important to note that this timing shift is not due to broader headwinds, rather normal transit timing of deliveries crossing the border. Adjusted EBITDA for the full year was $43 million, representing a $22.9 million increase or 114% improvement from 2023. I am pleased to note that 2024 signified our second consecutive year of delivering over 100% growth in adjusted EBITDA, underscoring the strength of our operational execution, favorable manufacturing cost structure, and an enhanced product mix. Adjusted net income for the full year was $24.5 million or $0.15 per diluted share, accounting primarily for the impact of certain non-cash items, including the change in fair market value of warrant liability, which fluctuates each quarter in line with the change in our share price during the period. For the full year, we recognized a $99.5 million non-cash adjustment due to the change in the fair market value of the warrant liability due to share price appreciation in the year. As a reminder, this valuation adjustment solely reflects accounting for the warrant holder's investment. The non-cash valuation adjustment does not have an effect on the shares outstanding included in our earnings per share calculation. All shares underlying the warrants have already been reflected as part of the weighted shares outstanding since their issuance in prior years. As a result, if the warrants were to be exercised, there will be no incremental dilutive effect on the…

Thanks, Mike. For the full year 2025, we are forecasting deliveries between 4,400 to 4,900 railcars, an increase of approximately 7.7% at the midpoint of the range. Revenues will be between $530 million and $595 million, up approximately 1% year over year at the midpoint of the range. In terms of cadence, we expect to build momentum with a stronger back half of the year that will scale up towards our guided numbers. We expect adjusted EBITDA guidance between $43 million and $49 million for the full year, representing a year-over-year increase of 7% at the midpoint and further underscoring the strength of our operations. Finally, I'd like to conclude with our expectation that 2025 represents a second consecutive year of positive free cash flow generation. With that, I'd like to now open the line for Q&A.

Thank you. Our first question comes from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Yes. So would you elaborate on the fourth-quarter product mix and also just how changes in the product mix may affect the quarterly cadence of railcar deliveries, revenue, and margin in 2025?

Hey, Mark. Good morning. It's Nick. I'll take that one, and then Mike can add some color if I don't fully answer your question. But, you know, overall, I'd say, first of all, we are very pleased with the overall year and our execution of the year, including the fourth quarter. Just a reminder, we significantly outpaced the market, again, share. Revenues and deliveries grew 56% and 44% respectively, landing well within our guidance, although at the lower end. There is a lot of variation in average selling price, which we call mix, which can influence the revenue, but really focus on driving despite movements in revenue being lower, I thought of our guidance, we delivered an outside EBITDA above our guidance for the year, which is a testament to our commitment to driving profitable growth. So there is a movement on ASP, which we manage locally on our style process. But really what's driving is making sure we're driving that EBITDA growth up, as we've seen through the last year. Mike will talk a bit more about how that impacts into 2025.

Yeah. So hi, Mark. Our quarterly cadence in 2025 is going to ratchet up. We delivered a unique new railcar in 2024 on the higher ASP side, specifically in Q4. We ended up dedicating two production lines at the start of the first quarter of 2025 to build some ancillary large spare part fabrications for that unique railcar for our end customer. As a result, you'll see lower deliveries and revenue in the first quarter, but similar overall gross margins on railcar deliveries. The second quarter will grow as all four lines switch back to producing railcars, but the second quarter will still be a little lower than I'd say the back half because of the changeovers to go into building new railcars. And then the back half will be heavy on railcars, revenue, very few changeovers, and just really producing at a constant rate to get to the guidance we provided.

Oh, thank you for that. And then obviously, I'm getting a lot of questions about the tariffs, and so I was just kind of wondering, you know, your thoughts on how FreightCar America is positioned relative to its competitors to respond to potential tariff actions taken by the US or other countries.

Sure. I'll start with that one. You know what? Our current guidance for 2025 balances both opportunities and risks. You know, there's a stable demand, operational efficiencies, lowering finance costs, providing tailwinds while remaining mindful of the supply chain dynamics, commodity prices, and tariff uncertainty. That said, the railcar industry operates with a stable replacement cycle driven by the essential role of rail transportation in moving bulk commodities. Even during these periods of elevated steel prices, customers continue to invest in new railcars, demonstrating, we believe, the industry's resilience. Also, while post-election years can bring temporary order slowdowns, history shows it is a deferment, not truly a lost demand, and inquiry levels remain strong, and our agility allows us to quickly convert interest into orders. Given our size and our agility, I think that positions us well in the market we're in. And as those market conditions stabilize, I think it's to our advantage.

Well, Nick, just to put a finer point on it, one of the questions that I've gotten is, you know, are there, you have, you know, we know that Greenbrier, Trinity, and FreightCar all produce in Mexico. Sure. But is there the potential that FreightCar could lose, say, market share if one of your other competitors has greater capacity to move production around either in the US or elsewhere?

You know, there isn't a large capacity footprint in the USA for building railcars. There are a couple of smaller repair shops that can build, you know, a couple of hundred railcars, not a couple of thousand railcars. So I don't think there are large enough operations to make a quick switch to move things to the US. Generally, for the industry, there may be some very unique products that can do that, but not generally. And certainly, we're, you know, we think about our products on VersaFLOOD. The open-top hopper. You know, we are clearly number one in that manufacturing space, so I think there's low risk of that being moved anywhere else given the product differentiation we have. So there's some product-specific items which give me confidence that there's only a limited ability to do that. I think there's some areas where products that we don't compete in may be better tailored to move to the US, but, you know, there's, I balance that with, you know, if manufacturing of bulk materials does re-center in the US, and that helps the rail industry overall, then that would be more of a positive net impact to the rail industry rather than the, I believe, rather than the potential impact on items across the Mexico border. But you know what? Our ability to be agile is really what I think sets us apart at the moment. You know, we've spent the last four years dramatically changing how we operate and run our business. We've got a lot of key management players, key leadership players who are well-versed in how to respond very quickly to a change in dynamic and how to respond very quickly to any change in supply chains, change in customer demands, change in profile. I think we demonstrated that last year. Certainly some uncertainty. Not necessarily around tariffs, but uncertainty around supply chain demand. As you saw, we won significant market share gains against very large competitors. Which is a testament to our ability to compete and win in those situations. And I do believe that, you know, tariffs are at a level of uncertainty at the moment. You know, they've been in, they've been out. There's a steel tariff in at the moment. And our job is to digest that, keep an eye on that, and respond quickly for the benefit of our customers and make sure that our end users get the products they need to move their bulk materials. So I guess that's a bit of a long-winded answer, but I think overall, there is uncertainty in tariffs. That's true. And I believe that FreightCar America, that uncertainty represents an opportunity for us to continue to demonstrate market share gains and to continue to meet our customers' expectations with speed and high-quality products.

Now that's very helpful. Thank you for that.

Thank you. Our next question comes from the line of Brendan McCarthy with Sidoti and Company.

Great. Thanks. Thanks for taking my questions here. I just wanted to talk about the fourth quarter. I think you mentioned there was a timing issue that might push some deliveries to the first quarter of 2025. Are you able to quantify that for us?

There was no timing. It's just the normal transit time. Just cars in transit, to the border that count as the delivery, but nothing of massive substance. No.

Okay. Got it. And then looking at the 2025 guidance, it looks like you're expecting almost 8% growth at the midpoint for deliveries. And then a little bit of a smaller 1% expectation for revenue growth. Can you just talk us or walk us through, you know, what's baked into that variance with the midpoint of guidance?

Yeah. I'll start that, Brendan, then Matt can probably fill in some great details. You know, there's a couple of things. As you know, we primarily produce new railcars, and even on new railcars, there's a large variance in the average selling price. At the top end, you've got things like box cars or some of the complex flat cars, which can be double the price of some of the open hoppers or some of the smaller cars. So there's a large average selling price. We call it ASP. Variance which can change revenue but doesn't change, I guess, our ability to deliver EBITDA. So while you just look at revenue, it's 1% growth. What we are looking at, there is value earnings and then consequent into cash, but very high level just to explain why that revenue isn't reflecting the same growth as EBITDA. But Matt, if you...

Yeah. Brendan, this is Matt. You know, the overarching commentary is that we see demand across multiple market segments levels. We're seeing good order activity as we enter into 2025. We do expect the mix change to Nick's point. So I think that's probably where you'll see some of the biggest differences in terms of overall revenue versus still very strong performance on the EBITDA side.

Great. That's helpful. That makes sense. Then on the delivery guidance, obviously, it looks like you're assuming, you know, pretty nice growth at the low point. For the 4,500 deliveries in 2025, but just curious as to what's baked into that from a tariff perspective, I guess? Is it kind of fair to assume that, you know, maybe worst-case tariff scenario, you're still going to see you have a nice, you know, kind of growth rate in the delivery number for 2025?

Yeah. I think that's a reasonable way of looking at it. At the moment, Brendan. You know, we've taken into account everything we know up until this point. And everything we've reviewed and revisited. It was as Matt touched on his notes, the inquiry level and the level of customers working and rather than just a low-quality inquiry, customers who are working with us on designs and shipment timings and delivery profiles, etcetera, and investing time and effort into being prepared to place an order is vibrant, and it's really encouraging. It would be helpful if there was some clarity on tariffs. But right now, the guidance we've given is based on how we interpret the current tariff. Sort of nervousness on timing of orders places. But I would expect that as we move forward, we will meet that guidance range even with what's perceived to be in today, if that makes sense.

Yeah. Brendan, Matt again. I'll just add that, you know, the conversations we're having with customers' tariffs is clearly, you know, top of mind. But I will tell you that inquiry level is certainly painting a very positive picture and from a FreightCar America perspective, we're very bullish on our guidance. We're having the right kinds of conversations with the right types of collaborative discussions with customers and feeling very positive about our position in the marketplace and the ability to continue to grow within our addressable market share. And all of that comes from the fact that customers buy railcars, as one of my colleagues has referred to frequently, because they need to ship freight. So you may have some delays, you may have order activity that's somewhat lumpy, but at the end of the day, railcars remain to be the most efficient method of transport. When we look at bulk commodities, which we're seeing a lot of inquiry activity on, and we're really well-positioned to pivot and to meet the needs of our customers that, you know, frankly, have a preference for the FreightCar America position in the market.

Got it. Thanks. Thanks. That's helpful. And then one more question for me on the tank car retrofit order, the 1,000 car order that you're looking to deliver in 2026 and 2027. Are you able to provide, you know, the addressable market on the, I guess, the total addressable market for tank car retrofit orders and, I guess, what that, you know, 1,000 car order kind of represents?

No. We would... Short answer is that I'm not going to provide the addressable market. But we will, as Mike alluded to in his commentary, we are pulling forward on the CapEx. So we'll have the CapEx to be the plant ready for recertification work, would expect sometime late Q2. It'd be ready late Q2 or Q3. So and we do have, we are fielding more inquiries from customers on conversion work. So as those become real, we'll provide, you know, updates and guidance as those orders are placed to become in our backlog. So but we're certainly pulling ahead on the investments of the CapEx. So that will be invested in the first half of this year. It's in a position to be ready. And as those inquiries convert to orders, obviously, we'll update accordingly. But I think the addressable market is, you know, there's a couple of factors that go into it, which is why I just don't want to misread either good or bad on what that size could be. Other than we are fielding inquiries, we will be ready ahead of schedule for the order we do have. And if as customers convert those inquiries into order placement, we'll update accordingly. Matt, I don't think I missed it in there, but that's pretty...

No. I think you got rid of it.

Understood. Thanks, Nick. Thanks, everybody. That's all for me.

Thanks, Brendan. Thanks, Matt.

Thank you. Our next question is a follow-up from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Yes. During the call, you mentioned that once you get the leverage ratio down, that you would be more open to considering kind of the strategic growth opportunities. And I'm just wondering, does that, are you referring to maybe growth around the parts business or are you looking even further out in terms of potentially adding a fifth line?

I'll take that. I know Mike mentioned it in his commentary about the work to get there. I guess your question is okay. But when you get there, what are you going to do with it? You know, we would always keep a very good review of how do we deploy capital in the best interest of our shareholders. A couple of things you've mentioned there. So parts group, obviously, parts group is a very important part to us. Parts and distribution. That is always going to be a worthy candidate for constant review. And as we make any investments in there, we'll update accordingly. But, you know, parts now broken out to our 10-K. People can see that group in there. You mentioned about the fifth line. So the fifth line is just a reminder, the fifth line we have is under roof, it's already prebuilt out. We don't lease it at the moment. It's available to lease on very short notice. The fifth line could be made ready in less than 90 days. So if demand or a product type demand comes upon us, converting that to a fully operational is probably going to be less than a million dollars CapEx in less than 90 days in time. So that's always a low-risk opportunity we can have at our disposal. When customer demand dictates that. And then beyond that, so you think about two to three years, you know, that's where we'll constantly keep an eye on what's the best way to deploy our capital. You know, as we change from being focused on just debt management to being, you know, having free capital to use, we'll take a good look at what represents the best for shareholders and what's good at the time to be adjacent to make more robustness in our whole market. So we're always on the lookout for that. That is something that is clearly in our next phase of strategic growth for the company overall.

Thank you. And then just lastly, for Michael, if he might be able to comment on the recent registration and, you know, how investors should think about that.

Hi, Mark. Yeah. So we filed the S-3 registration statement. It's a universal shelf, the same one we had back in 2021 that had expired. So we renewed that as everyone will probably notice, PIMCO has registered the shares under their warrant as a selling shareholder. That gives them the opportunity over time at their election to sell shares and begin to unwind their investment in us. And as I mentioned, we value our relationship with PIMCO tremendously as they were a key partner in getting us to this point. And I think one important part of this is that them exercising their warrants or them selling shares does not have an effect on our EPS. The way the accounting treatment works, we've always treated those shares as outstanding since their issuance. And so that's one key point that I think everyone should really understand with the registration statement and the warrants themselves.

Thank you. Ladies and gentlemen, there are no other questions at this time. I'll turn the floor back to Mr. Randall for final comments.

Thank you. I just wanted to take a moment to, you know, to really summarize our call. So 2024 was a year of execution and results, achieving significant revenue growth of 56% and gaining market share despite the decline across the broader industry. We delivered exceptional financial performance, exceeded EBITDA guidance for the year, and per railcar EBITDA increased substantially as we enhanced our mix, leveraged productivity improvements, and efficiency gains. We improved our capital structure by redeeming outstanding preferred shares and securing a $35 million ABL credit facility to enhance financial flexibility and ultimately reduce borrowing costs. We generated strong adjusted free cash flow of $22 million and heading into 2025, we anticipate a second consecutive year of positive free cash flow generation. And overall, with market share gains, a major multiyear tank car conversion deal, financial flexibility through an optimized capital structure, FreightCar America is well-positioned for sequential profitable growth in the year ahead. And with that, thank you.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.