Freightcar America, Inc.

Welcome to Freight Car America's fourth quarter 2023 earnings conference call. At this time, all participants are in 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 comments. Please note that this conference is being recorded, and an audio replay of the conference call 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'Day with Riverton Investor Relations.

Thank you and welcome. Joining me today are Jim Meyer, President and Chief Executive Officer, Mike Reardon, Chief Financial Officer, Matt Ton, Chief Commercial Officer, and Nick Randall, Chief Operating 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 Freight Car America's Form 10-K for description of certain business risks, some of 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 a result of new information, future events, or otherwise. During today's call, there will also be discussion of some items that do not conform to U.S. 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. Our earnings release for the fourth quarter 2023 is posted on the company's website at freightcaramerica.com, along with our 10-K, which was filed yesterday after market. With that, let me now turn the call over to Jim for opening remarks.

Thank you, Chris. Good morning, everyone, and thank you all for joining us today. Freight Car America achieved many significant milestones last year as part of our multi-year transformation, and I believe that we are now positioned to scale the business and generate compelling results. To support this belief, I will lead off with one very important metric. For 2023, Freight Car America earned $6,658 of adjusted EBITDA per railcar, This compares to a loss of $18,020 of adjusted EBITDA per rail car in 2019, which was our last full year of operation prior to beginning the transformation. During this timeframe, the company eliminated very important levels of both fixed and variable costs. In addition, our prior manufacturing footprint limited the types of cars we were able to produce. as well as access to the skilled labor we needed for expansion. Fast forward and back to 2023, we achieved the just mentioned adjusted EBITDA per railcar on just over 3,000 deliveries and a footprint now capable of producing 5,000 or more railcars per year. As we ramp up production, we expect to gain new operating efficiencies driving more adjusted EBITDA per railcar on more rail cars in total. In my view, this is the most important message today. Now to touch on a few key highlights for the full year. We delivered revenues of $358.1 million, a decrease of 2% year-over-year, on deliveries of 3,022 rail cars, a decrease of 5% year-over-year. The modest decline in top line numbers can be attributed to disruption in the movement of rail traffic at the US and Mexico border at the end of the year. Following the border issues we experienced during the third quarter, the government closed the border at Eagle Pass, Texas from December 18th to the 27th, which created a multi-week impact on our ability to both ship and produce rail cars. Furthermore, Recall that our fourth production line started just prior to year end, which prevented significant additional scaling in 2023. With the resumption of rail service at the border, combined with our manufacturing facility now fully online, our teams are well prepared to meet demand. In addition to these headwinds, foreign exchange also impacted our results, but despite these, which combined were approximately $5 million in headwinds for the full year. We delivered full year adjusted EBITDA of $20.1 million versus $8.4 million in 2022, an improvement of $11.7 million or approximately 139% on slightly less revenue. As we expanded our gross margin profile by 460 basis points from the prior year, achieving an industry-leading 11.7% for the full year. In terms of our operations, we achieved several key milestones in 2023. Notably, we completed the build-out of our Castanos Mexico manufacturing facility. We now have the capacity to seamlessly manufacture annual volume of 5,000 plus rail cars or 10 to 15% of the annual demand for North America. Moreover, I am extremely pleased with the high level of operational excellence our team has already been able to demonstrate. Coupled with the ongoing execution of our commercial strategy, I am confident in our ability to further enhance the quality of our earnings as we flex the full potential of our capacity and operational and commercial strategies. some of which will be evident when Nick speaks to our outlook for 2024 in a few minutes. Turning to the fourth quarter, revenue decreased 2% year over year to $126.6 million on deliveries of 1,021 rail cars, both lower than expected, purely due to challenges around the already mentioned border closure and rail service disruptions. Despite these headwinds, our gross margin increased 600 basis points to 9.6% compared to the fourth quarter of 2022, and adjusted EBITDA increased $5.3 million versus the same quarter of the prior year to $6.5 million, which equates to $6,357 per rail car. And this is in the face of an approximately $2.7 million impact in the quarter on adjusted EBITDA from the last end-of-year shipments and FX. As you are most likely aware from other industry participants, order activity took a pause in the fourth quarter, with Freight Car America securing 135 orders. I will say that activity has picked up significantly since the start of the new year, but it's still facing inertia from the high levels of caution being exercised by customers. We believe this inertia is due to caution with CapEx spending in view of mixed confidence in the economic outlook, elevated interest rates, which directly impact leasing costs, and improvement in railroad performance metrics, which has led some buyers to reevaluate new quantities needed. Despite the softness, we have line of sight to production of 4,000 to 4,400 railcars in 2024, which will allow us to achieve some of the scaling and levering we are so eager to demonstrate. With that, I will next turn the call over to Matt to discuss the market then Mike for a more detailed view of 2023, and finally to Nick to preview 2024. Matt?