Freightcar America, Inc.

Welcome to Freight Car America's fourth quarter and fiscal year 2025 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 call will be available on the company's website within a few hours after the call. I would now like to turn the call over to Chris O'Day with Riverrun Investor Relations.

Thank you and welcome. Joining me today are Nick Randall, President, Chief Executive Officer, Mike Reardon, Chief Financial Officer, and Matt Tong, 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 are 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 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 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 their most commonly directly comparable GAAP measures are included in the earnings release issued yesterday afternoon. Our earnings release for the fourth quarter and full year 2025 is posted on the company's website, freightcaramerica.com, along with our 8K, which was filed at market close yesterday. With that, I will now turn it over to Nick for opening remarks.

Thank you Chris. Good morning everyone and thank you all for joining us today. I'll start with a brief review of our full year performance and then share how we're thinking about the business moving into 2026. 2025 was a challenging year for the North American rail market with industry new build rates at some of the lowest levels we've seen in more than a decade. While we continue to view this as a temporarily muted with underlying fundamentals remaining strong, We have positioned ourselves well to maintain resiliency in any market cycle. Against that backdrop, our focus for the year was on disciplined execution, profitability, and positioning the company for long-term success. We did just that, and I'm proud of how the team executed. We delivered significant margin expansion, generated $31.4 million in free cash flow, gained delivery market share across the markets we serve, advanced our tank car readiness, and lastly, expanded our aftermarket platform through the acquisition of Carlie Railcar components. Accomplishments that effectively strengthened our financial position and expanded our industry presence. For the year, both revenue and deliveries were within our expected range, while our profitability improved meaningfully. Gross margin expanded over 260 basis points, and on a per-car basis, adjusted EBITDA rose approximately approaching 10% growth year over year, reflecting our diversified mix, improved operating leverage, and cost discipline across the platform. We also generated over $31 million of adjusted free cash flow, up approximately 45% year over year, reflecting our ability to translate earning expansions into cash. I want to pause on that point because it's important. In what was a down year for the industry, we not only maintained but enhanced profitability and cash generation. That speaks to the progress we've made over the past several years, building a leaner, more flexible manufacturing footprint. In particular, Our continued growth in conversion and retrofit programs reflects our focus on controlling the factors within our influence to drive profitable growth. These programs require meaningful engineering expertise, manufacturing flexibility, and disciplined operational execution, capabilities we've intentionally strengthened across our platform. By structuring our operations to support this level of complexity, we are able to deliver consistent margin performance and attractive returns, even when new build volumes remain below long-term replacement levels. Throughout 2025, in addition to our customized solution in conversions, retrofits, and other specialized railcar programs, we gain share in new car deliveries across the markets we serve. further demonstrating how our commercial strategy continues to resonate with customers as our flexible manufacturing presence enables us to gain ground on multiple fronts. In addition, from an operational standpoint, our ability to drive performance improvements through programs like TrueTrack, which focuses on driving consistency and quality, throughput, and cost execution, along with our broader operational initiatives, is working effectively to improve margins and production discipline. We continue to refine plant flow and production sequencing within our Castaneos facility, driving improved throughput, better cost absorption, and greater margin consistency across our manufacturing lines. Importantly, these are structural improvements that make us fundamentally a more efficient and dynamic company that can flex our manufacturing capabilities to support our customers in any market condition. Next, we continue to execute on our strategic roadmap, advancing our vision of Freight Car America as a scaled, integrated rail platform. During the fourth quarter, we completed the acquisition of Carly Railcar Components, a leading distributor of railcar components. This transaction expands our aftermarket capabilities, further diversifies our revenue mix, and broadens our reach across key regional footprints. Importantly, Carli represents our first acquisition in the aftermarket space and serves a foundational step in building a more robust, reoccurring revenue platform. The acquisition reflects our disciplined approach to capital allocation, prioritizing opportunities that are adjacent to our core manufacturing business, enhance our value proposition with our customers, and generate attractive returns relative to internal growth investments. With a strong balance sheet and cash generation, we are increasingly well positioned to build on this momentum. We will continue to evaluate strategic value accretive opportunities, particularly within the aftermarket, and that are aligned with our core rail markets, deepen customer relationships, and enhance long-term returns on invested capital. Additionally, we remain focused on progressing tank car readiness for this year's retrofit programs. And as we discussed previously, that readiness remains on schedule and we are prepared to start shipments for our retrofit audit in the back half of this year. While the larger opportunity lies in new builds, we view our fulfillment of this retrofit contract as a key step in achieving our longer-term goals. Looking ahead, we ended the year with a backlog of 1,926 rail cars valued at $137.5 million, reflecting a diversified mix of conversion programs and new car rail builds, providing meaningful visibility into our 2026 production. Our near-term focus is on converting that backlog into profitable deliveries while maintaining the same discipline that defined our performance in 2025. As we move into 2026, our priorities remain clear. Deliver consistent margin performance, generate strong free cash flow, continue expanding our aftermarket and tank capabilities, and deploy capital in a disciplined manner that enhances long-term returns. The operational progress we have made positions as well to execute against those priorities while maintaining flexibility in a dynamic market environment. We remain mindful of ongoing uncertainty in the railcar new build market as industry deliveries continue to run below long-term replacement levels. However, history has shown that prolonged underinvestment ultimately leads to a normalization of demand as fleets age, and replacement needs reassert themselves. As I stated earlier, fleet fundamentals and end markets remain strong, and it's a matter of time before this course corrects. As that normalization occurs, freight car America is well positioned with a flexible operating model, ample capacity, and a broader portfolio of offerings and the financial strength to capitalize on emerging opportunities. In summary, 2025 was a year of progress despite a difficult market environment. We improved margins, generated strong cash flow, strengthened the balance sheet, and advanced our diversification strategy, positioned the company to grow both organically and inorganically as industry conditions evolve. With a disciplined commercial strategy, a lean and flexible operating model, and an efficient manufacturing footprint, We are well positioned to adapt to changing conditions and deliver sustainable, profitable growth over the long term. With that, I'll turn it over to Matt to discuss the industry dynamics.