FreightCar America, Inc. Q4 FY2025 earnings call

• 2025年北美铁路市场新造率处于十多年来较低水平，公司聚焦纪律执行、盈利提升，在困难市场环境下实现显著margin扩张，自由现金流达31.4百万美元，获取服务市场的交付市场份额，推进罐车改造准备，完成对Carlie Railcar Components的收购拓展后市场。
• 运营上通过TrueTrack等项目驱动绩效提升，优化Castaneos工厂的流程和生产排序，提升吞吐量、成本吸收和margin一致性。
• 战略上执行路线图，推进成为规模化、整合铁路平台的愿景，持续评估战略增值机会，尤其是后市场相关且与核心铁路市场 aligned 的机会

2025年全年营收501百万美元，交付4125辆。毛利率扩展超260个基点，调整后EBITDA同比增长约10%，自由现金流31.4百万美元，同比增长约45%。第四季度营收125.6百万美元，交付1172辆，毛利率13.4%，调整后EBITDA为10.4百万美元。后市场业务通过2025年完成对Carlie Railcar Components的收购得以拓展，2025年全年后市场约27.1百万美元，2026年预期后市场相关营收有增长

2026年预期全年营收在500 - 550百万美元之间，中点较上年增长4.8%；调整后EBITDA预期在41 - 50百万美元之间，中点较2025年调整后EBITDA同比增长10.4%；2026年资本支出预计7 - 10百万美元，包括约4 - 5百万美元的维护水平支出以及完成罐车制造垂直整合投资

参与者需参考公司Form 10 - K了解某些业务风险，这些风险可能是公司无法控制的，会导致实际结果与前瞻性陈述中的结果大幅不同，且公司明确不承担更新前瞻性陈述的义务，非GAAP措施需参考财报释放的调节

Q: So the revenue guidance is $525 million at the midpoint. Now, the aftermarket business did about $27.1 million for the full year 2025. You made the Carly acquisition, which I'm assuming will contribute $13 to $15 million. So to kind of divide those two groups, it's $40 to $41 million, an appropriate estimate. revenue estimate for the aftermarket business in your view?

A: Yeah, I'd say that's a good view of what we would be expecting for 2026. And then secondly, the interest expense was about $17.6 million for the full year. And so with this change with the lease, that's about $3.5 million. So Would you expect that interest expense to decline to kind of maybe $14 to $15 million? And how are you thinking about maybe paying down debt or reviewing the balance sheet capitalization?

A: Yeah, I think you're thinking about that right. There will be the portion of interest expense that will now be in COGS, which would get you to about $13.5 million. I would expect that interest expense to go down a bit as we do have debt repayments we'll be making here in Q1 as part of our term loan. And we'll see that keep getting a little lower and generating more free cash flow as we pay down debt and continue to work on our capital structure. So it actually could be lower than, say, $14 or $15 million for the full year of 2026, it sounds like.

Q: What extent of that was driven by mix? So was it just a higher proportion of higher margin cars or was it more operational improvements or pricing?

A: There was obviously both those will influence it. Productivity is where we get the larger of the two enhancements in Q4. Obviously, you know, mix can vary quarter to quarter. Productivity is the one we really sort of drive to focus because that repeats over going as we drive and make those productivity improvements in. But What we observed in Q4 was more primarily driven by productivity and operational improvements.

Q: Are tank car retrofit volumes included within that, or should we think about those as incremental to the delivery outlook for 26?

A: They are in there. We've committed before that that's a multi-year program. So it's not the full program is in 2026. There's a portion of the program is in 2026 that it rolls in through 2027 as well. But it's in line with what we said in prior calls and the prior amounts. But it's, yeah, it's towards the back end of 2026 that program kicks in.

Q: I appreciate you taking my questions here. Just wanted to start off on your industry outlook. Yeah, I think you mentioned 31,000 deliveries in 2025. I have you at about a 13.3% market share. And then for 2026, what's your outlook on industry deliveries and your corresponding market share?

A: When we look at the overall industry, you know, we do believe that we'll see deliveries in the 25,000 to 30,000 range. Order activity will probably follow suit to what we saw in 2025. So we are expecting some moderation of order activity. with increases in activity as we get into the second half of the year.

Q: What assumptions would really cause deliveries to come in at the low end of 4,000 in 2026? And then on the other side, what would cause deliveries to come in at the high end, around 4,500?

A: I don't know if you recall, this time last year, we talked about uncertainty in the outlook for the year would favor us, given our agility and our ability to convert orders reasonably quickly and be able to bring things into the pipeline and all the value proposition we have. And that's what turns out to be true. So we gained market share last year despite a prevailing backdrop of a sort of reduction across the industry. And I expect to be similar this year, is where customers are facing any level of uncertainty, we're able to offer some certainty on the timing and the agility and the response times to builds. And as Matt says, not just new builds, but on conversions and re-bodies as well, where that may be a better alternative. for a customer rather than an outright new car.

Q: As it relates to your capabilities in, you know, rebuilds and retrofits, what are you seeing as far as demand goes? It seems like, you know, order flow picked up there in 2025 from 2024. Are you seeing relatively higher demand there on that front, just maybe considering some of the economics around the new build market?

A: Yeah, we do, because it does offer customers – significant price savings and value of the rail asset. A lot of it is tied to the existing rail car underutilized assets that are what we call the donor cars that are used in the conversion process. But we do believe that the demand for conversions is longstanding, and we continue to operate in the marketplace to develop those opportunities as those inquiries come in.

Q: Just on the backlog, just, you know, entering 2026, where the current backlog level is, as well as considering your outlook for deliveries, you know, 4,250 at the midpoint. It seems like the backlog covers a smaller portion of that compared to recent years. What can investors, you know, what can we take away from there as we look into 2026?

A: There's a couple of things. One is, you know, we've done a lot of work on leaning out our operations, and that translates into the productivity improvements you saw in Q4 as a financial productivity improvements in Q4. What that allows us to do is be a lot more agile in our manufacturing footprints and take opportunity to retool or rebuild lines to be more optimized in quieter periods, and then have them be able to scale up capacity without significant infrastructure during busier periods. So we're able to respond to those market dynamics in a way that doesn't require major infrastructure changes, which I think is a benefit to us.

Q: I mean, you know, it seems like the orders and deliveries have kind of lagged by choice. I mean, you have the tariff uncertainty, there's economic uncertainty, but the hope is that we get to a past replacement cycle. And so I was just wondering, you know, it's not like the industry is out there, you know, all using new equipment or don't need the equipment anymore. Is there a metric that you look at? I mean, can you look at, like, retirements versus deliveries, you know, to try to get an indication of when you might expect orders to accelerate, you know, in terms of, you know, and is that 40,000? Do we think that that's a good number? Or are there some structural dynamics that, you know, where they're either because of different types of cars, they're doing more with less? that might suggest either a lower or higher number.

A: You look at the mandated age of a rail car for retirement is 50 years. So you can back that up with some certainty on the build in the late 70s and into the early 80s to understand what's going to fall out. Some of those cars have already fallen out, but many of them are still operational. And depending on which... Forecast you look at somewhere between 150 and 200,000 rail cars are going to fall out in retirement over the course of the next four years. So with some certainty, we can look at that metric to understand what cars, what car types are going to require replacements in that timeframe. And there's some differences when we look at capacities. You have higher capacity cars today, both in cubic capacity and in gross railroad capacity. But overall, it's a pretty good indicator of what we see that will fall out. And of course, we monitor the new car opportunities based on market segments and growth in various markets where new rail demand is required.

Q: In the manufacturing segment, margins were about 12.2%, 13.5% for the year. We're kind of assuming 13.5% in 2026. The aftermarket business was 33.6% in the fourth quarter, just under 35% for the full year. Do you see any items kind of affecting your margins in 2026 relative to 2025?

A: I think for a manufacturing segment, I think that's a good basis to go on into 2026 based on the pipeline and mix we see. I think it'll be pretty similar. On the aftermarket, I think, you know, as we integrate our acquisition and move down the line, we should see some accretive generation there and some enhanced margin, but that will probably be a little more towards the back half of 26 going into 27 as we continue to scale that business.

Q: If you could just remind me, I think the orders for fourth quarter were like 348. Just how long does it take for these orders to convert into deliveries?

A: It can take anywhere from a year down to days. It sort of depends on the customer, the need, the planning of that particular customer. I will tell you, though, that, you know, as Nick mentioned, Our ability to pivot and meet customer needs based upon the flexibility, operational excellence of the plant allows us to be able to meet customers' needs very quickly and in short lead times.