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President & CEO, Bradford Nordholm, explained that tax credit purchases are opportunistic and that project finance will continue due to strong demand and complex 'commencement of construction' rules that extend eligibility. Senior VP & Chief Credit Officer, Marc Crady, provided details on the charge-offs (a permanent crop loan and a crop loan, both in the Southwest) and the downgrades (a solar project and a broadband provider, both in the Southeast). Mr. Nordholm described the share repurchase as one of several capital tools, to be used opportunistically when the stock is attractively priced, distinct from the consistent dividend policy.

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President & CEO, Bradford Nordholm, clarified that tax credit purchases are opportunistic, not a core strategy, and positioned the share repurchase as one of several capital tools to be used when the stock is attractively priced. Senior VP & Chief Credit Officer, Marc Crady, detailed the charge-offs: a $1.7 million charge on a permanent crop loan that was subsequently recovered post-quarter, and a $1.2 million charge on another crop loan. He also described the two downgraded infrastructure loans as a solar project with weak performance and an overlevered broadband provider.

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President & CEO Bradford Nordholm stated that tax credit purchases are opportunistic, not a core strategy, and that project finance will continue due to a large addressable market. Senior VP & Chief Credit Officer Marc Crady detailed the charge-offs on two Southwest loans (one permanent crop, one crop loan) and the downgrades of a Southeast solar project and a Southeast rural communications provider. Regarding the buyback, Nordholm explained it is one of several capital tools, to be used opportunistically when the stock price is attractive, while the dividend policy will remain consistent and disciplined.

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President & CEO Bradford Nordholm described the tax credit purchases as opportunistic and noted project finance will continue due to strong market fundamentals. Senior VP & Chief Credit Officer Marc Crady detailed the specific loans behind the quarter's charge-offs and downgrades. Mr. Nordholm explained the share repurchase is one of several capital management tools, to be used opportunistically when the stock is attractively priced.

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President & CEO Bradford Nordholm explained that tax credit purchases are opportunistic and not a core part of their P&L strategy, while project finance will continue due to a large addressable market. Senior VP & Chief Credit Officer Marc Crady provided details on the charge-offs, identifying them as a permanent crop loan and a crop loan in the Southwest, noting a significant recovery on one loan post-quarter. He also described the two downgraded infrastructure loans as a solar project and a broadband provider in the Southeast facing operational and liquidity challenges. Bradford Nordholm positioned the share repurchase as one of several capital management tools, to be used opportunistically when the stock price is attractive.

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President and CEO Bradford Nordholm stated there was no tax credit activity in Q1 but it remains an opportunity. CFO Aparna Ramesh added that OpEx benefited from lower legal fees related to Q4's tax credit activity. Regarding Farm & Ranch, Bradford Nordholm and Executive Zachary Carpenter attributed the NES strength to nonaccrual loan resolutions and strong new loan purchase volume driven by a tightening ag economy. For the Treasury segment, Aparna Ramesh explained the momentum came from opportunistically issuing debt at narrower SOFR spreads and calling some issuances as the yield curve steepened.

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Executive Zachary Carpenter stated that the company sees no slowdown in Renewable Energy and will invest to meet demand. President and CEO Bradford Nordholm affirmed the 30% efficiency target remains prudent to support growth and ensure safety. Zachary Carpenter also confirmed that a combination of factors, including lower rates and lender liquidity needs, is expected to boost Farm & Ranch volume.

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Founder & CEO Vishal Garg attributed the conversion rate improvement to Betsy AI's expanded functionality, which now handles the process through lock, re-underwrites loans, and finds intelligent solutions for customers, such as complex DTI calculations. He confirmed the previously mentioned bank partner is now live and funding loans on the platform, highlighting an implementation time of less than 90 days.

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Kevin Ryan and Vishal Garg responded that unit economics improved sequentially in Q1, with the mortgage company breaking even in March. AI-driven savings are primarily in compensation and loan origination expenses, with a goal of reducing total production cost to $1,500 per loan. The company runs a capital-light model and is comfortable with its current debt level. B2B opportunities are split between software-only deals for banks leaving legacy systems and platform partnerships with fintechs entering the mortgage space.

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CEO Vishal Garg identified further reductions in compensation, renegotiating vendor contracts, and professional fees as key areas for cost savings. He also revealed active discussions with a top-5 servicer, a lead-gen company, and a community bank for new B2B partnerships. CFO Kevin Ryan stated that losing the Ally business is an EBITDA-neutral event and that the nearly $1 billion in lost volume will be more than replaced by growth from NEO and other initiatives.

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CEO Raul Vazquez attributed the back book's improved NCO rate to the portfolio nearing its end-of-life and strong recovery efforts. He cited a significant economic slowdown or rising inflation from tariffs as potential macro risks. For 2026, he noted it was too early for guidance but reiterated the long-term goal of achieving a 12.5% OpEx ratio through continued efficiencies and portfolio growth.

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CEO Raul Vazquez clarified that tapering the originations growth outlook to approximately 10% is a prudent measure due to macroeconomic uncertainty, not a reaction to current performance. He mentioned that Q1 operating expenses were below the quarterly average because some marketing spend was deferred to the second half of the year, creating 'dry powder' if the macro environment improves. Regarding the board, Vazquez stated the reduction aims to create a more efficient and conventional size, reflecting shareholder feedback and a commitment to thoughtful board evolution.

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CFO Jonathan Coblentz confirmed the long-term OpEx ratio target is 12.5%, with CEO Raul Vazquez adding that progress will come from cost discipline and growing the principal balance. Coblentz attributed the higher yield to price adjustments and origination growth. He declined to give specific guidance on the back book's rate but noted its overall impact on losses will diminish as it shrinks to a projected 1% of the portfolio by year-end.

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Executive Chairman George Zoley clarified that the 100,000-bed objective existed prior to the act and reaching it involves patching together capacity from private and state partners. He explained that the appropriations bill provided a large, bundled sum of money for broad service categories like detention, giving the agency flexibility to reprogram funds as needed, rather than including specific text about programs like ISAP. He also highlighted ICE's priority of hiring 10,000 new officers.

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CFO Mark Suchinski confirmed Q2 guidance includes revenue from the Delaney Hall contract, which activated May 1, but a more meaningful contribution from Northlake will begin in Q3. He noted ISAP counts are not expected to increase significantly in Q2. CEO Dave Donahue stated the budget process will likely give ICE a 'clear runway' in the second half of the year. Regarding Lea County, Donahue explained the decision was made to depopulate the facility to market it to federal partners, with Suchinski adding it was a 'challenged contract' from a return perspective.

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Executive Chairman George Zoley explained the revised revenue forecast resulted from more detailed modeling and greater clarity on facility capacities. Regarding prioritization, Zoley stated that while the existing U.S. facility market is limited, the ISAP program operates with a separate team and is expected to ramp up significantly and simultaneously with detention. He stressed that the solution to program compliance is continuous monitoring until an individual's immigration case is resolved.

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Executive Chairman George Zoley projected a potential doubling or tripling of the ISAP program, noting a prior House bill required monitoring for all 7 million individuals on the non-detained docket, subject to funding. He anticipates new appropriations bills could fund 70,000 to 100,000 detention beds. Zoley and CEO Brian Evans affirmed they expect to retain their market share as the exclusive provider under the ISAP program, highlighting their extensive, fully integrated national infrastructure.

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CEO Nicholas Randall explained that long-term margins are difficult to predict due to product mix fluctuations, but the current 15% is at the high end. He attributed margin gains to a combination of consistent, incremental operational productivity improvements and the peaks of product margin. Regarding the tank car pipeline, Randall mentioned the federally mandated conversion deadline of 2029 is creating significant customer appetite, and the company is in constant conversation with customers to provide either conversions or new builds.

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CEO Nicholas Randall explained that while the 15% margin is at the high end, long-term levels are subject to product mix fluctuations. He attributed current gains to a combination of steady, incremental operational productivity improvements and favorable product mix. Regarding the tank car pipeline, Randall highlighted the significant market opportunity driven by a 2029 federal conversion mandate for 10,000-17,000 units. He confirmed ongoing conversations with customers about providing solutions, whether through conversions or new car builds.

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President, CEO & Director Nicholas Randall explained that long-term margins are highly dependent on product mix, making them difficult to predict, though underlying productivity improvements are ongoing. He noted it's hard to separate the two drivers as they are intertwined. Regarding the tank car pipeline, Randall highlighted a federally mandated conversion deadline by 2029 for a significant number of industry cars, and confirmed FreightCar America is in continuous conversations with customers to provide either conversion or new car solutions.

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CEO Nicholas Randall attributed their success to a strong value proposition and a healthy pipeline, noting Q1 had their highest order intake proportion in 15 years. He affirmed an industry delivery forecast of 34,000-40,000 units. CFO Michael Riordan outlined a delivery cadence with a modest Q2 step-up followed by a significant ramp in the second half. He explained that improved gross margins were driven by the absence of low-margin box cars from the mix and that the Q1 SG&A increase was due to timing, not a structural change.

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Executive Michael Riordan clarified the Q4 delivery timing was normal transit and not a material issue. Riordan and Executive Matthew Tonn explained the guidance variance (8% delivery growth vs. 1% revenue growth) is due to a planned shift in product mix to cars with a lower average selling price (ASP), while still driving strong EBITDA growth. They confirmed the guidance accounts for tariff uncertainty, citing robust inquiry levels. Executive Nicholas Randall declined to quantify the tank car retrofit market but confirmed they are accelerating CapEx to be ready for this work by mid-2025 and are fielding more inquiries.

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Executive Michael Riordan explained the adjusted EBITDA guidance increase was due to strong year-to-date performance, plant optimization, and better end-of-year visibility. Executive Nicholas Randall attributed the Q3 delivery variance to the timing of product line changeovers, noting Q3 had more than Q2, but affirmed they are on track to meet annual guidance. Riordan projected that full-year 2024 gross margins would be 'materially in line' with 2023, impacted by a weaker Q1. Executive Matthew Tonn confirmed that the pipeline for tank car conversions remains strong with significant customer interest.

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EVP & CFO Thomas Ellman detailed that year-to-date, the engine leasing profit mix is approximately 70% operating income and 30% remarketing, with strong performance expected to continue. He noted remarketing activity is lumpy but demand remains high. President & CEO Robert Lyons added that while wholly-owned investment might be slightly below the $200 million target, investment at the RRPF JV is expected to exceed its initial $800 million forecast for the year.

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EVP & CFO Thomas Ellman detailed that for Q2, operating income was 85% of the engine leasing total, with remarketing at 15%. He noted that the strong performance of this segment was the primary driver for the increased full-year guidance. President & CEO Robert Lyons added that while investment is lumpy, he expects healthy activity in the second half, with the RRPF joint venture's investment volume likely to exceed the initial $800 million forecast for the year.

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EVP & CFO Tom Ellman detailed that for Q2, operating income was 85% of the engine leasing profit mix, with remarketing at 15%. He noted strong performance in this segment is the key driver for the increased full-year guidance. President & CEO Bob Lyons added that while remarketing gains are lumpy due to high asset values, overall investment activity remains strong, with the RRPF joint venture's investment volume expected to be north of the initially forecasted $800 million for the year.

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EVP & CFO Thomas Ellman detailed that year-to-date, the engine leasing profit mix is approximately 70% operating income and 30% remarketing, with strong performance expected to continue. President & CEO Robert Lyons added that while investment timing is lumpy, he expects healthy activity in the second half, with total investment at the RRPF joint venture likely to exceed the initial $800 million forecast for the year.

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EVP & CFO Tom Ellman detailed that for Q2, operating income was 85% of the engine leasing JV's profit, and strong performance in this segment drove the company's guidance increase. He noted remarketing activity is lumpy but demand is high. President & CEO Bob Lyons added that while investment in the wholly-owned portfolio may be slightly below the $200 million target, investment at the RRPF JV is expected to exceed its initial $800 million forecast for the year.

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President and CEO Robert Lyons confirmed that the full-year investment target of $1.4 billion remains on track, supported by a strong pipeline in the RRPF engine leasing joint venture. He stated the company's interest expense forecast for 2025 is unchanged and that the balance sheet remains very strong. Regarding Europe, Lyons noted that while the intermodal market faces challenges, the overall renewal success rate is high, consistent with the market's typical shorter lease terms.

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President and CEO Robert Lyons noted that despite higher interest rates, demand for railcar assets has remained robust, supporting the strong 2025 outlook. Paul Titterton, EVP and President of Rail North America, added that disciplined new car production funnels investors to the secondary market. Lyons confirmed 2025 fleet additions will come from their existing supply agreement and continued, though less robust, secondary market purchases. CFO Thomas Ellman highlighted that lease repricing is the key driver of financial performance.

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President and CEO Bob Lyons explained that the forecast for modest Q4 remarketing income is due to already achieving the full-year target and a typical seasonal slowdown as buyers' capital programs wind down. EVP and CFO Tom Ellman stated that the strong RRPF results were driven by a larger engine portfolio and higher lease rates, consistent with expectations. Ellman provided the RRPF income mix as roughly 50/50 operating vs. remarketing for the quarter. Lyons confirmed that about half of the North American fleet has been repriced at current higher rates.

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EVP & CFO Haji Glover explained that cost savings are focused on non-revenue generating, discretionary functions and that the company is exploring real estate monetization with a potential update in 90-120 days. He projected flat profitability for the Entertainment segment in fiscal 2026. President & CEO Peter Warwick noted that while the district school market remains cyclically challenged, growth in state-sponsored programs and operational efficiencies support a flat revenue outlook for the Education segment. Warwick also described the internal integration of publishing and distribution channels as having a 'tremendous' positive impact, with benefits expected in fiscal 2026 and beyond.

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President and CEO Peter Warwick explained that strong frontlist performance from key authors is expected to drive backlist sales. He attributed the Education Solutions slowdown to cautious school spending and a cyclical focus on core curriculum, clarifying the strategic review is an internal optimization effort, not a sale. CFO and EVP Haji Glover declined to provide a fair value for real estate but noted the company has disclosed sufficient details for investors to make their own assessments.

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CFO Haji Glover explained the Entertainment segment's loss was due to non-cash intangible amortization from the 9 Story acquisition and production expenses, which are excluded from adjusted EBITDA. He clarified that Scholastic benefits from the 'Dog Man' movie via book sales, not production fees. CEO Peter Warwick added that federal policy changes are not expected to have a material near-term impact, as most education funding is state and local. He cited the growing Florida literacy initiative as a key driver of optimism. Finally, Mr. Glover stated the company is comfortable with its current leverage but may increase it for growth initiatives while continuing to return cash to shareholders.

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CFO Haji Glover attributed gross margin gains to a favorable business mix and noted this was factored into the full-year outlook. He also expressed confidence in the current leverage, stating the company is exploring balance sheet opportunities but has no immediate plans to aggressively pay down debt. President and CEO Peter Warwick reported that Book Fairs are performing as expected, with strategic adjustments and a higher fair count mitigating consumer pressures. He highlighted positive early signs in the Book Clubs business, where redesigned, teacher-centric flyers are boosting sponsor engagement. For Education Solutions, Warwick noted a growing trend of state and partner programs focused on getting books into homes, which Scholastic is leveraging to rebalance the segment amid near-term headwinds in direct-to-school sales.

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CEO Lance Parker explained the strong Q4 spread was driven by solid baseline activity plus a significant lift from a CVS/Longs anchor renewal. While not providing specific guidance, he expressed confidence in continued strong leasing interest for 2025. He characterized the small office portfolio as non-strategic and a candidate for capital recycling. Both Lance Parker and CFO Clayton Chun clarified the $0.01 FFO in guidance is for unspecified growth, reflecting confidence in their ability to deploy capital rather than a specific, pending transaction.

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CFO Clayton Chun explained the joint venture is a passive, pre-REIT investment that is not a major cash flow contributor and that Q4 guidance assumes a breakeven contribution from Land Operations. He attributed G&A reductions to process improvements and overall company simplification. Chun stated the decision to use the revolver for the Pearl Highlands mortgage was a strategic move to pair it with an existing forward-starting interest rate swap, locking in a fixed rate of 4.73%.

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CFO Greg Ezell noted that underlying collateral performance is positive, with unrealized NAV increasing, though distributions have declined year-over-year. CEO Brad Heppner added that industry-wide distributions have fallen to half their historical norms but expects this to change. Ezell then explained the equity reclassification was achieved by creating a new preferred security without a cash redemption feature, which is a key step toward meeting Nasdaq's permanent equity listing requirement.

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Greg Ezell stated the collateral portfolio is performing well with rising unrealized NAV, though cash distributions have slowed but show early signs of picking up. Brad Heppner added that the entire industry has seen a historic slowdown in distributions but expects a recovery. Greg Ezell explained the equity reclassification was a technical change to a preferred security to remove a cash redemption feature, allowing it to count as permanent equity to help meet Nasdaq listing requirements.

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