Executive Summary

Q1 2025 revenue and EPS came in below Street: revenue $96.3M vs $102.7M consensus; Primary EPS $0.05 vs $0.08 consensus; Adjusted EBITDA $7.3M grew YoY but was below S&P Global’s EBITDA consensus, while gross margin expanded 780 bps YoY to 14.9% on mix and efficiency . Results were affected by planned lower deliveries (710 vs 1,223 YoY) due to dedicating capacity to large custom fabrications . S&P Global consensus figures marked with an asterisk; Values retrieved from S&P Global.*
Commercial momentum was strong: 1,250 railcars ordered (~$141M), representing ~25% of industry orders and 36% in the addressable market, pushing backlog to 3,337 units/$318M; management reaffirmed FY25 guidance (deliveries 4,500–4,900; revenue $530–$595M; Adjusted EBITDA $43–$49M) .
Cash generation continued: operating cash flow $12.8M; adjusted free cash flow $12.5M; cash on hand $54.1M; fourth consecutive quarter of positive operating cash flow; capex light at $0.3M in Q1; FY25 capex remains $5–$6M with ~$1M for tank car retrofit readiness .
Stock reaction catalysts: guidance reaffirmation and share-gain narrative vs near‑term misses and second‑half weighted delivery cadence; tariff/USMCA positioning and tank-car retrofit program underpin medium-term optionality .

What Went Well and What Went Wrong

What Went Well
- Margin and profitability resilience on lower volumes: gross margin 14.9% (+780 bps YoY) on favorable mix/efficiency; Adjusted EBITDA $7.3M vs $6.1M YoY . CEO: “we achieved robust margins…once again outperforming our industry peers” .
- Commercial execution and market share: 1,250 orders (~$141M) with the largest quarterly intake market share in 15 years; backlog to 3,337 units/$318M; mgmt cites addressable market share rising to 27% on TTM basis .
- Cash flow and balance sheet: operating cash flow $12.8M and adjusted FCF $12.5M; cash ended $54.1M; fourth straight quarter of positive operating cash flow; no revolver borrowings .
What Went Wrong
- Top-line and EPS miss vs Street: revenue $96.3M vs $102.7M consensus; Primary EPS $0.05 vs $0.08 consensus; EBITDA below S&P’s consensus; planned lower deliveries (710 vs 1,223 YoY) and Q1 allocation to large fabrications weighed on revenue/EBITDA conversion . S&P Global values marked with an asterisk; Values retrieved from S&P Global.*
- Higher SG&A: SG&A rose to $10.5M vs $7.5M YoY; management flagged timing and expects normalization as % of revenue over the year .
- Interest expense remained elevated YoY: $4.3M vs $2.4M in Q1 2024; although finance costs improved from 2024 levels overall, interest expense impacted GAAP operating leverage; GAAP diluted EPS of $1.52 was driven by a $52.9M non‑cash warrant liability gain (excluded from adjusted) .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 Consensus
Revenue ($M)	$161.1	$137.7	$96.3	$102.7*
Gross Margin %	7.1%	15.3%	14.9%	—
Operating Income ($M)	$3.9	$11.6	$3.9	—
Adjusted EBITDA ($M)	$6.1	$13.9	$7.3	$8.22*
EPS (Primary/Adjusted Diluted)	($0.10)	$0.21	$0.05	$0.08*
EPS (GAAP Diluted)	($0.54)	$1.01	$1.52	—

Notes: Primary EPS aligns to S&P Global Primary EPS and equals company Adjusted Diluted EPS for Q1 2025. S&P Global values marked with an asterisk; Values retrieved from S&P Global.*

Drivers: Lower deliveries (710 vs 1,223 YoY) and prior-year border timing benefited Q1’24 comp, while Q1’25 margins improved on mix/efficiency; Q2 sequential step-up expected but back-half weighted to reach FY guide .

KPIs and Operating Metrics

KPI	Q1 2024	Q4 2024	Q1 2025
Deliveries (units)	1,223	1,019	710
Orders (units / $)	—	—	1,250 / ~$141M
Backlog (units / $)	—	2,797 / $266.5M	3,337 / $318M
Operating Cash Flow ($M)	($25.3)	—	$12.8
Adjusted Free Cash Flow ($M)	($30.5)	—	$12.5
Cash Balance ($M)	$14.0	$44.5	$54.1
SG&A ($M)	$7.5	$9.4	$10.5
Capex ($M)	$1.0	—	$0.3

Segment disclosure: No segment table provided in Q1 2025 release; prior materials have shown “Manufacturing” and “Corporate and Other” segmentation (e.g., Q3 2024) .

Guidance Changes

Metric	Period	Previous Guidance (3/12/25)	Current Guidance (5/5/25)	Change
Railcar Deliveries (units)	FY 2025	4,500 – 4,900	4,500 – 4,900	Maintained
Revenue ($M)	FY 2025	$530 – $595	$530 – $595	Maintained
Adjusted EBITDA ($M)	FY 2025	$43 – $49	$43 – $49	Maintained
Capex ($M)	FY 2025	$5 – $6 (incl. ~$1M tank retrofit prep)	$5 – $6 (incl. ~$1M tank retrofit prep)	Maintained
Free Cash Flow	FY 2025	Positive FCF expected	Positive FCF expected	Maintained

Management reiterated 2H-weighted delivery cadence to achieve guidance .

Earnings Call Themes & Trends

Topic	Q-2 (Q3 2024)	Q-1 (Q4 2024)	Current (Q1 2025)	Trend
Market share/orders	Strong pipeline; raised FY24 Adj. EBITDA midpoint; robust backlog	4,245 FY orders; ~12% total market share; ~21% addressable; backlog 2,797/$267M	1,250 orders (~25% of quarterly orders; 36% addressable); TTM addressable share 27%; backlog 3,337/$318M	Improving share, strong intake
Tariffs/USMCA	—	Minimal direct impact; sources largely U.S.; agility as advantage	Railcars compliant with USMCA; not subject to tariffs per current understanding	De‑risked positioning
Delivery cadence	—	2025 back-half heavy; Q1 lower on fabrications; Q2 step-up; Q3/Q4 strong	Reaffirmed cadence; Q2 up modestly; heavy 2H ramp	Visibility improving
Margin trajectory	GM improved on mix; Adj. EBITDA up YoY	Margin expansion with 4 lines; per-car EBITDA up	GM 14.9% (+780 bps YoY); mix benefits; boxcars (lower margin) not in 2025 pipeline	Sustained improvement
Tank car strategy	Entered tank retrofit; multi‑year order	Capex ~$1M in 1H25 for retrofit readiness; exploring new tank car entry	Retrofit shipments start 2026; new tank car timing later; fifth line optional if demand	Optionality building
Capacity/flexibility	Optional fifth line discussed	Fifth line under roof; <90 days, <~$1M to commission	Trigger >~~5,200 units sustained or other demand (retrofits/fabrications); <90 days, <~~$1M	Ready lever
Macro/supply chain	—	Border transit timing noted for Q4/Q1	Industry orders timing delays but replacement cycle intact	Neutral to positive LT

Management Commentary

Strategy and positioning
- “We continued to solidify our position as the fastest-growing railcar manufacturer in North America…achieved robust margins…Order activity remained strong, with 1,250 railcars ordered…We reaffirm our previously announced full-year guidance” — Nick Randall, CEO .
- “Our alignment with USMCA guidelines insulates our operations from current tariff uncertainties…distinct competitive edge through enhanced responsiveness” — CEO, prepared remarks .
Financial discipline
- “We remain in a strong financial position, generating consistent operating and free cash flow…ending the quarter with over $50 million in cash on hand…firmly on track to achieve our full year guidance” — Mike Riordan, CFO .
- “This quarter, we generated $12.8 million in operating cash flow…adjusted free cash flow…approximately $12.5 million…ended the quarter with cash holdings of $54.1 million and no outstanding borrowings on our revolving credit facility” — CFO .

Q&A Highlights

Capacity/fifth line triggers: Fifth line can be commissioned in <90 days with <~$1M capex; trigger would be sustained demand >~5,200 units/year or needs from conversions/adjacent fabrications; not assumed in 2025 guidance .
Delivery cadence: Q2 step-up from Q1 but not dramatic due to changeovers; back half (Q3/Q4) carries bulk of deliveries to meet FY guidance .
Mix and margins: 2024 Q1 had low-margin boxcars; none expected in 2025 pipeline; Q1 2025 GM improvement driven by product mix and efficiency .
Orders and conversion: Despite industry hesitancy, RAIL posted its strongest quarterly market share in 15+ years; pipeline active with healthy inquiry-to-order progression .
Tank car program and timing: Retrofit capex in 2025; shipments begin 2026 and run ~18 months; new-build tank entry targeted in out-years (post-2026) .

Estimates Context

Metric	Q1 2025 Consensus	Q1 2025 Actual	Surprise
Revenue ($M)	$102.7*	$96.3	Miss (~$6.4M)
Primary EPS	$0.08*	$0.05	Miss ($0.03)
EBITDA ($M)	$8.22*	$5.34*	Miss (~$2.9M)

Notes: Primary EPS refers to S&P Global Primary EPS (aligns to company’s Adjusted Diluted EPS for Q1 2025). S&P Global values marked with an asterisk; Values retrieved from S&P Global.*

Implications: Street likely revisits quarterly cadence (heavier 2H) and margin durability; reaffirmed FY guide provides an anchor, but near‑term models may trim Q2 while holding FY bridge if order/backlog conversion remains on track .

Key Takeaways for Investors

Near-term miss vs consensus, but margin quality intact and FY25 guidance reaffirmed; story remains execution on 2H delivery ramp and mix discipline .
Commercial momentum remains a differentiator (1,250 orders; share gain to 27% TTM addressable) supporting backlog visibility into 2H and 2026 .
Cash generation inflecting with four straight quarters of positive operating cash flow and low maintenance capex; deleveraging path intact .
Mix tailwinds (no boxcars in 2025 pipeline) and operations efficiency support sustained gross margins even at lower volumes .
Capacity optionality (fifth line) provides upside if demand accelerates; retrofit/tank-car initiatives add medium-term growth vectors without near-term capacity constraints .
Watch tariff headlines: USMCA footprint and supply strategy mitigate direct exposure, but timing of order placements remains a swing factor for quarterly cadence .
Trading setup: Reaffirmed guide and strong orders/backlog are supportive vs. Q1 miss; shares likely react to evidence of Q2 step-up and Q3/Q4 execution, and any incremental order disclosures .

FreightCar America, Inc. (RAIL)·Q1 2025 Earnings Summary