Executive Summary

Q3 beat on both revenue and EPS: revenue $160.5M vs $157.1M consensus*; Adjusted EPS $0.24 vs $0.155 consensus*; gross margin expanded to 15.1% (record quarter since moving production to Mexico), and Adjusted EBITDA reached $17.0M (10.6% margin) . Results were driven by favorable product mix (specialty new cars and conversions) and continued efficiency gains at Castaños .
Guidance: Deliveries (4,500–4,900) and Adjusted EBITDA ($43–$49M) reaffirmed; Revenue lowered to $500–$530M (mix shift toward conversions). Capex now $4–$5M for FY25 (timing shift to Q1’26) .
Backlog ended at 2,750 units ($222M) with 430 orders in Q3; management cited subdued industry demand (orders <30k units in 2025) but expects a recovery toward replacement levels in 2026, likely back-half weighted .
Near-term setup: Q4 margin to step down due to annual maintenance shutdown and a higher mix of lower-margin covered hoppers; plant line retooling aims to make margins more sustainable in 2026 .
Strategic catalysts: advancing tank car retrofit readiness (AAR certifications, vertical integration), with 2026–27 deliveries tied to a 1,000-car retrofit and a pathway into new tank car builds afterward .

S&P Global estimates disclaimer: all values marked with * are from S&P Global consensus.

What Went Well and What Went Wrong

What Went Well
- “Record third quarter Adjusted EBITDA at our new facility” of $17.0M (10.6% margin) with revenue up 42% YoY; gross margin improved to 15.1% on favorable mix and plant efficiency .
- Healthy commercial execution despite industry softness: 430 orders in Q3; backlog 2,750 units ($222M); achieved over 20% of addressable new-car order share in the quarter (15% of total market) .
- Strong liquidity and cash generation: Q3 operating cash flow $3.4M, Adjusted FCF $2.2M; quarter-end cash $62.7M, no revolver borrowings .
What Went Wrong
- Revenue outlook trimmed to $500–$530M due to a higher proportion of conversions (lower ASP), despite holding deliveries and Adjusted EBITDA guidance .
- Q4 margin expected to step down to ~8% Adjusted EBITDA margin implied by guidance midpoint, reflecting annual maintenance shutdown and a larger mix of lower-margin covered hoppers .
- Industry demand muted (2025 orders <30k vs ~~40k replacement); backlog value per unit stepped down (~~$81k vs ~$87k prior Q) as mix shifted, though margins improved .

Financial Results

Headline results – quarterly trend (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$96.29	$118.62	$160.51
GAAP Diluted EPS ($)	$1.52	$0.34	$(0.23)
Adjusted EPS ($)	$0.05	$0.11	$0.24
Gross Margin (%)	14.9%	15.0%	15.1%
Adjusted EBITDA ($M)	$7.31	$10.02	$17.02

Q3 vs. consensus (S&P Global)

Metric	Q3 2025 Actual	Q3 2025 Consensus*	Surprise
Revenue ($M)	$160.51	$157.15*	+$3.36M (beat)
Primary EPS / Adjusted EPS ($)	$0.24	$0.155*	+$0.085 (beat)

KPIs and operating metrics – quarterly trend (oldest → newest)

KPI	Q1 2025	Q2 2025	Q3 2025
Deliveries (units)	710	939	1,304
Orders in-quarter (units)	1,250	1,226	430
Backlog (units)	3,337	3,624	2,750
Backlog ($M)	$318	$316.9	$222.0
Operating Cash Flow ($M)	$12.79	$8.53	$3.41
Adjusted Free Cash Flow ($M)	$12.46	$7.92	$2.25
Cash & Equivalents ($M)	$54.08	$61.35	$62.74
Capex ($M)	$0.33	$0.61	$1.16

Segment breakdown: Not applicable – FreightCar America reports consolidated results; product mix commentary (new builds vs conversions/retrofits) provided qualitatively .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Railcar Deliveries (units)	FY 2025	4,500–4,900	4,500–4,900	Maintained
Revenue ($M)	FY 2025	$530–$595	$500–$530	Lowered
Adjusted EBITDA ($M)	FY 2025	$43–$49	$43–$49	Maintained
Capex ($M)	FY 2025	$9–$10 (Q2 call)	$4–$5 (timing shift to Q1’26)	Lowered (timing)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Demand / replacement cycle	Q1: Reaffirmed FY25 guide with healthy backlog; Q2: industry orders likely sub-30k; backlog up ~300 units, book-to-bill 1.3x .	Industry demand remains subdued (<30k); pipeline steady; recovery toward replacement levels expected in 2026 (back-half) .	Stabilizing near trough; recovery expected 2026.
Product mix: conversions vs new builds	Q2: Orders largely rebuilds/conversions; margin tailwind .	Mix skew to conversions in H2 drives lower revenue guidance but stable EBITDA .	Mix shift to conversions; supports margins, lowers ASP.
Gross margins / ops efficiency	Q1: GM 14.9%; Q2: GM 15.0% on efficiency .	GM 15.1%; record adj. EBITDA; Q4 margin step-down (shutdown + more covered hoppers) .	Structural improvement; Q4 seasonal dip.
Tank car retrofit and path to new builds	Q2: Growth capex for tank retrofit; ~$6M incremental EBITDA over 2026–27; program starts mid-2026 .	Ahead of schedule on readiness (AAR certs; vertical integration); retrofit a bridge to new tank car builds post-2027 .	Execution progressing; strategic expansion.
Digital/automation (TruTrack)	Not highlighted in Q1/Q2 press; focus on operations and backlog .	Introduced TruTrack digital tracking and monitoring across production; layout enhancements to improve flow/productivity .	New tech/process focus emerging.
Macro & policy (tariffs/government)	Q2: Tariff uncertainties impacting order timing .	Limited direct impact from gov’t shutdown; border crossings highly automated; no disruptions noted .	Macro uncertainties persist; limited direct impact reported.
Governance / Rights plan	—	Board adopted limited-duration stockholder rights plan (9/8/25) .	Governance backdrop for potential change-in-control scenarios.

Management Commentary

“We delivered record third quarter Adjusted EBITDA at our new facility... Our team continues to demonstrate manufacturing flexibility... While overall industry demand remains subdued, we continue to support customers by leveraging our expertise in conversions and customized solutions” – CEO Nick Randall .
“Consolidated revenues… $160.5M… gross margin 15.1%… Adjusted EBITDA $17.0M… Reported net loss… includes a $17.6M non-cash adjustment [warrant liability]… We generated $3.4M operating cash… ended the quarter with $62.7M of cash and no borrowings” – CFO Mike Riordan .
“We are reaffirming our full-year adjusted EBITDA and railcar delivery guidance ranges and adjusting our revenue range down to $500 to $530 million to reflect the product mix change” – CFO .
“We received total orders for 430 railcars… achieved over 20% of addressable market order share… conversions and retrofits… meaningful driver of margin expansion” – CCO Matt Tonn .
“TruTrack process, integrating digital tracking and monitoring… plant layout enhancements… improving flow… increasing productivity… driving higher throughput” – CEO .

Q&A Highlights

Capex guidance reset is timing, not scope: growth investments for tank retrofit shifted from late Dec to early Jan; FY25 capex now $4–$5M (vs prior $9–$10M) .
Mix and revenue: higher conversion mix lowers revenue dollars but maintains unit and Adjusted EBITDA guidance; revenue is “not a great metric” given conversions vs new builds .
Q4 margin step-down: annual maintenance shutdown in late Dec and a larger mix of lower-margin covered hoppers; retooling lines to improve sustainable margins .
Tank car strategy: 1,000-car retrofit order in backlog for 2026–27; retrofit serves as bridge to enter new tank car builds afterward; normal market ~40k units/yr with ~10k tank cars .
Industry trajectory: mgmt expects order placement to trend toward ~40k replacement level in 2H26; sees pent-up demand as scrap continues .

Estimates Context

Q3 2025 results vs S&P Global consensus: Revenue $160.5M vs $157.1M*; Adjusted/Primary EPS $0.24 vs $0.155* (beat on both) .
Intra-year cadence: Q1 missed both revenue and EPS; Q2 beat on both; Q3 beat on both (below).

S&P Global estimates disclaimer: values marked with * were retrieved from S&P Global.

Metric	Q1 2025 Consensus*	Q1 2025 Actual	Q2 2025 Consensus*	Q2 2025 Actual	Q3 2025 Consensus*	Q3 2025 Actual
Revenue ($M)	102.73*	96.29	114.89*	118.62	157.15*	160.51
Primary EPS / Adjusted EPS ($)	0.08*	0.05	0.055*	0.11	0.155*	0.24

Key Takeaways for Investors

Q3 quality of earnings was strong: margin expansion and a sizable EBITDA beat vs consensus* provide confidence in the operating model despite softer industry orders .
Guidance nuance matters: revenue reduced on mix (conversions) but unit deliveries and Adjusted EBITDA maintained—watch mix/ASP vs margin trade-offs into Q4 .
Expect Q4 normalization: seasonal shutdown and product mix imply lower margins in Q4; focus on FY EBITDA delivery and cash generation remains intact .
2026 setup improving: tank car retrofit readiness (AAR, vertical integration) and line retooling create levers for sustainable margins as demand trends toward replacement levels .
Liquidity supports optionality: $62.7M cash and no revolver borrowings enable continued growth capex and strategic opportunities without near-term balance sheet stress .
Governance backdrop: limited-duration stockholder rights plan in place through Aug 2026, relevant should corporate actions emerge .
Watch list: order intake momentum, backlog value per unit (mix), cadence of tank retrofit milestones, and pricing discipline vs covered-hopper exposure into 2026 .