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FreightCar America, Inc. (RAIL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid topline and margin performance: revenue $137.7M, gross margin 15.3%, Adjusted EBITDA $13.9M, and Adjusted EPS $0.21; GAAP diluted EPS was $1.01, driven by a non-cash warrant liability fair value adjustment .
  • Year-over-year, revenue rose 8.8% and gross profit increased to $21.0M (vs. $12.1M in Q4 2023); deliveries were stable at 1,019 units (vs. 1,021) as product mix and productivity improved margins .
  • FY 2025 guidance introduced: deliveries 4,500–4,900 (+7.7% midpoint), revenue $530–$595M (+~1% midpoint), Adjusted EBITDA $43–$49M (+7% midpoint), with expected positive free cash flow; capex planned at $5–$6M, including ~$1M for tank car retrofit readiness .
  • Backlog ended Q4 at 2,797 units valued $266.5M; management emphasized strong inquiry levels despite tariff uncertainty, and reiterated agility, market-share gains, and capital structure optimization as catalysts heading into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to 15.3% in Q4 (vs. 9.6% prior-year) on favorable mix and higher productivity; Adjusted EBITDA more than doubled to $13.9M YoY .
  • Strategic financing actions: redeemed Series C preferred via $115M term loan (~40% cost of capital reduction; ~$9.2M first-year savings) and closed $35M ABL at SOFR+175 (~35% borrowing cost reduction), enhancing financial flexibility and free cash generation .
  • Commercial momentum: full-year orders of 4,245 railcars ($447M), entry into tank car conversions (DOT-117R) under multi-year deal, and increased share across addressable segments; backlog supports 2025 execution .

What Went Wrong

  • Backlog stepped down sequentially to 2,797 units ($266.5M) from 3,611 units ($372M) in Q3; management cited normal transit timing affecting quarter-end deliveries and mix-driven cadence into 1H 2025 .
  • SG&A rose to $9.4M (vs. $7.7M prior-year) and ex-stock comp increased as a percent of revenue by ~70 bps in Q4, reflecting growth and operational scaling .
  • Wall Street consensus estimates from S&P Global were unavailable due to SPGI access limits, preventing formal beat/miss analysis for Q4; analysts may need to refresh coverage and cadence given non-GAAP adjustments and mix shifts [GetEstimates error].

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$147.4 $113.3 $137.7
Gross Profit ($USD Millions)$18.4 $16.2 $21.0
Gross Margin (%)12.5% 14.3% 15.3%
Adjusted EBITDA ($USD Millions)$12.1 $10.9 $13.9
Diluted EPS (GAAP)$0.11 $(3.57) $1.01
Adjusted EPS (Non-GAAP)$0.05 $0.08 $0.21
Deliveries & Backlog KPIsQ2 2024Q3 2024Q4 2024
Railcar Deliveries (Units)1,159 961 1,019
Backlog (Units)3,833 3,611 2,797
Backlog Value ($USD Millions)$382 $372 $266.5
Net Orders (Units)2,916 739 — (not disclosed)

Notes: Q4 GAAP EPS and net income benefited from a non-cash warrant liability fair value change; management emphasized adjusted metrics for comparability .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Railcar DeliveriesFY 2025—4,500 – 4,900New
Revenue ($USD Millions)FY 2025—$530 – $595New
Adjusted EBITDA ($USD Millions)FY 2025—$43 – $49New
Capex ($USD Millions)FY 2025—$5 – $6 (incl. ~$1 for tank retrofit readiness)New
Free Cash FlowFY 2025—Expect positive FCFNew

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Tariffs/MacroStable replacement-driven demand; tank conversions added; watch service metrics Tariffs expected not to directly impact; replacement demand ~40k cars/year Not directly impacted (materials mostly USA-sourced); inquiry robust; post-election cadence deferment noted Cautious but resilient; inquiries steady
Product Mix & MarginsAll-new cars lowered GM vs prior-year conversions; sequential GM +550 bps GM 14.3%; sequential improvement; facility at capacity Q4 GM 15.3% on mix/productivity; ASP variance to drive 2025 revenue vs deliveries Improving mix; productivity gains
Tank Car StrategySecured multi-year DOT-117R conversions; capacity runway Continued pipeline for conversions; market share gains Capex ~$1M to outfit facility; conversions start 2026–2027; new tank cars possible thereafter Executing conversions; option for new builds
Market ShareHighest orders since Mexico transformation; gains in gondolas/flat/hoppers Captured 22% of orders in addressable market; +3% sequential share 57% increase in market share on orders won vs addressable market down 45% YoY Share gains vs industry
Capital Structure & LiquidityHealthy cash; no revolver draw; strong operating cash flow Cash $44.8M; operating cash flow momentum Term loan redeems preferred (~40% cost reduction); $35M ABL at lower spread; target 1.0x–2.5x leverage Materially improved funding costs
Parts/AftermarketAftermarket parts opportunity noted Parts business growth drivers explained (coal/EVC, Class II/III) Parts broken out in filings; ongoing review for growth Expanding parts distribution

Management Commentary

  • “We delivered $43 million in Adjusted EBITDA for the full year, representing a 114% increase versus the prior year… we recently lowered our cost of capital through refinancing, reinforcing our financial flexibility for the future” — Nick Randall, CEO .
  • “Adjusted EBITDA for the full year was $43 million… 2024 signified our second consecutive year of delivering over 100% growth in adjusted EBITDA… replaced our preferred shares with a lower-cost term loan and entered into a new $35 million ABL” — Michael Riordan, CFO .
  • “We closed the year with a robust backlog of 2,797 units valued at approximately $267 million… increased our market share… agility positions us well as tariff-related uncertainties dissipate” — Matthew Tonn, CCO .

Q&A Highlights

  • Mix and cadence: Two lines allocated to large spare fabrications in Q1’25 will reduce deliveries early, with momentum rebuilding in Q2 and a heavier back half; margins expected to hold despite cadence effects .
  • Tariffs: Company sources most materials domestically; sees tariff uncertainty as temporary deferment, with robust inquiries and ability to convert interest into orders; limited ability for competitors to shift significant capacity to US .
  • Revenue vs deliveries (2025): Small revenue growth vs stronger delivery growth reflects ASP variance and lower-priced rebodies; focus remains on EBITDA and cash generation .
  • Tank conversions: 1,000-car retrofit program expected to run 2026–2027; facility readiness in late Q2/early Q3 2025 with ~$1M capex; addressable market not disclosed; inquiries increasing .
  • Capital strategy: Target leverage 1.0x–2.5x; S-3 shelf renewed; PIMCO registered warrant shares with no EPS dilution (already counted in diluted shares outstanding) .

Estimates Context

  • Wall Street consensus for Q4 2024 EPS and revenue from S&P Global was unavailable due to SPGI access limits during retrieval. As a result, we cannot provide formal beat/miss analysis vs. consensus for this quarter. Please note to refresh S&P Global consensus prior to trading decisions [GetEstimates error].

Key Takeaways for Investors

  • Margin and cash story intact: Q4 gross margin expanded to 15.3% and Adjusted EBITDA rose to $13.9M; full-year operating cash flow $44.9M and adjusted free cash flow $21.7M underpin 2025 FCF guidance .
  • Mix drives narrative: ASP/mix shifts will cause revenue growth to lag delivery growth in 2025; watch product mix and rebodies vs. new builds to gauge margins and EBITDA trajectory .
  • Backlog/inquiries: Backlog moderated to 2,797 units ($266.5M) but inquiry levels remain strong; tariff clarity could unlock orders; monitor sequential bookings and backlog replenishment in H1 2025 .
  • Tank car optionality: 2026–2027 conversions provide visibility; ~$1M capex in 1H 2025 to outfit facility; potential to enter new tank car builds thereafter—track milestones and customer commitments .
  • Financing tailwind: Cost of capital materially lower post preferred redemption and new ABL; management targets 1–2.5x leverage—expect improved earnings quality and capital allocation flexibility .
  • Watch non-GAAP adjustments: GAAP EPS heavily influenced by non-cash warrant liability fair value changes; use Adjusted EPS/EBITDA for operating performance comparisons .
  • Near-term trading lens: Stock may react to booking cadence, margin mix in H1, and tariff headlines; confirm consensus once SPGI access is restored to calibrate expectations for sequential deliveries and profitability [GetEstimates error].