Q4 2024 FreightCar America Inc Earnings Call
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Speaker Change: Greetings and welcome to FreightCar America's fourth quarter and full year 2024 earnings conference call. At this time, all participant lines are in a listen only mode. For those of you participating on the conference call, there will be an opportunity for your questions at the end of today's prepared remarks.
Speaker Change: Please note, this conference is being recorded. An audio replay of the conference will be available on the company's website within a few hours after this call. I would now like to turn the call over to Chris O'Day with Riveront Investor Relations. Please go ahead.
Chris O'Day: Thank you and welcome. Joining me today are Nick Randall, President and Chief Executive Officer, Mike Riordan, Chief Financial Officer, Nat Ton, Chief Commercial Officer. I like to remind everyone that statements made during this conference call related to the company's expected future performance.
Chris O'Day: Future business prospects for future events or plans made quick forward-looking statements as defined under the private security litigation reform at 1995.
Chris O'Day: Participants are directed to Freight Car America's Form 10-K for description of certain business risks, some of which may be outside the control of the company and may cause actual results to materially differ from those expressed in the forward-looking statements.
Chris O'Day: Expressly to exclaim any duty to provide any updates to our forward-looking statements, whether as a result of new information, future events or otherwise.
Chris O'Day: During today's call, there will also be discussion of some items that do not conform to U.S. General makes a bit of conning principles or gap.
Chris O'Day: Reconciliation of these non-GAAP measures to their most directly comparable GAAP measures are included in the earnings release issued yesterday afternoon Thank you.
Chris O'Day: Arning's release for the 4th quarter of 2024 is posted on the company's website at FreightCarAmerica.com along with our 10k which was filed yesterday after market. With that, I will not turn the call over to Nick for opening remarks.
Nick: Thank you, Chris. Good morning, everyone, and thank you all for joining us today.
Nick: As we close out 2024, I want to reflect on a significant year of relentless execution and achievement for the company. We set ambitious goals throughout the year and exceeded expectations as we continue to leverage our unique vertically integrated, pure play, manufacturing presence.
Nick: During the fiscal year 2024, we achieved a 57% increase in market share on orders one across our addressable market, despite our addressable market being down 45% year on year.
Nick: We delivered 56% revenue growth for the year and exceeded our adjusted EBITDA guidance delivering 43 million dollars, representing a 140% increase over a prior year.
Nick: On a per rail car basis, adjusted EBIDAR per car also improved dramatically, up 48% to 9,858 up from 6,658 in the prior year, underscoring the strength of our operational efficiency
Nick: Lastly, we have generated $45 million in operating cash flow for the four year and $22 million in adjusted free cash flow, representing a significant step up as we continue to generate profitable growth from our facility. Thank you very much.
Nick: Simply put, we are in a much stronger position as we enter 2025 on our position to deliver sustainable results ahead.
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Speaker Change: Looking back on the year, our ability to execute at a high level was evident across the board. Our team consistently delivered on our operational and commercial commitments, ensuring robust, superior quality product shipments.
Speaker Change: We hit a major milestone, producing a 10,000th rail car at our Christianios facility, a testament to the strength of our operations.
Speaker Change: Additionally, 2024 marked a successful launch into the tank car segment, proving as an entry point as we look to expand our reach and our competitive advantage in this higher margin space.
Speaker Change: Alongside our operational success, we also took key steps to strengthen our financial foundations further.
Speaker Change: As with Privacy Committee to in 2024, we've redeemed all outstanding preferred shares to strengthen our balance sheets and improve our capital efficiency, resulting in approximately $9.2 million in cost savings.
Speaker Change: We subsequently expanded our ABL credit facility, which enhances our borrowing capacity, reduces our cost to capital, and provides the financial flexibility needs to support our long-term growth strategy.
Speaker Change: These actions reinforce our commitment to maintaining a strong and stable capital structure while improving our ability to seize new growth opportunities as they arise.
Speaker Change: Beyond our financial and operational achievements, we outperform the broader market, capturing the digital market share despite industry headwinds.
Speaker Change: Our targeted pursuit of high-value opportunities has reinforced our position as a leading pure play rail car manufacture and positions as well for sustained long-term growth.
Speaker Change: Additionally, we secured a meaningful multi-year agreement with Tank Car Resetifications.
Speaker Change: Our consistent commitment to operational excellence, deepens customer relationships and enhances brand loyalty as customers increasingly value out diverse product offering, exceptional quality, customizable capabilities and outstanding service.
Speaker Change: Turning to the industry, I am sure you are all aware, tariffs present an element of uncertainty. However, I would like to remind you all of the fundamentals of our industry. The rail car sector operates within a stable replacement cycle, driven by the mission critical role of rail transportation in moving bulk commodities.
Speaker Change: Our customers made the third purchases in the short term, long term postponement is rarely feasible due to the essential nature of our services.
Speaker Change: Even during periods of elevated steel prices, customers continue to invest in rail cars, underscoring the industry's resilience.
Speaker Change: For example, in 2021, despite a nearly five-fold increase in steel prices, rail car owners perceived with scrapping order units and placed new car orders, reflecting resilient demand.
Speaker Change: The clarity, we are not directly impacted by the current steel and aluminium tariffs as we source the vast majority of our materials from the USA already.
Speaker Change: Rail transport is indispensable for moving both qualities such as food products, chemicals, and coal, goods that are largely recession proof.
Speaker Change: According to the Federal Railroad Administration, 52% of rail freight car loads consist of bulk commodities.
Speaker Change: This resilience underscores the critical importance of maintaining an up-to-date and efficient rail car fleet to ensure the un-interrupted flow of these essential goods.
Speaker Change: It's also important to note that post-election years typically correspond with a slight downturn in rail car replacement orders. This phenomenon is attributed to market uncertainties that prompt customers to temporary delay capital expenditures.
Speaker Change: However, this trend represents a deferment rather than loss of demand, with order rates historically rebounding post-election as comptence is restored and deferred investments are actualized
Speaker Change: Despite a moderate pace in order placements, FreightCar America continues to experience robust inquiry levels.
Speaker Change: Customers remain actively engaged in the procurement process, diligently evaluating product offerings and conducting vendor assessments. This sustained engagement indicates a readiness to transition for inquiry to order as market conditions stabilize.
Speaker Change: Our inherent flexibility in agile manufacturing capabilities uniquely positioned us to meet emerging demand efficiently.
Speaker Change: As customer enquiries involved into confirmed orders, our operational agility enables us to expedite delivery timelines, providing a competitive advantage in responsiveness and customer
Speaker Change: As we look ahead, we remain encouraged by our positive momentum. Even as we acknowledge the ongoing uncertainty at surrounding tariffs, our team continues to close the
Speaker Change: With our unique manufacturing footprint and our operational agility, we are well equipped to swiftly adapt to market shifts.
Speaker Change: Our strategic priorities remain clear heading into 2025, driving continued growth and enhanced cash generation through disciplined financial management and strong operational excellence.
Speaker Change: We enter the new year with a robust balance sheet and a solid operational foundation which provide momentum, confidence and a steadfast commitment to delivering value to our customers employees, can shareholders.
Speaker Change: The significant process we achieved in 2024 positions as for even greater success ahead. And I look forward to sharing our continued accomplishments with you throughout the coming year.
Speaker Change: Thank you to our team, your hard work and dedication, your commitment is what drives our success and I am proud of what we have achieved together. With that, I will now turn it over to Matt.
Thanks Nick and good morning everybody Good morning
Matt: Throughout 2024, we experienced strong and sustained inquiry activity, reflecting the continued demand for high quality purpose built rail cars. For the full year, we secured orders totaling 4,245 rail cars valued at approximately 447 million.
Matt: We maintain our leading position in open top hoppers driven in part by our continued success and strong customer preference of our VersaFloat aggregate hopper cart. [inaudible]
Matt: The verse of blood, the verse of the design featuring both transverse and longitudinal discharge options [inaudible]
Matt: Superior Payload capacity and enhanced durability through its hybrid steel and aluminum construction has enabled us to effectively meet diverse customer requirements for transporting a wide range of aggregates and minerals
Matt: Additionally, we saw notable gains across flat cars, gandolas, and medium to large covered hoppers further demonstrating the breadth of our product portfolio and the responsiveness of our team to evolve evolving customer needs.
Matt: Our ability to translate this demand into meaningful order wins underscores at the strength of our commercial strategy in differentiated market position.
Matt: We close the year with a robust backlog of 2,797 units valued at approximately $267 million, providing the strong foundation as we enter 2025.
Matt: With overall industry rail car deliveries held steady at roughly 42,000 units, order activity for the trailing 12 months totaled around 25,000 units, well below typical replacement demand.
Matt: Despite these shifting industry dynamics, we successfully increased our market share, underscoring the effectiveness of our commercial strategy, agile manufacturing presence, and resilient supply chain capabilities.
Matt: In 2024, we achieved a 21% share within our addressable market segments and captured approximately 12% of the total rail car market, demonstrating our ability to compete and consistently win in this dynamic environment. [inaudible]
Matt: From a broader industry perspective, we continued to see sustained long-term demand with forecast projecting annual industry deliveries in the range of 35,000 to 40,000 rail cars driven primarily by replacement cycles as cars approach mandated retirement thresholds.
Matt: These structural factors reinforce the ongoing need for the high-quality, versatile rail car solutions that we are uniquely positioned to deliver.
Matt: Our continued focus remains on manufacturing excellence, delivering the industry's finest products and engineering expertise, and deepening our long-standing customer relationships.
Matt: Our strategic approach emphasizes tailored offerings rather than a one-size-fits-all model, enabling us to effectively address specific product and order requirements.
Matt: Importantly, our unique operational flexibility sets us apart and allows us to rapidly ramp production, efficiently switch between rail car types and accommodate smaller specialized production runs. [inaudible]
Matt: This agility combined with the versatility of our four production, our active production lines, and an optional fifth line positions us extremely well to respond swiftly and effectively as terra-related uncertainties dissipate and customer demand increases.
Matt: Our steadfast commitment to operational excellence and innovation. We remain confident in our ability to capitalize on emerging opportunities ahead of the competition. I'll turn the call over to Mike for comments related to our financial performance. Mike.
Mike: Thanks, Matt. Good morning, everyone. I'd like to begin with an overview of our full-year 2024 financials and then share a few fourth-quarter highlights.
Mike: For the full year we achieved revenues of $559.4 million, representing a 56% growth over the prior year.
Mike: These results reflect some minor timing delays for the fourth quarter, which resulted in some delivery fulfillment getting pushed into early Q1. It is important to note that this timing shift is not due to broader headwinds, rather normal transit timing of deliveries across in the border.
Mike: Adjusted EBITDA for the full year was $43 million, representing a $22.9 million increase, or 114% improvement from 2023.
Mike: I am pleased to note that 2024 signified our second consecutive year of delivering over 100% growth in adjusted EBITDA, underscoring the strength of our operational execution, favorable manufacturing cost structure, and an enhanced product mix.
Mike: Adjust the net income for the full year was $24.5 million or $0.15 per deluded share, accounting primarily for the impact of certain non-cash items, including the change in fair market value of warrant liability which fluctuates each quarter in line with the change in our share price during the period.
Mike: For the full year we recognize a $99.5 million non-cash adjustment due to the change in the fair market value of the warrant liability due to share price appreciation in the year.
Mike: As a reminder, this valuation adjustment solely reflects accounting for the warrant holders investment
Mike: The non-cash valuation adjustment does not have an effect on the shares outstanding, including in our earnings per share calculation.
Mike: All shares underlying the warrants have already been reflected as part of the weight of shares outstanding since their issuance in prior years As a result, if the warrants were to be exercised there will be no incremental dilutive effect on the shares outstanding in our earnings per share the warrants have already been reflected as part of the warrants have already been reflected as part of the warrants
Mike: In 2024, we took significant steps led by the commercial and operational successes of 2023 and 2024 to lower our cost to capital of the world.
Mike: The first action we took was to replace our preferred shares with a lower-cost term loan facility that will significantly reduce our ongoing capital cost by approximately 40%.
Mike: Second, we entered into a new $35 million asset-based revolving credit facility to provide working capital flexibility and facilitate our growth initiatives with a new lender that will result in an approximate 35% reduction in facility borrowing costs. This is a new $35 million asset-based revolving credit facility to provide working capital flexibility and provide working capital flexibility and funding.
Mike: In February , we renewed the universal self-registration we previously had on file with the SEC.
Mike: Additionally, Hempkel has now registered shares of common stock as a selling shareholder.
Mike: Importantly, this will not cause further delusion among common shareholders, as their warrant shares have consistently been reflected as outstanding in our earnings per share calculation.
Mike: While we value our relationship with PIMCO, over time, this will strengthen our balance sheet and allow investors to more clearly focus on the underlying power of our business to generate consistent profitability and cash flow.
Mike: Turning to fourth quarter highlights, we delivered solid revenue growth on consistent railcar deliveries.
Mike: Consolidated revenues for the 4th quarter of 2024 totaled $137.7 million with deliveries of $1,019 railcars compared to $126.6 million on deliveries of $1,021 railcars in the 4th quarter of 2023.
Mike: Gross Profit in the 4th quarter of 2024 was $21 million with a gross margin of 15.3% compared to gross profit of $12.1 million in gross margin of 9.6% in the 4th quarter of last year.
Mike: Higher Gross Margin Performance as compared to the prior year was primarily driven by a favorable mixed shift in rail car delivered and higher productivity.
Mike: S-GNA for the fourth quarter of 2024, totaled 9.4 million, up from 7.7 million in the fourth quarter of 2023. Excluding stock base compensation, S-GNA has a percentage of revenue increased to approximately 70 basis points.
Mike: In the fourth quarter of 2024, we achieved adjusted EBITDA of $13.9 million compared to $6.5 million in the fourth quarter of 2023 23.
Mike: Again, primarily driven by product mix between the comparable periods, as well as realizing the operational efficiencies of running four lines in the fourth quarter of 2024 were three lines in the comparable period.
Mike: For the fourth quarter of 2024, our adjusted net income was $8 million per 21 cents per diluted share compared to adjusted net income of $1.7 million or a loss of 16 cents per share in the fourth quarter of last year.
Mike: As I said earlier, when discussing the four-year results, the warrant liability adjustment is a non-cash item and has no effect on the shares outstanding in our earnings for share. It only reflects the change in the warrant holders investment in our company during the respective reporting period.
Mike: As we have mentioned on prior calls, we are laser focused on enhancing cash generation. This year marked the significant inflection point as we delivered $44.9 million in operating cash flow and $21.7 million in adjusted free cash flow.
Mike: This strong cash generation further supports our strong balance sheet as we currently hold $44.5 million in cash.
Mike: In 2024, capital expenditures totaled $5 million, including $1.3 million in the fourth quarter, primarily reflecting ongoing investments consistent with our current maintenance cycle.
Mike: As part of our discipline approach to capital allocation, we're providing the range of $5 to $6 million million dollars.
in Capitol expenditures during 2025.
Mike: This largely represents maintenance level capital spend, as well as an early investment in the first half of 2025 of approximately $1 million to outfit our facility for the Tank Car Retrofit program we have in our backlog as we continue to field new customer inquiries for Tank Car Retrofit orders.
Mike: For 2025, we will prioritize deploying free clash flow to reduce leverage and enhance our financial position with an objective to achieve a normalized leverage ratio in the range of one to two and a half times.
Mike: That will position us to access lower cost financing and enable flexibility to pursue strategic growth opportunities in the future.
Nick: With that, I'd like to now turn the call back over to Nick to share our outlook for 2025 .
Nick: Thanks, Mike. For the full year 2025, we are forecasting deliveries between 4,500 to 4,900 rail cars, and increase for approximately 7.7% at the midpoint of the range.
Nick: Revenue use will be between 530 million and 595 million, up approximately 1% year over year at the midpoint of the range.
Nick: In terms of cadence, we expect to build momentum with a stronger back half the year that will scale up towards our guided numbers
Nick: We expected adjusted EBITAR guidance between 43 million and 49 million for the full year, representing a year-over-year increase of 7% at the midpoint and a further underscoring the strength of our operations.
Nick: Finally, I'd like to conclude with our expectation that 2025 will represent a second consecutive year of positive free cash flow generation. With that, I'd like to now open the line for Q&A.
Speaker Change: Thank you. If you'd like to ask a question, please press star one under telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question comes from the line of Mark Reichman with noble capital markets. Please proceed with your question.
Mark Reitman: Yes, would you elaborate on the fourth quarter product mix and also just how changes in the product mix may affect the quarterly cadence of rail car deliveries, revenue and margin in 2025?
Mark Reitman: Hey Mark, good morning, Nick, I'll take that one and then Mike can add some colour if I don't fully answer your questions fully, but over on say, first of all, we are very pleased with the overall year and our execution of the year including the fourth quarter.
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Mark Reitman: Despite movements in revenue being lower than at the load of our guns.
Speaker Change: We've lived at an outside EBITDA while above our guidance for the year, which is a testament to our commitments to driving portable growth. So there is a movement on ASP, which we manage locally on our style process, but really what's driving is making sure we're driving that EBITDA growth. [inaudible]
Speaker Change: as we've seen through the last year. Mike will talk a bit more about how that impacts since 2025.
So, hi Mark.
Mike: Our quarterly cadence in 25 is going to ratchet up. We delivered a unique new rail car in 2024 on the higher ASP side.
specifically in Q4.
Mike: We ended up dedicating two production lines at the start of the first quarter of 2025 to build some ancillary large spare part fabrications for that unique rail car for our end customer. As a result, you'll see lower deliveries and revenue in the first quarter, but similar overall gross margins on rail car deliveries.
Mike: The second quarter will grow as all four lines switch back to producing railcars.
Mike: But second quarter will still be a little lower than I'd say the back half because of the changeovers to go into building new rail cars And then the back half will be heavy on rail cars revenue very few changeovers and just really producing at a constant rate to get to the guidance we provided
Mike: Well, thank you for that. And then, you know, obviously I'm getting a lot of questions about the tariffs. And so I was just kind of wondering, you know, your thoughts on how FreightCar is positioned.
Speaker Change: relative to its competitors to respond to potential tariff actions taken by the U.S. or other countries.
Sure, I'll start with that one I'm
Speaker Change: You know, our current guidance for 2025 balances both opportunities and risks. There's a stable demand, operational efficiencies, lowering finance costs, providing tailwinds while remained mindful of the supply chain dynamics.
Commodity Price and Entire From Certainty [inaudible]
Speaker Change: That said, rail car industry operates from the stable replacement cycle through by the essential role of rail transportation and moving bulk commodities. Even during these periods of elevated steel prices, customers continue to invest in new rail cars demonstrating we believe the industry is resilience.
Speaker Change: Also, our post election years can bring temporary order slowdowns, history shows this as a deferment.
Speaker Change: Not truly a lost demand and inquiry levels remain strong and our agility allows us to quickly convert interest into orders Even our size and our agility I think that positions as well in the market we end and as those market conditions stabilize I think as to our advantage
www.myer-dot-com.
Speaker Change: We'll Nick just to put a finer point on it. One of the questions that I've gotten is
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You know, um...
There isn't a large capacity footprint.
Speaker Change: In the USA, the building rail cars, there are a couple of
Smaller repair shops that can build.
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Speaker Change: You know, we are clearly number one in that manufacturing space. So I think there's [inaudible]
Low risk of that being moved, and you are else given that [inaudible]
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Speaker Change: I balanced that with, if manufacturing of bulk materials does recenter in the US.
Speaker Change: and that helps the rail industry overall, then that would be more of a positive net impact to the rail industry rather than the, I believe rather than the, um,
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Speaker Change: Dramatically changing how we operate and run our business. So we've got a lot of key management players, key leadership players.
Speaker Change: who are well versed in how to respond very quickly to a change in dynamic and how to respond very quickly to any change in supply chains, change in customer demands, change in profile. I think we demonstrated that last year, it was certainly some uncertainty.
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Complete and win in those situations in those situations.
And I do believe that, you know, [inaudible]
Speaker Change: Tariffs are a level of uncertainty at the moment. They've been in, they've been out. There's a steel tariff in at the moment. And our job is to digest that. Keep an eye on that and respond.
Speaker Change: quickly for the benefit of our customers and make sure that our end users get the products they need to move their book materials. So I guess that's a bit of a long winded answer. But I think overall, there is uncertainty in tariffs. That's true. And I
Speaker Change: I believe the FreightCar America, that uncertainty represents an opportunity, plus to continue to demonstrate market share gains, and to continue to meet our customers' expectations with speed and high quality products.
Now that's very helpful. Thank you for that.
Speaker Change: Thank you. Our next question comes from the line of Brendan McCarthy with Cedodian Company. Please proceed with your question
Brendan Mccarthy: Great, thanks. Thanks for taking my questions here. I just wanted to talk about the fourth quarter. I think you mentioned there was a timing issue that might push some deliveries to the first quarter of 2025. Are you able to quantify that for us?
Speaker Change: There was no timing, it's just the normal transit time. Just cars in transit through the border that count as a delivery, but nothing of massive substance now
Speaker Change: Okay, got it. And then looking at the 2025 guidance, looks like you're expecting almost 8% growth at the midpoint for deliveries and then a little bit of a smaller 1% expectation for revenue growth.
Speaker Change: Can you just talk us or walk us through, you know, what's baked into that variance with the midpoint of guidance?
Speaker Change: Yeah, I'll start that brand new then. Matt can probably fill in some great details, you know.
Speaker Change: There's a couple of things. We primarily produce new railcars and even on new railcars, there's a large variance in the average selling price. You know, at the top end you've got things like boxcars or some of the complex blackcars which can be...
Double the price of some of the
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Speaker Change: What I focus on is driving that EBITDA growth up. And, you know,
That's where we generate a real growth of
Speaker Change: Value earnings and then consequently into cash, but that's very high level just to explain why that's a revenue isn't Reflect in the same growth as EBITAB Matt Brendan is Matt, you know the over overarching commentary is that we see demand across multiple market segments.
Speaker Change: levels. We're seeing good order activity as we enter into 2025. We do expect the mixed change to next point. So I think that's probably where you'll see some of the biggest differences in terms of overall revenue versus still very strong performance on the eve of the side.
Speaker Change: Great, that's helpful. That makes sense. Then on the delivery guidance, obviously it looks like you're assuming pretty nice growth at the low point for the 4,500 deliveries in 2025, but just curious as to what's baked into that from a tear perspective, I guess.
Speaker Change: It's kind of fair to assume that you're maybe worst-case terror scenario, you're still going to see a nice growth rate in the delivery.
Number for 2020-25 Thank you very much.
Speaker Change: I think that's a reasonable way at looking at it at the moment, Brendan. We've taken this account everything we know up until this point, and everything we've reviewed and revisited. It was as Matt touched on his notes, the
Speaker Change: The inquiry level and the level of customers working and rather than just a low quality inquiry customers who are working with his own designs and
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The...
Speaker Change: It would be helpful if there was some clarity on tariffs, but right now the guidance we've given is based on how we interpret the current tariff, sort of nervousness on tampering a lot of spaces, but
I would expect that.
As we move forward, we will, you know,
Speaker Change: Meet that guidance range even with what's perceived to be in today, if that makes sense.
Speaker Change: Yeah, Brendan Mattigan. I'll just add that, you know, the conversations we're having with customers, terraces, clearly, you know, top of mind, but I will tell you that inquiry level certainly paint a very positive picture and from a, from a FreightCar America perspective we're very bullish on our guidance.
Speaker Change: We're having the right kinds of conversations with the right types of collaborative.
Speaker Change: Discussions with customers and feeling very positive about our position in the marketplace and the ability to continue to grow within our addressable market share and all of that comes from the fact that customers buy rail cars as one of my colleagues. Thank you very much.
referred to frequently because they needed to ship freight.
So you may have some delays, you may have-
Speaker Change: Order Activity that's somewhat lumpy, but at the end of the day you
Railcars remain to be the most efficient. Thank you very much.
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Speaker Change: And we're really well positioned to pivot and to meet the needs of our customers that frankly have a preference for the FreightCar America.
Unknown Speaker Okay.
Speaker Change: Got to thank that's helpful and then one more question for me on the tank car retrofit order, the 1000 car order that you're looking to deliver in 2026 and 2027. Are you able to provide the address will market on the.
Speaker Change: I guess the total adjustable market for tank car retrofit orders and I guess what that you know a thousand car order kind of represents .
No way would ...
Speaker Change: The short answer is that I'm not going to provide the address from the market, but we will as
Make alluded to on his commentary. We are...
Colin Forewood on the CapEx
Speaker Change: So we'll have the capex to be the plant ready for resettification work. I would expect sometime late Q2, we'd be ready late Q2 or the Q3 . . . . . . . . . . . . .
So and we do have we are feeling We are feeling
More inquiries from customers.
on Convertions Work. So as those-
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The address for Mark is, is...
Speaker Change: You know there's a couple of factors that go into it which is why I just don't want to mislead either good or bad on what that size could be You know what I mean?
Speaker Change: Rather than we are filled in inquiries, we will be ready ahead of schedule the order we do have and If as customers convert those inquiries into order placement will update
Speaker Change: Matt, I don't think that mission is in there, but that's pretty much it. No, I think you got rid of it.
Speaker Change: Punisher, thanks Nick, thanks everybody, that's all for me.
Thanks for having us.
Speaker Change: Thank you. As a reminder, if you'd like to join the question cue, please press star 1 under telephone keypad.
Speaker Change: Our next question is a follow-up from the line of Mark Reichman with noble capital markets. Please proceed with your question.
Speaker Change: Yes, during the call you mentioned that once you get the leverage ratio down that you would
Mark Reichman: Be more open to considering kind of the strategic growth opportunities and I was just wondering is that are you referring to maybe growth around the parts business or are you looking even further out in terms of potentially adding a fifth line?
Speaker Change: I'll take that. I know Mike mentioned it in his commentary about the work to get the, I guess your question is okay, but when you get there, what are you going to do with it? You know, we will always keep a very good review of how do we deploy capital and the best interest of our shareholders. A couple of things you mentioned there, so parts group, obviously parts group is a very important part to us.
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Speaker Change: Parts now broke. Now it's in our 10k. People can see that group in there. You mentioned about the fifth line. So the fifth line is just a reminder the fifth line we have is under root.
Speaker Change: It's already pre-built out. We don't lease it at the moment. It's available to lease and very short notice.
Speaker Change: The fifth line could be made ready in less than 90 days, so if-
Options, we can have it our disposal.
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customer demand
Clearly, it are in our next phase of
strategic growth for a complete overall .
Speaker Change: Thank you, and they're just lastly for Michael. If he might be able to comment on the recent registration and how industry should think about that.
Michael: Hi, Mark. Yeah, so we filed the S3 Registration Statement. It's a universal shelf, the same one we had back in 2021 that had expired, so we renewed that, but as everyone will probably notice.
Speaker Change: Tymco has registered the shares under their warrant as a selling shareholder .
that gives them the opportunity over time at their time.
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Speaker Change: and I think one important part of this is that them exercising their warrants or them selling shares does not have an effect on our EPS, the way the accounting treatment works. We've always treated those shares as outstanding sensor issuance.
Speaker Change: And so that's one key point that I think everyone should really understand with the registration statement and the warrants themselves themselves.
Operator: Thank you. Ladies and gentlemen, there are no other questions at this type. I'll turn the foot back to Mr Randall for final comments.
Randall: Thank you. Thank you. I just wanted to take a moment to, you know, to summarize our call. So, 2024 was a year of execution of results achieving significant revenue growth of 56% and gaining market share despite the decline across the broader industry.
Randall: We've delivered exceptional financial performance, exceeded EBITDA guidance the year and and per rail car EBITDA increased substantially as we enhanced our mix, leverage productivity improvements and efficiency gains We've delivered exceptional financial performance and efficiency gains
Randall: We improved our capital structure by redeeming outstanding preferred shares and securing a $35 million ABL credit facility to enhance financial flexibility and ultimately reduce borrowing costs.
Randall: We generated strong adjusted free cash flow of 22 million and heading into 2025 we anticipate a second consecutive year past positive free cash flow generation
Randall: And overall, with market share gains, a major multi-year tank car conversion deal, financial flexibility through an optimized capital structure, FreightCar America is well positioned for sequential protocol growth in the year ahead. And with that, thank you.
Speaker Change: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation