Q2 2025 FreightCar America Inc Earnings Call

Speaker 1: Welcome to FreightCar America's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. For those of you participating on the conference call, there will be an opportunity for you to ask questions at the end of today's prepared comments. 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'Dea with Riverton Investor Relations. Over to you, Chris.

Welcome to freight car America's second quarter 2025 earnings conference call.

At this time, all participants are in a listen-only mode.

For those of you participating on the conference call, there will be an opportunity for you to ask questions at the end of today's prepared, comments.

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.

Chris O'Dea: Thank you and welcome. Joining me today are Nick Randall, President and Chief Executive Officer; Mike Riordan, Chief Financial Officer; and Matt Ton, Chief Commercial Officer. I'd like to remind everyone that statements made during this conference call related to the company's expected future performance, future business prospects, or future events or plans may include forward-looking statements as defined under the Private Security Litigation Reform Act of 1995. Participants are directed to FreightCar America's Form 10-K for a description of certain business risks, some of which may be outside of the control of the company, that may cause actual results to materially differ from those expressed in the forward-looking statements. We expressly disclaim any duty to provide updates to our forward-looking statements, whether as a result of new information, future events, or otherwise.

I would now like to turn the call over to Chris o'dea with Riverton investor relations over to you. Chris

Thank you, and welcome. Joining me today are Nicholas Randall, President and Chief Executive Officer; Michael Riordan, Chief Financial Officer; and Matthew Tonn, Chief Commercial Officer.

I'd like to remind everyone that statements major in this conference call related to the company's expected, huge performance, future business prospects or future events or plans may include forward-looking statements as the final of the private Securities. Litigation Reform, Act of 1995.

Chris O'Dea: During today's call, there will also be a discussion of some items that do not conform to US generally accepted accounting principles, or GAAP. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the earnings release issued yesterday afternoon. Our earnings release for the second quarter of 2025 is posted on the company's website at freightcaramerica.com, along with our 8-K, which was filed pre-market this morning. With that, let me now turn the call over to Nick for a few opening remarks.

Participants are directed to freight car, America's form 10K for a description of certain business, risks. Some of which may be outside of the control of the company that may cause actual results to materially differ from those expressed in the form of statements. We expressly disclaim any duty to provide updates to our forward-looking statements whether is a result of new information, future events or otherwise.

During today's call, there will also be a discussion of some items that do not conform to us. Generally accepted accounting principles or gaap reconciliations of these non-gaap measures to their most directly comparable. Gaap measures are included in the earnings release issued yesterday afternoon. Our earnings are released for the second quarter of 2025 as posted on the company's website, a freight car america.com along with our 8K which was filed pre-market this morning.

Nick Randall: Thank you, Chris. Good morning, everyone, and thank you all for joining us today. I am proud to share another quarter of strong performance of FreightCar America, marked by execution and resilience as we expanded our margins through operational efficiency and delivered solid profitability. This quarter also marks our fifth consecutive quarter of positive operating cash flow generation, finishing Q2 with over $61 million, $61 million of cash on hand. While we have maintained strong commercial momentum with orders, adding 300 units to our healthy backlog for the year, despite a challenging industry backdrop. Gross margins for the quarter expanded to 15% on 939 deliveries, up from 12.5% on 1,159 deliveries a year ago. Adjusted EBITDA margins increased 20 basis points compared to the prior year, and we generated an adjusted free cash flow of $7.9 million.

Thank you, Chris. Good morning, everyone. And thank you all for joining us today. I am proud to share another quarter of strong performance of freight car. America marked by execution and resilience as we expanded our margins through operational efficiency and delivered solid profitability.

This quarter. Also marks our fifth consecutive quarter of positive, operating cash flow generation finishing Q2 with over 61 million, cash on 61 million of cash on hand.

While we have maintained strong commercial momentum with orders, adding 300 units to our healthy backlog for the year, despite a challenging industry backdrop,

Gross margins. For the quarter expanded to 15% on 939, deliveries up from 12 and a half percent on 1,159 deliveries a year ago.

Nick Randall: While revenues and deliveries were lower year over year, we have continued to utilize our lines effectively and deliver increased profitability, as these strong results demonstrate the effectiveness of our manufacturing strategy and the operational commitment of our team. On the commercial side, our broad product portfolio and value-added solutions continue to prove themselves as competitive differentiators. We secured 1,226 new orders in the quarter, largely driven by rebuilds and conversions. These orders increased our backlog to 3,624 units, up approximately 300 units from the prior quarter. Though the dollar value of the backlog remains stable, reflecting a higher proportion of rebuild and conversion work. Importantly, rebuilds and conversions continue to deliver excellent value for our customers in these market conditions. This type of work exemplifies the strength of our flexible manufacturing model, enabling us to adjust quickly to customer needs while maintaining healthy profitability.

Adjusted. Even our margins increase 20 basis points compared to the prior year and we generated adjusted free cash flow of 7.9 million.

While revenues and deliveries were lower 8% year-over-year, we have continued to utilize our lanes and lines effectively and deliver increased profitability. These strong results demonstrate the effectiveness of our manufacturing strategy and the operational commitment of our team.

On the commercial side, our broad product portfolio and value added Solutions. Continue to prove themselves as competitive differentiators,

We secured 1,226 new orders in the quarter. Largely driven by rebuilds and conversions.

These orders increased, our backlog to 3,624 units up approximately 300 units from the prior quarter.

though, the dollar value of the backlog remains stable, reflecting a higher proportion of rebuild and conversion work,

Nick Randall: Operationally, we continue to run all four production lines throughout the quarter, improving productivity and supporting high throughput even at a lower volume of deliveries. This operational flexibility, which has been a hallmark of our approach, remains a key advantage, allowing us to meet evolving demand and keep lead times competitive. Turning to the broader industry, the replacement cycle has moderated, and industry forecasts for new railcar deliveries have been revised downward for 2025. However, we remain well-positioned thanks to the diversity of our business model and our agile manufacturing presence. We continue to see strong order momentum, and inquiries in our pipeline are reaffirming our outlook for the remainder of the year. Our nimble, vertically integrated model enables us to take market share and respond faster than our peers. These dynamics will position us to benefit meaningfully when new build activity picks back up.

Importantly, rebuilds and conversions continue to deliver excellent value for our customers. In these market conditions, this type of work exemplifies the strength of our flexible manufacturing model, enabling us to adjust quickly to customer needs while maintaining healthy profitability.

Operationally. We continue to run all 4 production lines throughout the quarter, improving productivity and supporting High throughput, even at a lower volume of deliveries.

This operational flexibility, which has been a hallmark of our approach, remains a key advantage, allowing us to meet evolving demand and keep lead times competitive.

Turn into the broader industry. The replacement cycle has moderated and Industry forecast for New rail card. Deliveries have been revised downward for 2025.

However, we remain. Well positioned thanks to the diversity of our business model and our agile. Manufacturing presence. We continue to see strong order momentum and inquiries in our pipeline, our reaffirming, and our reaffirming our outlook for the remainder of the year.

Our Nimble vertically, integrated model enables us to take market, share and respond, faster than our peers.

These Dynamics.

Nick Randall: We also continue to invest in the business to strengthen our foundation for future growth. This quarter, we announced a capital investment in our tank car retrofit program as we accelerate our capability expansion and vertical integration of key components within the manufacturing process to provide our customers with the product quality and reliability they demand. We expect this initiative to continue to enhance our margin profile and create long-term value as the tank car program ramps up over the next several years. In short, we are executing well, delivering on our commitments, and continuing to strengthen the foundation of our business. I am proud of what we have accomplished this quarter, and I'm excited about the opportunities ahead. With that, I'll turn it over to Matt to walk through our commercial operations in more detail.

Will position us to benefit meaningfully when new build activity picks back up.

We also continue to invest in the business to strengthen our foundation for future growth. This quarter, we announced a capital investment in our tank car retrofit program as we accelerate our capability expansion and vertical integration of key components within the manufacturing process to provide our customers with the product quality and reliability. They demand.

We expect this initiative to continue to enhance our margin profile and create long-term value as the tank, our program ramps up over the next several years.

In short, we are executing well delivering on our commitments and continuing to strengthen the foundation of our business. I am proud of what we have accomplished this quarter and I'm excited about the opportunities ahead.

Chris O'Dea: Thank you, Nick, and good morning, everyone. For the second consecutive quarter, we continued to see consistent inquiry-level activity and conversion to orders. During the second quarter, we booked orders for 1,226 railcars valued at $107 million. This order intake represents back-to-back quarters with a book-to-bill ratio of 1.3 and further supports that our purpose-built commercial strategy of engineering, manufacturing, and delivering high-quality railcars resonates with our broad customer base. Our commercial strategy is focused on maintaining share while remaining responsive to changing market conditions. As new railcar demand softens and customers seek a rebuild or conversion option, we leverage our expertise and flexible plant operations, providing value and optionality to our customers. Railcar conversions have been a foundational component of our heritage, with over 15,000 conversions and rebodies completed in the last 20 years.

With that, I'll turn it over to Matt to walk through our commercial operations in more detail.

Thank you, Nick and good morning everyone. For the second consecutive quarter, we continue to see consistent inquiry level activity and conversion to orders.

During the second quarter, we booked orders for 1,226 rail cars, valued at 107 million.

This order intake represents back-to-back quarters with a book-to-bill ratio of 1.3 and further supports our purpose-built commercial strategy of engineering, manufacturing, and delivering high-quality rail cars, which resonate with our broad customer base.

Our commercial strategy is focused on maintaining share. While remaining responsive to changing market conditions.

As new rail, car demands, softens and customers seek a re rebuild or conversion option. We leverage our expertise and flexible plant operations, providing value and optionality to our customers.

Chris O'Dea: Further, our tank car retrofit program and plant readiness is advancing and on track for primary production beginning in 2026. This added capability, coupled with our modern manufacturing infrastructure, serves as a key competitive advantage, providing value to our customers, a flexible mix of new car production, conversions, and rebuilds, and solid gross margin returns. From an industry perspective, we are beginning to see a softer new railcar demand environment, due in large part to uncertainties around tariff policies. Although we view these economic realities as short-lived, they are affecting customer order timing, and we do expect that total 2025 industry deliveries will fall below the previously expected 40,000 units per year average.

Primary production beginning in 2026. This added capability coupled with our modern manufacturing infrastructure serves as a key competitive Advantage, providing value to our customers. A flexible mix of new car production, conversions and rebuilds and solid gross margin returns.

From an industry perspective. We are beginning to see a softer new rail car, demand environment due in large parts to uncertainties around tariff policies.

Chris O'Dea: It is important to note with over 160,000 railcars projected to reach their mandated retirement in the next four and a half years, we fully expect overall industry annual demand to fall within the 35,000 to 40,000 range. Despite short-term extended decision cycles in certain freight segments, our team continues to drive steady quote volume by emphasizing versatility, value, and delivery certainty. Looking ahead, we remain committed to driving high-value opportunities that align with our customers' dynamic needs. We continue to prioritize margin performance, manufacturing flexibility, and a diversified order book, all factors that we believe will set us apart in a moderating demand environment. With that, I'll turn it over to Mike for comments on our financial performance. Mike.

Although we view these economic realities as short-lived, they are effective for customer order timing, and we do expect that total 2025 industry deliveries will fall below the previously expected 40,000 units per year average.

It is important to note with over 160,000 rail cars, projected to reach their mandated retirement in the next 4 and a half years. We fully expect overall industry annual demand to fall within the 35,000 to 40,000 range, despite short-term extended decision Cycles in certain Freight segments. Our team continues to drive steady quote volume by emphasizing versatility value and delivery certainty.

Looking ahead. We remain committed to driving high-value opportunities that align with our customers Dynamic needs. We continue to Prior prioritize margin performance, manufacturing, flexibility and a diversified order book. All factors that we believe will set us apart and moderating demand environment.

Mike Riordan: Thanks, Matt, and good morning, everyone. I'd like to begin by sharing a few second quarter highlights. Consolidated revenues for the second quarter of 2025 totaled 118.6 million, with deliveries of 939 railcars compared to 147.4 million on deliveries of 1,159 railcars in the second quarter of 2024. Lower deliveries in revenue in the second quarter of 2025 were primarily driven by producing railcars during the quarter that will deliver throughout the second half of 2025. Gross profit in the second quarter of 2025 was $17.8 million, with a gross margin of 15% compared to a gross profit of $18.4 million and a gross margin of 12.5% in the second quarter of last year. Higher gross margin performance was driven primarily by a favorable product mix and increased production efficiency. SG&A for the second quarter of 2025 totaled 10.1 million, up from 8.5 million in the second quarter of 2024.

With that, I'll turn it over to Mike for comments. On our financial performance. Mike

Thanks, Matt, and good morning everyone. I'd like to begin by sharing a few second quarter highlights.

Consolidated revenues for the second quarter of 2025 total of 118.6 million with deliveries of 939 rail cars compared to 147.4 million on deliveries of 1,159 rail cars in the second quarter of 2024.

Lower deliveries in Revenue in the second quarter of 2025 were primarily driven by producing rail cars during the quarter that would deliver throughout the second half of 2025.

Gross profit in the second quarter of 2025 with 17.8 million, with a gross margin of, 15% compared to gross profit of 18.4 million, and growth margin of 12 and a half percent in the second quarter of last year.

Higher gross margin performance was driven primarily by a favorable product mix and increased production efficiency.

Mike Riordan: Excluding stock-based compensation, SG&A is a percentage of revenue increased approximately 260 basis points, primarily due to the timing of spend on various professional services. We expect SG&A excluding stock-based compensation to decrease in the second half of the year and normalize for the full year. In the second quarter of 2025, we achieved an adjusted EBITDA of $10 million compared to 12.1 million in the second quarter of 2024, driven primarily by lower deliveries. Despite the lower volume of deliveries, adjusted EBITDA margin expanded by 20 basis points in the second quarter of 2025 compared to the second quarter of 2024. Adjusted net income for the second quarter of 2025 was 3.8 million or 11 cents per share compared to adjusted net income of 3.5 million or 10 cents per share in the second quarter of last year.

As GNA for the second quarter of 2025, totaled 10.1 million, up from 8.5 million in the second quarter of 2024.

Excluding stock-based compensation sgna is a percentage of Revenue increased to approximately 260 basis points. Primarily due to the timing of spend on various Professional Services

We expect sgna excluding stock-based, compensation to decrease in the second half of the year and normalize, for the full year.

In the second quarter of 2025, we achieved adjusted Eva of 10 million compared to 12.1 million in the second quarter of 2024 driven primarily by lower deliveries, despite the lower volume of deliveries adjusted, even a margin expanded by 20 basis points in the second quarter of 2025 compared to the second quarter of 2024.

Mike Riordan: During the second quarter of 2025, we recorded a non-cash tax benefit of approximately $52 million, primarily due to the release of a valuation allowance on US deferred tax assets related to our historical net operating losses. This decision reflects our profitability over the past two years in the US, as well as our confidence in future profitability and taxable income generation in the US. This non-cash benefit was partially offset by a $47.6 million non-cash adjustment to our warrant liability. As a reminder, the warrant liability adjustment accounted for in adjusted net income is a non-cash item with no effect on shares outstanding or earnings per share calculations, reflecting only the valuation change of the warrant holder's investment as our share price appreciated during the quarter.

Adjusted net income for the second quarter of 2025 was 3.8 million or 11 cents per share compared to adjusted net, income of 3.5 million or 10 cents per share in the second quarter of last year.

During the second quarter of 2025, we recorded a non-cash tax benefit of approximately 52 million primarily due to the release of evaluation allowance on us, deferred tax assets related to our historical net. Operating losses.

This decision reflects our profitability over the past 2 years, in the US as well as our confidence in future profitability, and taxable income generation in the US.

Mike Riordan: This quarter, we generated $8.5 million in operating cash flow, marking our fifth consecutive quarter with positive cash flow from operations, our best in nearly 20 years. This is a testament to the collective FreightCar America team's efforts over the past several years to transform our business. Additionally, our adjusted free cash flow for the first half of 2025 was approximately $20.4 million, reflecting the continued execution of our commercial strategy, operational discipline, and more efficient capital structure. We closed the quarter with $61.4 million cash on hand and no borrowings under a revolving credit facility. Capital expenditures for the second quarter totaled $0.6 million. For the full year 2025, we now expect capital expenditures to be in the range of $9 to $10 million. Approximately $4 million is allocated to retained capital for ongoing operations.

This non-cash benefit was partially offset by a 47.6 million non-cash adjustment to our warrant liability as a reminder the warrant liability adjustment accounted for an adjusted. Net income is a non-cash item with no effect on shares outstanding or earnings per share calculations reflecting. Only the valuation change of the warrant holders investment as our share price appreciated during the quarter.

This quarter, we generated 8.5 million in operating cash flow marking our fifth consecutive quarter with positive cash flow from operations, our best in nearly 20 years.

This is a testament to the collective freight car America, team's efforts over the past several years, to transform our business.

Additionally, our adjusted free cash flow for the first half of 2025 was approximately 20.4 million reflecting the continued execution of our commercial strategy, operational discipline and more efficient capital structure.

We closed the quarter with 61.4 million cash on hand and no borrowings under our revolving credit facility.

For the full year 2025. We now expect Capital expenditures to be in the range of 9 to 10 million.

Mike Riordan: The remaining balance is growth capital for both our tank car retrofit program that begins next year, as well as future production of new tank cars. This quarter's increase in growth capital will vertically integrate aspects of our future tank car operations and strengthen our position in the market. We anticipate that this additional investment will contribute an additional $6 million of EBITDA over the next two years and be a meaningful contributor to gross margin expansion in future periods. Our strong cash flow generation and discipline approach continue to support these growth investments while keeping our financial position healthy, with trailing 12-month net leverage remaining around 1.2 times. Looking ahead, we're focused on ensuring that every dollar we invest supports scalable, high-return opportunities. With a healthy balance sheet and steady cash flow, we are well-positioned to support future growth and deliver improved profitability.

Approximately 4 million is allocated to reaching capital for ongoing operations.

The remaining balance is growth capital for both our tank car retrofit program. That begins next year, as well as future production of new tank cars.

This quarter's increase in growth. Capital will vertically integrate aspects of our future tank car operations and strengthen our position in the market.

We anticipate that this is additional investment, will contribute in additional 6 million dollars of e bit over the next 2 years and be a meaningful contributor to gross margin expansion in future periods.

Our strong cash flow generation and disciplined approach continue to support these growth investments while keeping our financial position healthy, with trailing 12-month net leverage remaining around 1.2 times.

Looking ahead we're focused on ensuring that every dollar we invest supports scalable High return opportunities.

Mike Riordan: With that, we'll now open the line for questions and answers.

With a healthy balance sheet and steady cash flow. We are, well, positioned to support future growth and deliver improved profitability.

With that, we'll now open the line for questions and answers.

Speaker 7: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Mark Richman with Noble Capital Markets. Please go ahead.

Thank you.

We will now be conducting a question and answer session.

If you would like to ask a question, please press star on your telephone keypad.

The confirmation tone will indicate.

Your line is in the question queue.

you may press star and 2 if you would like to remove your question from the queue,

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

1 moment, please while we Poll for questions.

Mark Richman: Thank you. Compared to the prior year period, you know, rail car sales fell about 26%, while aftermarket sales increased almost 61%. And I was just wondering how much of that is due to productive capacity being dedicated to custom fabrications versus the timing of rail orders within the year, and what are your expectations for the third and fourth quarters?

Our first question comes from Mark Richmond with Noble Capital markets, please go ahead.

Thank you. Compared to the prior year period, rail car sales fell about 26%. While aftermarket sales increased almost 61%. I was just wondering how much of that is due to productive capacity being dedicated to custom fabrications versus the timing of rail orders within the year. What are your expectations for the third and fourth quarters?

Nick Randall: Hey, Mark. Good morning. It's Nick. I'll answer that one and then Mike may do some follow-up on some of the timing issues of it. So I think, yeah, there's a couple of things to unpack in that question. So in Q2, we did produce a higher volume than we shipped in Q2. We produced some products that we'll ship in a subsequent quarter. So from a production perspective, we are set up our planning process leveled out so that we don't have large swings in labor up or down. So we really utilize our capacity in an effective manner to drive our business. So that kind of really explains why there's a difference year on year, Q2 to Q2, in the volume shift. So yes, you'd expect to see those ship in a later quarter in the year and see that sort of smooth off.

Hey Mark. Good morning. It's Nick ala. I'll I'll answer that 1 and then Mike may do some follow-up on a on some of the timing issues of it. So

Nick Randall: I would just clarify, though, our production capacity wouldn't be a constraint on sales. The customer demand dictates our sales rather than any capacity concerns. But the aftermarket piece, I'll let Mike add on to that, or the.

I think you have just a couple of things to unpack in that question. Um, so in Q2 we did produce, uh, a higher volume than we shipped in Q2, we produced some products that were shipped, um, uh, in a, in a, in a subsequent quarter. So, from a production perspective, we are set up for our planning process leveled out, so that we don't have large swings in, um, labor up or down. So, we really use utilize our capacity, uh, in an effective manner, to drive our business. Um, so that, that kind of really explains why there's a difference here on year Q2 to Q2 in the uh, volume shift. So yes, you'd expect to see those ship in a later quarter in the year um and see that sort of uh smooth off.

I would just clarify, though. Our

Mike Riordan: Yeah. So on a quarter over quarter, we continue to expand our presence in the aftermarket, and we're just seeing sales growth there that we continue to like and see in the future. But to Nick's point, production was higher in the second quarter than you'll see in the delivery numbers with a balance of cars produced and will deliver throughout the second half. And you'll see that maintaining the full-year delivery guidance, you'll see Q3 and Q4, we expect to be much higher deliveries than what you've seen in Q1 and Q2. And all of that is simply timing to customer schedules on when they want to take cars.

Production capacity wouldn't be a constraint on sales. The customer demand dictates our sales rather than any, uh, capacity concerns but, um, the aftermarket piece I let Mike that onto that property.

Yeah, so on a quarter of a quarter, we continue to expand our presence in the aftermarket and we're just seeing sales growth there um that we continue to to like and see in the future. But to Nick's Point production was higher in the second quarter and then you'll see in the delivery numbers with a balance of cars produced. Um, and we'll deliver throughout the second half and you'll see that maintaining the full year delivery guidance, you'll see, uh, Q3 and Q4, we expect to be much higher deliveries than what you've seen in q1 and Q2, and all that is is simply time.

Mark Richman: And you know, the second question is just manufacturing segment gross margins. You know, if you look at them kind of historically, but in the first and second quarters, 13.4% and 13.5%, while the aftermarket margins were 37.4% and 36.8%. So do you think the first and second quarters are indicative of forward gross margin expectations, and how are the tank car retrofits expected to impact revenue and margin in 2026 and 2027?

Climbing to customer schedules and when they want to take cars.

And you know the second question is just manufacturing segment gross margins. You know, if you look at them kind of historically, in the first and second quarters, 13.4% and 13.5%, while the aftermarket margins were 37.4% and 36.8%. So, do you think the first and second quarters are indicative of forward gross margin expectations? And how are the tank car retrofits expected to impact revenue and margin in 2026 and 2027?

Nick Randall: So I'll split that into two separate pieces, Mark. One is the current year of 2025, and then the other one is future years. Typically, we don't make too many comments on future years, but we've mentioned tank car retrofits, so we can talk a bit about the timing of that at least. So in this year, the margins we've seen in Q1 and Q2 have been a mix between product mix and really accelerating our productivity, our operational productivity, at least on the whole good sides, which has been favorable for us. I would expect to see those carry through in Q2 and Q3, sorry, Q3 and Q4 for the balance of the year. So I don't expect to see too many changes from what we've demonstrated in Q1 and Q2.

Well, I, I'll split that into 2 separate pieces. Mark 1 is the current year of 2025. Um, and then the other 1 was future is typically we don't make too many comments on future years, but we've mentioned tank, car retrofits. We can talk a bit about the timing of that, at least.

Nick Randall: Certainly, with the volume going up, you'll see the shipments go up, but the margins should stay pretty consistent. And as mentioned before, we try and we haven't been communicating large layoffs or changes in our organization. We've been able to be consistent in retaining that well-trained workforce so that we can build on the margins we get each quarter. So that's why I would just use that as an indicator of what Q3 and Q4 will look like and what the whole year will look like. As it comes to future years, you know, we don't generally communicate on those. We do have the tank car retrofit program, which we've communicated. And as Matt and Mike both commented in their prepared notes, that sort of starts partway through 2026. We've got a, you know, we've, I think last quarter, you asked about a fifth line.

Have been a mix between product mix and, um, really accelerated our productivity, our operational productivity, at least on a whole good sides which is being favorable for us. I would expect to see those carry through in Q2 and Q3 for. Sorry. Q3 and Q4 for the uh, for the balance of the year. So I don't expect to see too many um changes from what we've demonstrated in q1 and Q2. Um, certainly with the volume going up, you'll see the shipments go up but the the margins should stay uh, pretty consistent. Um, and you know, as mentioned before we try and we we haven't been

Communicating large layoffs or changes in our organization. We've been able to be consistent in retaining that um

Well-trained, Workforce, so that we can build on the margins. We we get each quarter. So that's what I. I I I would just use that as a, as a indicator of what the Q3 and Q4 will look like and what the whole year will look like,

Um as it comes to Future years. Um, you know, we don't generally

Nick Randall: You know, we would look at our latest incoming order quantity is about 1,200 units a year each quarter, sorry, 1,200 units per quarter coming through. If we sustain quarters like that, then we'd obviously look to add that fifth line to produce those retrofits, and that would obviously alter the performance accordingly. But we'd know more about that as we enter into 2026 rather than sort of the summer of 2025, if that helps.

Communicate on those we we we do have the tank car retrofit program which we've communicated and um as Matt and Mike both commented in the in the prepared notes that sort of starts um partway through 2026. Um we we've got a, you know, we've I think last quarter you asked about a Fifth Line um you know we would look at our

Mark Richman: No, that's very helpful. Thank you very much.

Nick Randall: Thanks, Mark.

Mark Richman: Thanks, man.

The latest incoming order quantity is about 1,200 units a year, uh, each quarter. Sorry, 1,200 units per quarter coming through. If we sustain quarters like that, then we'd obviously look to add that fifth line to produce those retrofits, and that would obviously, uh, alter the performance accordingly. Um, but we would know more about that as we enter into 2026, rather than sort of the summer of 2025. If that helps. No, it's very helpful. Thank you very much.

Speaker 7: Thank you. We have a next question from Aaron Reed with North Coast Research. Please go ahead.

Thanks Mark.

Thank you.

Aaron Reed: Hi, Nick. Hi, Mike. Thanks for taking the question. So what I want to find out a little bit more about, and I know you mentioned it, was you said the tank line is expected to add around 6 million in EBITDA here in '26 and '27. I just want to make sure I heard that right, as well as if you can give a little more color around the timing of what that might look like would be helpful.

We have a next question from Aaron Reed with North Coast research. Please go ahead.

Hi Nick. Hi Mike. Thanks for uh taking the question.

Nick Randall: Yes. Just for clarification, obviously, you know that it's 6 million over a two-year, right? So it's.

What, what, what, what about a little bit more about? I know you mentioned, it was, you said the tank line is expected to add around $6 million in EBITDA here in '26 and '27. I just want to make sure I heard that right, as well as if you could give a little more color around the timing of what that might look like, would be helpful.

Aaron Reed: Over two years. Okay.

Nick Randall: Period. Yeah. So that's, you know, we've been talking about our plant will be ready to do the tank car conversion program in a matter of months. And we will, the contract we have starts sort of mid to end Q2 of 2026 and then bleeds over into 2027 as well. So, but we've got inquiries and other orders that we may add to that, but the specific one that you referenced is really scheduled to start back off Q2 of 2026.

Yeah, just, just, just for clarification, you know, you got that it's $6 million over 2 years, right? So, that's over 2 years, okay?

Um, so so that's I you know we've been talking about uh uh plant will be ready.

to do the tank car conversion program, uh, in a matter of, um, months and we will um, the contract we have starts sort of

Aaron Reed: Perfect. Okay. That's helpful. And the other question I have is, I know there's been a lot of talk, especially in terms of mergers between some of the, you know, class one rail carriers. How is that expecting to impact you, or is that, you know, kind of not really going to impact you one way or another? I'm getting a lot of questions on that.

Mid to, uh, end Q2 of 2026 and then, uh, bleeds over into 2027 as well. So, um, but we, we, we've got inquiries and other orders we made as to that. But the, the specific 1 that you referenced is um, really scheduled to start the back off Q2 uh, of 2026.

Nick Randall: You know, it's a difficult one to say for sure. Will it impact the industry? I would expect so. I expect there's a couple of things. One is I would expect there'll be some productivity and customer enhancements in the railroad industry. You know, that will ultimately help railroads. Just the industry overall, improved productivity and improved customer service levels always help from that perspective. You know, from a builder's perspective, you know, what's good for rail is good for a builder. That's the way I always look at it. I think it's too early to say on any timing or orders or content or product types. That would still need to be seen.

Perfect. Okay, that's helpful. And the other question I have is, um, I know there's been a lot of talk especially with in terms of mergers between some of the, you know, class 1 rail carriers. I how is that expecting to impact you or is that you know, kind of a not really an impact you 1 way or another? I'm getting a lot of questions on that.

You know, it's a a it's a difficult 1 to say, for sure. Um, will it impact the industry? I would, I would expect. So I expect there's a couple of things 1 is, I've expected to be some productivity in in customer enhancements, in the railroad industry. Um, you know, that will ultimately help railroads, uh, just the industry overall, uh, improved productivity improved customer, service levels, always help. Um, from that perspective, um, you know, from a, um, a builder's perspective,

Nick Randall: But I think it's, you know, if there's an enhancement or improvement for customers and end users in rail, I think that rises the tide for the rail industry, is the way I would look at it. But it is very early days, Aaron. So it's not something that a lot of people have had a lot of time to digest and look at the true details behind it.

Aaron Reed: Right. And then one more quick question is, you know, one of the things that we're seeing a lot of interest in, obviously, is, you know, AI and the massive demand and uptick in energy needed. So it looks like there's been a bit of a resurgence in coal. And my understanding is a lot of those cars have been retired as the expectation was that coal was going to kind of fizzle out. Is there a potential for increased demand in either repairs or even maybe new opened-up hoppers that might develop here in the next, you know, coming quarters or even year that wasn't necessarily expected, you know, a year or two ago, or is there still, would you think, ample supply that means that wouldn't necessarily be required to get additional or repaired cars?

Nick Randall: Sure. I will make some comments on it, and then I'll ask Matt and Mike maybe to comment on it as well. So just to put into context, I think for the entire railroad industry, coal is probably still the largest single commodity moved across the railroad networks in its own right. So coal is a very large proportion. And as you've mentioned prior to probably two years ago, it's been on a constant decline and a very predictable decline from a usage perspective. So any change to that certainly would be a positive for people who are involved in either the repair, the restoration, or the extended life of units that are used to move coal. So I think FreightCar America has one of the largest fleets of coal units, coal rail cars out there.

There's been a bit of a Resurgence in cult and my understanding is a lot of those uh uh cars have been retired. Um as the expectation. Was that Cole's going to kind of fizzle out? Um is there a potential for increased demand in either repairs or even maybe new uh opened up Hoppers that might develop here in the next, you know, coming quarters or even year that wasn't necessarily expected. You know a year or 2 ago or is there still would you think ample Supply? Uh, that means that wouldn't necessarily be required to get additional or repaired cars?

Nick Randall: So yeah, so we would expect to see, or we do see, a lot more inquiries about extending the life of existing coal-related assets in the rail network, which is very helpful. I think it's too early to look at whether that would transpire into a new car build. I think there's a lot of rail assets dedicated to coal out there, but I don't know how close to the end of life they actually are and whether people would look to do a conversion into coal or a conversion from coal. So I think the conversion piece is probably more where we would see activity on that. Obviously, we do a lot of conversion, so it's very beneficial for us.

Sure. I I I I will make some comments and then I'll ask, uh, Matt and Mike maybe to come into it as well. So just just to put into context. I think for the entire railroad industry, coal is probably still the largest single commodity moved across the railroad networks in its own, right. So coal is a very large proportion and as you mentioned prior to probably 2 years ago, uh, it's been on a constant Decline and a very predictable decline, um, from a, uh, a usage perspective. So any any change to that certainly would, um, be a positive for people who are involved in either the the repair, the restoration, or the extended life of units that are used to move coal. So, um, I think Freight on America, has 1 of the largest Fleet of coal, units, Co coal rail cars out there. Um, so yeah. So so we would expect to see

We are seeing a lot more inquiries about extending the life of existing coal-related assets, uh, in the real network, which is very helpful. Um, I think it's too early to look at whether that would transpire into a new car build. Um,

Nick Randall: But in the near term, it's the extension of life from maintenance, repairs, and parts, which is clearly well within the remit of our aftermarket business, which feeds that industry. Mike, anything I missed on there?

I think there's there's a lot of um, rail assets dedicated to Coal out there, but I I I don't know how close to the to the end of life. They actually are and whether people would look to do a conversion into coal or a conversion from coal, so I think the conversion piece is probably worth more. Where we would see activity on that. Obviously, we do a lot of conversions, so it's very beneficial for us. But at the near term, it's the extension of life from um maintenance repairs and parts, which is clearly well within the uh remit of our aftermarket business which uh, which feeds that industry.

Maintenance, and I missed on.

Aaron Reed: Very helpful. Thank you.

Speaker 7: Thank you. We have a next question from Brendan McCarty with Siddharthi. Please go ahead.

Great, very helpful. Thank you.

Thank you.

We have a next question from Brendan Marti.

With sidoti, please go ahead.

Brendan Mccarthy: Great. Good morning, guys. Thanks for taking my questions here. I wanted to circle back to gross margins. I think that you had mentioned we should see a similar gross margin level of right around 15% for the back half of this year. I just wanted to look longer term. I know there's the 1,000 or 1,000 tank car conversion order in the backlog, obviously higher margin there. Do you see any reason why gross margins may step down from that 15% level long term?

Great morning guys, thanks for taking my questions here. I wanted to Circle back to gross margins. I think that you had mentioned

We should see a similar gross margin level of right around 15% for the back half of this year. I just wanted to look longer term. I know there's the thousand tank car conversion order in the backlog; obviously, higher margin there.

Do you see any reason why gross margins May step down from that 15% level of long term?

Nick Randall: I'll take a stab at that to begin with, Brendan, and then Mike can add any additional details. So there's a couple of things. So first of all, mix does play a large influence. So when you ask, you know, when we look outside our lead time window, it's hard to nail mix down. All I know from a planning and from an agile manufacturing perspective, we are confident and capable to adjust to whatever the customer demand is in the future, but the margins will flex, obviously predicated by mix. So that is somewhat unknown from a mix perspective. So when you look too far out, that's difficult to sort of predict with any certainty. I would say there's no, you know, we've got some nice pipelines and some nice inquiry levels.

Uh, I'll take a stab at that to begin with Brendan and then Mike can, um,

Add any any additional details. So, there's a, there's a couple of things. So first of all,

Nick Randall: I think 15% is at the high end, which is nice, but obviously, we wouldn't work maybe dilute that as well in the out period as well. If you think about this year for the next two quarters that we finish per calendar year 2025, I think the biggest thing we look at is, you know, our shipments will probably go up in Q3 and Q4 compared to what they've been in Q1 and Q2. We did build ahead in Q2 for some items that were shipped in the second half of the year. I think that the margins will be similar. So it's going to depend on what ships and exactly when it ships in Q3 and Q4. But it's really mixed dependent with an underlying productivity enhancements, which we keep on driving, which is really influencing those gross margins most. Mike, anything to add?

Mixed does play a large, um, influences. So when you ask, you know, when we look outside our, um, lead time window, it's hard to Nail Mix down, um, all all, all I know from a, a planning and from a an agile manufacturing perspective, we are confident and capable to adjust to whatever the customer demand is in the future. But, uh, the, the, the margins will Flex obviously, predicated by, um, mix so that that is somewhat unknown from a mixed perspective. So when you look too far out, that's um, difficult to sort of predict, with any certainty, I would, I would say there's no. Um, you know, we've got some, uh, nice pipelines and some nice inquiry levels. Um, I think 15% is at the, at the high end, um, which is nice, um, but uh, you obviously we, we would, um, we wouldn't work, um, maybe dilute that as well.

In the output as well.

You think about this year for a, uh, the next 2 quarters and we finish for calendar year 2025. I think the biggest thing we look at is, you know, our our shipments will probably go up in Q3 and Q4 compared to what they're being q1 and Q2. Um we did build a head in Q2 for some items that were shipping, the second half of the year. Um, I I think that the, the margins will be similar um,

...enhancements, which we keep on driving, which is really influencing those gross margins most.

Mike.

Brendan Mccarthy: That makes sense. That's helpful, Nick. I appreciate the color there. And just looking at gross margin gains, maybe year to date, I guess how much of that do you attribute to that manufacturing efficiency? How much do you attribute to just the product mix in general?

That makes sense. That's helpful, Nick. I appreciate the color there and just looking at gross margin gains, maybe a year to date. I guess how much of that do you tribute to that manufacturing efficiency. And how much do you tribute to just the product mix in general?

Nick Randall: It's difficult to split that out in an easy way. There are certain products that also have a manufacturing productivity mix that go with them, an enhancement that go with them simply because of the length of the order, the size of the order, and the volume rates we produce. You know, I would say there's a generic trajectory that we're on for productivity improvement, which incrementally improves our underlying operational productivity quarter on quarter, and that's predictable and reliable. And then you have the peaks and troughs of the product margin that ships at any given time, which adds on to that. So I would, you know, our operational productivity will continue to increase quarter over quarter as we offset any incremental pay rise improvements or inflation pressures. And then the product mix margins are really predicated by the product type.

Um,

it's, it's

It's difficult to split that out. Um, in a in an easy way there are certain products

That also have a manufacturing productivity mix that goes with them, enhancements to go with them simply because of the length of the order, the size of the order, and the volume rates we produce. Um, you know, I would say there's a generic trajectory that we're on for productivity improvement, which incrementally improves our underlying operational productivity quarter on quarter, and that's predictable and reliable. And then you have the peaks and troughs of the product margin that ships at any given time, which adds on to that. So I I would, you know,

Operational productivity will continue to increase. Um,

Nick Randall: You know, if you think about out of this year, obviously, we talked about tank cars and tank car retrofit, which generally have a more lucrative margin with them. So I'd expect that to go with that product to go up. But I generally, you know, trying to get it, pin it down to which quarter, which will ship which product in the out periods is a bit more difficult than just looking at the market per se.

Quarter over quarter as we offset any incremental, pay rise, uh, improvements or uh, inflation pressures. And then the product mix. Um, margins are really predicated by the product type. You know, if you think about, uh, out of this year, obviously we talked about tank cars and tank car retrofit, which generally have a more lucrative margin with them. So I'd expect it to go with that product to go up. Um, but I generally, they're trying to get it pin it down to, which quarter, which will ship, which product in the out periods is, uh, is a bit more difficult than just, um, looking at the market per se.

Brendan Mccarthy: That makes sense. I appreciate that. And one more question from me. I know you talked about an increase in gross CAPEX as it relates to the tank car capabilities in your manufacturing. Just wondering if you could provide any color on the tank car conversion pipeline, maybe conversations that you're having with potential customers there. Just curious as to what that pipeline might look like.

Nick Randall: Sure. I'll talk a bit about that. So obviously, we've secured a large order. We've previously communicated that. There is a, you know, there is a federally mandated date, which I think is back end of 2029, by the time that all these cars must be converted for use on across North America. So there is a, I think there's some industry estimates that put somewhere between, and I'm at somewhere between 10 to 17,000 units likely would need to be converted in order to stay operational. The owners of those units have some decisions to make. Do they want to replace them with new, or do they want to convert them? And that would depend on how much usable life and what type of usable life is left on them. So there's certainly a significant chunk of customer appetite out there for conversions.

That makes sense. I appreciate that. And one more question for me. I know you talked about increasing growth and CapEx as it relates to the tank car capabilities in your manufacturing. Just wondering if you could provide any color on the tank car conversion pipeline, maybe some conversations that you're having with potential customers there. Just curious as to what that pipeline might look like.

Sure, I'll talk a bit about that. So obviously we've secured a large order. Uh, we've previously communicated that there is a, um, you know, there is a federally mandated, uh, date which I think is back end of 2029 but at the time that all these cars must be converted for use on, uh, across North America. So there is a, um, a a thing, there's some industry estimates that put some

somewhere between and I'm at somewhere between

Nick Randall: We continually have conversations with people, but that, excuse me, the decision is certainly not a capacity issue for us. We would accommodate orders that any customer would like to get converted in that timeframe. The question really is, would they like to switch, would they prefer to switch it to a new car as opposed to a conversion? And obviously, we are preparing and readying ourselves to enter into the new car market as well. So we are staying close to those conversations, whether it be a conversion or a new car in that late '26 or '27 calendar year, late '26 or calendar year '27 period. But yeah, it's the same customers that we talk about, about the same product. We just provide different routes to solutions depending on what their need is at that time.

10 to 17,000 uh units um likely would need to be converted in order to stay operational. The owners of those units, have some decisions to make, do they want to replace them with new or do they want to convert them and that would depend on how much usable life, and what type of usable life is left on them. So there's certainly a, um, a significant chunk of customer appetite out there for conversions. Um, we continually have conversations with people but the excuse me,

This decision is certainly not a capacity issue for us. We, we would accommodate orders, um, that any customer would like to get converted in that time frame. The question really is, would they like to switch? Would they prefer to switch it to a new car as opposed to a conversion? Um, and obviously, we are preparing and readying ourselves to enter into the new car market as well. So, so we are staying close to those conversations. Whether it be a conversion or a new car in that late, 26, or 27, talent year 2026 account of the Year 27 period. Um, but yeah, it's it's it's the same customers that we talked about about the same product and we just provide um, different routes to Solutions depend on what their need is at that time.

Brendan Mccarthy: Great. I appreciate the detail, Nick. Thanks, everybody. That's all for me.

Aaron Reed: Thanks, Brendan.

I appreciate the detail, Nick. Thanks, everybody; that's all for me.

Speaker 7: Thank you. We have a follow-up question from Mark Richman with Noble Capital Markets. Please go ahead.

Thanks Brandon.

Thank you.

Mark Richman: Thank you. This question is for Matthew. You know, according to the RSI, industry-wide orders and deliveries were 11,322 and 15,726, respectively, for the first six months of 2025. I'm just kind of curious, Matt, where do you think those numbers will fall out for the year?

We have a follow-up question, from Mark Richmond with Noble Capital markets, please go ahead.

Chris O'Dea: Yeah, Mark, good morning. I think we're looking at another year, back-to-back years of total industry order volume that will be sub 30,000 rail cars with an upturn in demand when we get into the year '26. I'll just add that we do see, based on pipeline activity, we do have an expected order increase in the second half of the year.

Thank you. Uh, this question is for, for Matthew, you know, according to the RSI industrywide orders and deliveries were 11,322 and 15,726 respectively. For the first 6 months of 2025, I was just kind of curious. Uh, where Matt, where do you think those numbers will fall out for the year?

Mark Richman: Okay. So like the first quarter, you were 25% of the orders, and the second quarter, about 19.7%. So you'll kind of, you expect to kind of maintain those levels, or you think you can continue to capture market share, and then, of course, you've got the backlog as well?

Industry order volume, that will be subbed, 30,000 rail cars, um, with a with an upturn in demand. When we get into the years 26, I'll just add that. We do. See, um, based on Pipeline activity, we do have an expected order, increase in the second half of the year.

Chris O'Dea: Yeah, Mark, we expect to continue to have market share gains, and I would point out that our flexibility and the capabilities to work with customers on specific demands beyond just new cars is something that's not measured in terms of total market share when you compare it to ARCI numbers. However, keep in mind that conversions, rebodies, and rebuilds are a very valuable component of our offering and provide customers, you know, that optionality. So the market share numbers themselves don't tell the full story. But we do expect to see continued growth in market share based on our overall offering.

Okay, so in the first quarter, you were 25% of the orders, and in the second quarter, about 19.7%. So, do you kind of expect to maintain those levels, or do you think you can continue to capture market share? And then, of course, you've got the backlog as well.

You know, we Mark we expect to continue to have market share gains and I would point out that our flexibility and the capabilities to work with customers on specific demands Beyond just new cars um is something that's not measured in terms of total market share when you compare it to arci numbers. However keep in mind that conversions re bodies and rebuilds are very valuable component of our offering and provide customers, you know that optionality. Um so the market share numbers themselves, don't tell the full story.

Mark Richman: Okay. And then the last one, the question is just for Nick. In the recent presentation, there's mention that the fifth line is expected to increase capacity by 20% or 1,000 units. So you've got the four production lines at 1,250, and I was just kind of curious why it would be 1,250 versus 1,000.

What we do expect to see continued growth uh, in market share based on our uh our overall offering.

Nick Randall: You know, it's a good question. You know, when you look at the capacity, we've typically used 1,250 because of the four lines, and then the fifth line will be in some way used for preparation for entry into the tank car market. And we would look at that may be a bit of a slower ramp-up. So that's where that sort of slight delta is between a fifth line, whichever line we convert to tank cars, you know, as a new entrant, we would want to just ease ourselves in a little bit rather than going full volume straight away. So that really sort of explains that delta. I would just caveat that, you know, capacity constraint would never, well, I wouldn't say never, but in the foreseeable period wouldn't be a constraint for us.

Okay. And then the last question is just for Nick. In the recent presentation, it was mentioned that the fifth line is expected to increase capacity by 20%, or a thousand units. So, you've got the four production lines at 1,250, and I was just kind of curious why it would be 1,250 versus a thousand.

Uh, you know, it's a good question. You know? We, we um

When you look at the capacity, we typically use 1250 uh, because of the 4 lines. And then, the Fifth Line will be in some way used for, uh, preparation for entrance to tank car market. And we would look at, um, that may be a bit of a slower ramp up, so that's where that sort of slight. Delta is between a, a Fifth Line, whichever whichever line we convert to tank cars. Um, you know, it's a new entrance we would want to just, uh, ease ourselves in a little bit, uh, rather go full volume straight away. So that really sort of explains that Delta, I, I would just

Nick Randall: We are currently running four lines at about 1,250 a line, running about 70% of the work week. So there's obviously shift modifications and changes we could do to increase that capacity if we ever needed to from that perspective. But in answer direct to your question, why is the fifth one coming in 1,000, not 1,250? It's more to do with us being a little bit cautious on a new product type, a new segment. We would just have to take that into account when we look at how our capacity looks.

Caveat that um, you know, capacity constraint would never. Well, I wouldn't say never, but in the foreseeable period wouldn't be a constraint for us. We are currently running 4 lines at about 1250, a line um, running about uh 70% of the work week. So there's obviously shift modifications and changes. We could do to increase that capacity if we ever needed to uh, from

Mark Richman: Okay. No, that makes sense. Well, thank you all very much.

Perspective. But in answer direct to your question: Why is the fifth 1 coming in a thousand? Not 1250. It's more to do with us, um, being a little bit cautious on a new product type, a new segment. We would just have to take that into account when we look at how our capacity looks.

Nick Randall: Thank you, Mark.

Aaron Reed: Thank you.

Okay, now that makes sense. Well, thank you all very much.

Speaker 7: Thank you. I am not showing any further questions at this time. I would now like to turn the call back over to Nick Randall for any further remark.

Thank you. Thank you.

Thank you.

Nick Randall: Yeah. So thank you. I would just like to summarize a couple of bullet points for where we finish. So we mean at the end of Q2, we maintained strong commercial momentum with our orders driven by rebuilds and conversions, adding 300 units to our healthy backlog for this year, despite, as people mentioned, a challenging industry backdrop. We expanded our gross margins to 15%. That's 250 basis points through operational efficiency and driven solid profitability. We generated 8.5 million in operating cash flow this quarter, marking our fifth consecutive quarter of positive cash flow operations and adjusted free cash of 7.9 million. Our strong cash position provides flexibility to invest strategically while maintaining our financial discipline. We announced a capital investment in our tank car retrofit program, accelerating capability expansion and advancing vertical integration of key components within our manufacturing process.

I am not showing any further questions at this time. I would now like to turn the call back over to Nick Randall for any further remark

Yes, so thank you. I would just like to summarize a couple of bullet points, uh, for where we finish. So we meet at the end of Q2, we maintain strong commercial momentum with our orders driven by rebuilds, and conversions adding 300 units to our healthy backlog for this year. Despite, as people mentioned, a challenging industry backdrop,

We expanded our gross margins to 15%. That's 250 basis points through operational efficiency and driven initiatives. Solid profitability. We generated $8.5 million in operating cash flow this quarter, marking our fifth consecutive quarter of positive cash flow operations and adjusted free cash flow of $7.9 million.

Nick Randall: And we are well-positioned to capitalize on market opportunities ahead and continue to deliver sustainable shareholder value. And with that, I thank you all for your time. Thank you.

Our strong cast position provides flexibility to invest strategically while maintaining our financial discipline. We announced a capital investment in our tank car retrofit program accelerating capability expansion and advancing vertical integration of key components within our manufacturing process. And we are well, positioned to capitalize on Market opportunities ahead and you continue.

To deliver sustainable shareholder value.

Speaker 7: Thank you. This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a great day.

And with that, I thank you all for your time. Thank you.

Thank you, this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a great day.