Live Earnings Conference Call: FreightCar America will host a live Q1 2025 earnings call on May 6, 2025 at 11:00AM ET. Follow this link to get details and listen to FreightCar America's Q1 2025 earnings call when it goes live. Get details. NASDAQ:RAIL FreightCar America Q1 2024 Earnings Report $6.25 -0.15 (-2.34%) Closing price 05/5/2025 04:00 PM EasternExtended Trading$6.23 -0.02 (-0.32%) As of 05:06 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast FreightCar America EPS ResultsActual EPS$0.02Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AFreightCar America Revenue ResultsActual Revenue$161.06 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AFreightCar America Announcement DetailsQuarterQ1 2024Date5/8/2024TimeN/AConference Call DateThursday, May 9, 2024Conference Call Time11:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by FreightCar America Q1 2024 Earnings Call TranscriptProvided by QuartrMay 9, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Welcome to FreightCar America's First Quarter 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 comments. Please note this conference is being recorded. An audio replay of the conference call will be available on company's website within a few hours after this call. Operator00:00:27I would now like to turn the call over to Chris Aude with Riveron Investor Relations. Please go ahead. Speaker 100:00:34Thank you and welcome. Speaker 200:00:35Joining me today are Nick Randall, President and Chief Executive Officer Mike Reardon, Chief Financial Officer and Matt Thawne, Chief Commercial Officer. I'd like to remind everyone that statements made during the conference call relating 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 Securities Litigation Reform Act of 1995. Participants are directed to Fracar America's Form 10 ks for a 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. We expressly disclaim any duty to provide updates to our forward looking statements whether as 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 U. Speaker 200:01:20S. 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 Q1 of 2024 is posted on the company's website at freightcaramerica.com along with the 8 ks, which was filed yesterday aftermarket. With that, let me now turn the call over to Nick for opening remarks. Speaker 100:01:43Thank you, Chris. Good morning, everyone, and thank you all for joining us today. I would like to begin by saying how pleased I am to join you for my first earnings as President and CEO of FreightCar America. I would like to recognize Jim Meyer for his support and mentorship as we look to continue to execute our strategic priorities. In just a few years, the company has undergone a significant transformation in both its earning potential and capital allocation, achieving impressive milestones during our restructuring efforts as a pure play manufacturer. Speaker 100:02:17Today, we are at an inflection point with both the build out of our new facility and rightsizing of our capacity is now complete. We have a proven manufacturing platform to build upon coupled with FreightCar's long history of industry expertise, which allows us to remain highly focused on both our operational excellence and our commercialization strategy. We have laid the groundwork for our next phase of growth and by diligently executing our strategy, I'm confident we will be able to achieve the power of scale and leverage that I believe exists in this business. With that, let me provide an update on the industry dynamics at play during the Q1. As a reminder, demand for rail equipment depends on factors like downstream rail activity, the profitability of Class 1 railroads, freight volumes, public policy. Speaker 100:03:07Industry volatility is rooted in the dependence on industrial, energy and farm production, which can vary with economic changing economic and weather conditions. Volatility in the railcar During the Q1, we saw an increase in service levels and throughput of railroads allowing the shippers to be more consistent and resulting in improvements to the supply chain. Based on a competitive industry environment, we maintained our market presence in the Q1, which Matt will speak to in a few minutes. Overall, we continue to view these metrics as positive for a healthy rail environment that will drive more freight to rail, reinforcing our growing confidence in the secular trends we see important to this business. With that, let's turn to the discussion of our Q1 results. Speaker 100:04:00FreightCar America delivered a solid first quarter performance in line with our expectations. Revenue generated during the Q1 increased 99% year over year to $161,000,000 on record quarterly deliveries of 12.23 railcars, which includes roughly 200 cars from the year end that were impacted by the border closure in December. This marks our 2nd consecutive quarter of producing and shipping more than 1,000 units at our newly completed facility in Mexico, which truly validates our operating capabilities. This record is also a testament to our expanded manufacturing footprint that is now capable of producing 5,000 or more railcars per year. Moving forward, it has always been our intention to bring build rates back to optimal levels to meet customer demand, which is in line with our guidance for the year. Speaker 100:04:53With the build out of facility complete, we are well positioned to focus on operational excellence, I. E, efficiency and scale in accordance with our market momentum. In addition to top line strength and robust deliveries, we reported gross margins of 7.1% in the Q1 of 2024, while adjusted EBITDA increased versus the same quarter of the prior year to $6,100,000 Turning to orders, as with other industry participants, activity picked up albeit slowly in the Q1. We received orders of 384 units fired at 45,200,000. We anticipate orders to pick up in the second half of the year and our full year expectations for 2024 are unchanged, continuing to support replacement rates between 35,040,000 units per year. Speaker 100:05:42Switching gears now to touch on our operations. Echoing my opening comments, I believe that we are optimally positioned to drive enhanced earnings moving forward. As a reminder, the strategic repositioning we have undertaken over the last few years allows us to leverage the cyclical nature of the railcar industry, differentiating us from other industry participants. Our variable cost structure enables swift adjustments in production and operational to align with fluctuating demand and reducing risk during downturns by optimizing resource allocation. With our facility now complete and the start up costs associated with the 4th production line behind us, we are focused on driving further efficiencies at our plant. Speaker 100:06:26Now that we have 2 consecutive quarters of higher levels of production under our belt and have successfully tested our operations, I'm extremely confident in our ability to produce a full array of railcar products at higher capacity to meet demand as the industry picks up. Likewise, we remain confident for the full year and reiterate our stated guidance for 2024. With that, I will turn next turn the call over to Matt to discuss the market and then to Mike for more detail on our financial results. Speaker 300:06:56Thank you, Nick, and good morning, everyone. The improved rail service metrics the industry saw in 2023 have continued through the Q1 of 2024. Rail velocity remains above its 5 year average and drill times have seen a noticeable 3% decline year over year, also trending below the 5 year average. These improved service metrics equate to better turn times of rail equipment and ultimately improved shipper confidence. Overall, carload volume revised forecast models point to 1.1 percent year over year improvement in car loadings for the full year 2024. Speaker 300:07:32Chemical, agricultural products and metals are driving much of the expected volume growth in the forecast, and we see this in our inquiry activities, growth of the pipeline and recent order bookings. In summary, we see positive signs for rail and the associated drivers for new railcar demand. Moving to order activity. For the Q1 of 2024, we closed orders for 384 railcars valued at approximately $45,200,000 As Nick touched on earlier, for many freight segments, customers are still taking longer to fully analyze the timing of their new railcar purchases. As mentioned during our Q4 earnings call, we expected this dynamic to continue into the beginning of 2024, which is reflected in our outlook. Speaker 300:08:15We ended the Q1 with a backlog of 2,075 railcars valued at approximately 238,000,000 dollars Our record quarterly delivery performance of the Mexico plant underscores our ability to operate at higher capacity levels to meet customer needs when the industry picks up and as our sales team continues to build our pipeline. As a reminder, our facility was purpose built to not only scale to industry demands but to remain nimble enough to meet niche customer needs around timing and our range of railcar types. On the commercial front, our inquiry activity remains steady with a healthy pipeline that includes a diverse mix of car types. Our strategy to provide customers with tailor made solutions coupled with a disciplined and straightforward approach to the deal proven successful in our efforts to grow market presence. Despite lower levels of order activity across the industry as reported by ARCI, we expect to remain in the cycle of new car, new railcar demand tied closely to replacement levels. Speaker 300:09:18We do not see any changes in forecasts calling for total railcar deliveries falling in the range of 35,000 to 40,000 railcars for the full year 2024. I'll now turn the call over to Mike for comments related to our financial performance. Mike? Speaker 400:09:34Thanks, Matt, and good morning, everyone. I'll begin with an overview of the Q1 financials. We are pleased with our Q1 results as we delivered year over year revenue growth and record quarter deliveries for our Mexico facility. Consolidated revenues for the Q1 of 2024 totaled $161,100,000 with deliveries of 1223 railcars compared to $81,000,000 on deliveries of 738 railcars in the Q1 of 2023. Gross profit in the Q1 of 2024 was $11,400,000 with a gross margin of 7.1% compared to gross profit of $7,500,000 and gross margin of 9.2% in the Q1 of last year. Speaker 400:10:16The lower gross margin performance was driven primarily by startup costs associated with launching our 4th production line, which started late in Q4 of 2023 and included labor cost inefficiencies as we completed the hiring of 2 shifts of new team members during the Q1 of 2024, which includes a significant amount of training time. Further, the mix of railcars delivered during the quarter was more heavily weighted towards lower margin profile cars. Despite the decrease year over year, we anticipate our freight car gross margin will remain at industry leading levels for the full year as we realize the operational efficiencies associated with our fully staffed and built facility. SG and A for the Q1 of 2024 totaled $7,500,000 up from $6,300,000 in the Q1 of 2023, primarily due to an increase in stock based compensation as the Q1 of 2023 had a favorable fair market value adjustment for certain cash settled awards. In the Q1 of 2024, we achieved adjusted EBITDA of $6,100,000 compared to $2,100,000 in the Q1 of 2023, primarily driven by increased railcar deliveries between the comparable periods. Speaker 400:11:27For the Q1 of 2024, our adjusted net income was $4,900,000 or $0.02 per share compared to an adjusted net loss of $5,700,000 or $0.21 per share in the Q1 of last year. Adjusted net income accounts for the impact of certain non cash items and non recurring charges such as 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. Capital expenditures for the Q1 of 2024 were approximately 1,000,000 dollars primarily related to the timing of payments for work that was finished at the end of 2023 to complete the 4th production line at our Mexico facility. I would like to reiterate that with the completion of our 4th production line, we expect future capital spend to decrease and to be in a maintenance cycle. We estimate the maintenance cycle to be approximately 0.5% to 0.75 percent of revenue. Speaker 400:12:22Looking ahead, we expect to be well positioned to be on the path to free cash flow generation allowing us to service down the debt we took out to support our transformation. With that financial overview, I'd like to now turn the call over to Nick for a few closing remarks. Speaker 100:12:38Thanks Mike. Would like to comment briefly on our outlook for the remainder of 2024. We would like to remind everyone that the Q1 played out as we expected and that we anticipate a progression throughout the year. Reiterating my earlier comments, our Q1 performance supports our initial outlook and we remain positive regarding our market position. This has given us confidence in reaffirming our previous stated guidance ranges. Speaker 100:13:04As a reminder, we are maintaining our forecasted revenues between $520,000,000 $572,000,000 up approximately 52.5 percent year over year at the midpoint of the range. This expectation is based on expected deliveries between 4,000 to 4,400 railcars, an increase of approximately 39% at the midpoint of the range. We are also maintaining our forecasted adjusted EBITDA guidance of between $32,000,000 $38,000,000 for the full year, representing a year over year increase of 74.1 percent at the midpoint and further underscoring the power of our transformation strategy. Finally, we expect positive operating cash flow for the 3rd consecutive year. With the heavy lifting of our plant expansion and testing behind us, we remain committed to executing our operational and commercial strategies to continue building our backlog into the fiscal year. Speaker 100:14:02With the benefits of higher productivity at our fingertips, I'm excited about the year ahead. I believe we will drive progressively better results as we realize the benefits of our business model. We remain focused on incremental cash generation and creating profitable growth for all of our shareholders. With that, I will ask the operator to open the lines for some Q and A. Operator00:14:25Thank you. We will now be conducting a question and answer The first question comes from the line of Justin Long with Stephens Inc. Please go ahead. Speaker 500:14:59Thanks and good morning. So I wanted to start with production levels. You mentioned the 200 units that were pushed from Q4 into the Q1 in terms of sales activity. So if you take that out, production was right around 1,000 units. Are you assuming that the quarterly cadence going forward continues around that 1,000 unit level? Speaker 500:15:27Or is there any reason to think we flex up or down meaningfully in the quarters ahead? Speaker 100:15:36Sorry, Mike. I was just saying good morning, Justin, but Mike is going to answer that question for us. Speaker 400:15:40Hey, Justin. Yes, based on the guidance you can see out there 1200 in the Q1, 4,200 at the midpoint. We would expect the production levels to be right around 1,000 or higher per quarter going forward for the remainder of the year. Speaker 500:15:56Okay, got it. So we should be pretty steady on that front. And I guess from a gross margin perspective to get to my second question, Mike, you mentioned mix maybe being a little bit of a headwind here in the Q1. Can you talk about what changes going forward to improve gross margins? Is this solely a function of better mix that's secured in the backlog? Speaker 500:16:21Or is there anything else that's driving that? And I think you talked last quarter about an expectation for full year gross margins to improve relative to 2023. So I'm curious if that's still your expectation? Speaker 400:16:37Yes. The guidance for the full year hasn't changed. And given our mentioned before, SG and A is relatively flat. You can kind of back into where we expect gross margin percentage to be on the revenue and adjusted EBITDA. So that hasn't changed. Speaker 400:16:51So we expect sequential improvement from Q1 into Q2, Q3, Q4. That's going to be driven by 2 things. 1, the mix of cars in the backlog shifts after Q1. And second, in Q1, as mentioned, we had start up costs and a slower ramp on our 4th production line, which actually held back production levels from where they could have been. And so as that's fully ramped up now with the full hiring of both shifts, you'll get natural labor cost efficiencies and production efficiencies for the balance of the year on that production line, which will in turn be accretive to gross margin. Speaker 500:17:30Very helpful. And I guess the last one for me is on inquiry and order levels that you're seeing in the market. I think you made a comment that things are pretty steady, but I was wondering if you could expand on what you're seeing thus far in the Q2 on that front. And Nick, I think you made a comment about the backlog building. So should we read into that that you feel like demand is strong enough to support a sequential improvement in the backlog over the remainder of the year? Speaker 100:18:03So just I'll let Matt comment on the industry and the market. I'll just reiterate kind of what Mike said that we've issued our guidance. We're still holding our guidance between 4000,400 units. So that's where we expect those to be able to ship this year. But Matt can give us a bit more color around the industry and inquiry levels. Speaker 300:18:28Yes. Good morning, Justin. So a couple of comments. On the inquiry level side, when we look at year over year activity, it's been on par with what we saw in 2023, which was pretty robust. So haven't seen significant changes year over year in terms of the type of inquiries. Speaker 300:18:45I would say that the car mix has changed somewhat, but overall, our demand continues to be driven by a replacement market. And if you think about where we are in the current marketplace, and you go back even looking at the last 20 years and the cycles of order activity, we always had a demand catalyst, which we simply don't have today, right? If you go back to 2000s, early 2000s, you had energy, plastics and coal. Mid teens, you had crude by rail and you had the fracking boom, which drove up significant demand. And as we look forward and over the course of the next several years in the forecast, we don't see that catalyst. Speaker 300:19:30We see replacement demand continuing. So, for us, as we look at inquiry activity levels and we look at what the forecast looks like, I think we stay in that 35,000 to 40000 a year demand cycle with some changes based upon fleet aging out, some changes in the overall mix of cars. But overall, we're seeing some steady inquiry activity from quarter to quarter. Speaker 500:20:00Got it. Thank you. Appreciate the time. Speaker 400:20:03Thanks Justin. Operator00:20:06Thank you. Next question comes from the line of Matt Elkott with TD Cowen and Company. Please go ahead. Speaker 600:20:14Good morning. Thank you. I think this question is for Matt. Matt, can you maybe give us a general idea on the customer mix and how it's trended over the last few quarters, the split between shipper and lessor. The reason I'm asking this is with capacity having been ramped up to over 5,000 cars now and you have a more diverse product portfolio. Speaker 600:20:44Can we expect maybe more multiyear supply agreement with lessors in the coming years than you've had in recent years? Speaker 300:20:56Good morning, Matt. A couple of things. So on the mix, we continue to hit the 3 primary segments, right? You've got Class 1 shippers and lessors. We're actively engaged with all of Speaker 600:21:14I won't speak to Speaker 300:21:14specific deals, but, clearly, I won't speak to specific deals, but clearly there's always interest among multiple customers that look to expand their plants, expand their fleets and address the looming aging fleet profile they have where those types of opportunities do exist. Speaker 600:21:38Okay. That's helpful. And then Matt, I think it might have been over a year ago when you guys filed for tank car authorization from the AAR. Can you update us on where that stands if you're still pursuing tank cars and how that would fit into the 5,000 car capacity you have? Would it mean incremental to that or would it be you have the existing footprint to the flexibility to switch some of the existing 5,000 car capacity to same cars? Speaker 300:22:14Yes. So a couple of things Matt. We've got multiple tank car designs that are AR approved. We're watching that market very closely and we'll enter at an appropriate time with the right customers that really fits with our capabilities. So there's more to come on that. Speaker 100:22:32Yes. So the question I'll ask Matt on the capacity wise. So we've got a current capacity, which we state is about 5,000 units a year, which were forecasted between 4,004,400 this year. If tank cars we can include in that 5,000 and there are some opportunities for with additional CapEx to increase beyond that $5,000 for any additional tank cars as we see fit. But the short answer is yes, they could fit within the $5,000 There'll be some CapEx to support that. Speaker 100:23:04But if we needed to, there's an opportunity to flex higher than that if the demand would justify it. Speaker 600:23:12Makes sense, Nick. Thank you. Just one last question on the broader market. It is good to see rail service improving and that eventually should be a tailwind for shift from the highway. But as you guys, I'm sure, would agree that rail velocity improving could be a headwind in the intermediate term to railcar demand. Speaker 600:23:36Are you expecting that to be a factor anytime in the coming few quarters where we see you need to your railcars to ship the same amount of freight and that could be a headwind to orders? Speaker 300:23:51Yes. I think I would go back to my earlier comments on the overall market and the efficiency that the railroads bring versus trucking, right? I know you're familiar with the ability for railroads to carry a ton of freight 4 50 miles on 1 gallon of diesel. And I think that's a compelling argument and continues to be one of the most efficient modes to carry freight. I don't I see where you're headed. Speaker 300:24:22I will tell you that I think the only real impact we're seeing is it's just taking a little bit longer as customers make decisions as they analyze their fleets and what they need. But I think the better story is that the growth opportunity as service metrics continue and improve present a really compelling argument for shippers to look to growth and maybe taking some of that freight off the highways. We see it as an upside, not really as a near term downside. And I would say our inquiry levels support that. Speaker 600:24:56Got Just one last follow-up related to interest rates. It's been somewhat of a roller coaster ride with interest rates over the last few quarters here. Have you seen any can you attribute any orders or lack thereof or cancellations or conversations you were having with customers and they want to pause now because of interest rate concerns? Speaker 300:25:25Yes. I would say that from the lesser community, which is obviously watching that closely, if you talk to the lessors, they'll tell you that from a majority perspective, each are in the 98% of utilization of their fleets right now, and which is great. But what is happening as it relates to the interest rates, I think, is the fact that they are all looking very carefully at any speculative build. So I think that's where you're seeing some more discipline in the marketplace is that previously we had seen significant ramp up of builds based on speculation. And I think the lesser community and the shippers as well are a lot more careful about speculating on the demand for rail versus not having a lease in hand before they make that decision. Speaker 600:26:20Great. Thank you guys very much. Appreciate it. Speaker 100:26:23Thanks, Matt. Thanks, Matt. Operator00:26:25Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallFreightCar America Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) FreightCar America Earnings HeadlinesFreightCar America Inc (RAIL) Q1 2025 Earnings: EPS of $0. ...May 5 at 5:03 PM | gurufocus.comFreightCar America, Inc. Reports First Quarter 2025 ResultsMay 5 at 4:15 PM | globenewswire.comWatch This Robotics Demo Before July 23rdJeff Brown, the tech legend who picked shares of Nvidia in 2016 before they jumped by more than 22,000%... Just did a demo of what Nvidia’s CEO said will be "the first multitrillion-dollar robotics industry."May 6, 2025 | Brownstone Research (Ad)FreightCar America (RAIL) Expected to Announce Earnings on MondayMay 3 at 2:56 AM | americanbankingnews.comFreightCar America Q1 2025 Earnings PreviewMay 2, 2025 | seekingalpha.comFreightCar America announces orders of 1,250 railcars valued at $141MApril 24, 2025 | msn.comSee More FreightCar America Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like FreightCar America? Sign up for Earnings360's daily newsletter to receive timely earnings updates on FreightCar America and other key companies, straight to your email. Email Address About FreightCar AmericaFreightCar America (NASDAQ:RAIL), through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. It operates in two segments, Manufacturing and Parts. The company offers a range of railcars, including open top hoppers, mill gondola cars, intermodal and non-intermodal flat cars, coal cars; bulk commodity cars covered hopper cars, coil steel cars, boxcars, woodchip hoppers, aluminum vehicle carriers, and articulated bulk container railcars. It also sells used railcars; rebuilds, converts, and leases railcars; and sells forged, cast, and fabricated parts for various railcars. The company's customers primarily include shippers, railroads, and financial institutions. FreightCar America, Inc. was founded in 1901 and is headquartered in Chicago, Illinois.View FreightCar America ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings Fortinet (5/7/2025)ARM (5/7/2025)DoorDash (5/7/2025)AppLovin (5/7/2025)MercadoLibre (5/7/2025)Lloyds Banking Group (5/7/2025)Manulife Financial (5/7/2025)Novo Nordisk A/S (5/7/2025)Uber Technologies (5/7/2025)Johnson Controls International (5/7/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 7 speakers on the call. Operator00:00:00Welcome to FreightCar America's First Quarter 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 comments. Please note this conference is being recorded. An audio replay of the conference call will be available on company's website within a few hours after this call. Operator00:00:27I would now like to turn the call over to Chris Aude with Riveron Investor Relations. Please go ahead. Speaker 100:00:34Thank you and welcome. Speaker 200:00:35Joining me today are Nick Randall, President and Chief Executive Officer Mike Reardon, Chief Financial Officer and Matt Thawne, Chief Commercial Officer. I'd like to remind everyone that statements made during the conference call relating 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 Securities Litigation Reform Act of 1995. Participants are directed to Fracar America's Form 10 ks for a 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. We expressly disclaim any duty to provide updates to our forward looking statements whether as 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 U. Speaker 200:01:20S. 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 Q1 of 2024 is posted on the company's website at freightcaramerica.com along with the 8 ks, which was filed yesterday aftermarket. With that, let me now turn the call over to Nick for opening remarks. Speaker 100:01:43Thank you, Chris. Good morning, everyone, and thank you all for joining us today. I would like to begin by saying how pleased I am to join you for my first earnings as President and CEO of FreightCar America. I would like to recognize Jim Meyer for his support and mentorship as we look to continue to execute our strategic priorities. In just a few years, the company has undergone a significant transformation in both its earning potential and capital allocation, achieving impressive milestones during our restructuring efforts as a pure play manufacturer. Speaker 100:02:17Today, we are at an inflection point with both the build out of our new facility and rightsizing of our capacity is now complete. We have a proven manufacturing platform to build upon coupled with FreightCar's long history of industry expertise, which allows us to remain highly focused on both our operational excellence and our commercialization strategy. We have laid the groundwork for our next phase of growth and by diligently executing our strategy, I'm confident we will be able to achieve the power of scale and leverage that I believe exists in this business. With that, let me provide an update on the industry dynamics at play during the Q1. As a reminder, demand for rail equipment depends on factors like downstream rail activity, the profitability of Class 1 railroads, freight volumes, public policy. Speaker 100:03:07Industry volatility is rooted in the dependence on industrial, energy and farm production, which can vary with economic changing economic and weather conditions. Volatility in the railcar During the Q1, we saw an increase in service levels and throughput of railroads allowing the shippers to be more consistent and resulting in improvements to the supply chain. Based on a competitive industry environment, we maintained our market presence in the Q1, which Matt will speak to in a few minutes. Overall, we continue to view these metrics as positive for a healthy rail environment that will drive more freight to rail, reinforcing our growing confidence in the secular trends we see important to this business. With that, let's turn to the discussion of our Q1 results. Speaker 100:04:00FreightCar America delivered a solid first quarter performance in line with our expectations. Revenue generated during the Q1 increased 99% year over year to $161,000,000 on record quarterly deliveries of 12.23 railcars, which includes roughly 200 cars from the year end that were impacted by the border closure in December. This marks our 2nd consecutive quarter of producing and shipping more than 1,000 units at our newly completed facility in Mexico, which truly validates our operating capabilities. This record is also a testament to our expanded manufacturing footprint that is now capable of producing 5,000 or more railcars per year. Moving forward, it has always been our intention to bring build rates back to optimal levels to meet customer demand, which is in line with our guidance for the year. Speaker 100:04:53With the build out of facility complete, we are well positioned to focus on operational excellence, I. E, efficiency and scale in accordance with our market momentum. In addition to top line strength and robust deliveries, we reported gross margins of 7.1% in the Q1 of 2024, while adjusted EBITDA increased versus the same quarter of the prior year to $6,100,000 Turning to orders, as with other industry participants, activity picked up albeit slowly in the Q1. We received orders of 384 units fired at 45,200,000. We anticipate orders to pick up in the second half of the year and our full year expectations for 2024 are unchanged, continuing to support replacement rates between 35,040,000 units per year. Speaker 100:05:42Switching gears now to touch on our operations. Echoing my opening comments, I believe that we are optimally positioned to drive enhanced earnings moving forward. As a reminder, the strategic repositioning we have undertaken over the last few years allows us to leverage the cyclical nature of the railcar industry, differentiating us from other industry participants. Our variable cost structure enables swift adjustments in production and operational to align with fluctuating demand and reducing risk during downturns by optimizing resource allocation. With our facility now complete and the start up costs associated with the 4th production line behind us, we are focused on driving further efficiencies at our plant. Speaker 100:06:26Now that we have 2 consecutive quarters of higher levels of production under our belt and have successfully tested our operations, I'm extremely confident in our ability to produce a full array of railcar products at higher capacity to meet demand as the industry picks up. Likewise, we remain confident for the full year and reiterate our stated guidance for 2024. With that, I will turn next turn the call over to Matt to discuss the market and then to Mike for more detail on our financial results. Speaker 300:06:56Thank you, Nick, and good morning, everyone. The improved rail service metrics the industry saw in 2023 have continued through the Q1 of 2024. Rail velocity remains above its 5 year average and drill times have seen a noticeable 3% decline year over year, also trending below the 5 year average. These improved service metrics equate to better turn times of rail equipment and ultimately improved shipper confidence. Overall, carload volume revised forecast models point to 1.1 percent year over year improvement in car loadings for the full year 2024. Speaker 300:07:32Chemical, agricultural products and metals are driving much of the expected volume growth in the forecast, and we see this in our inquiry activities, growth of the pipeline and recent order bookings. In summary, we see positive signs for rail and the associated drivers for new railcar demand. Moving to order activity. For the Q1 of 2024, we closed orders for 384 railcars valued at approximately $45,200,000 As Nick touched on earlier, for many freight segments, customers are still taking longer to fully analyze the timing of their new railcar purchases. As mentioned during our Q4 earnings call, we expected this dynamic to continue into the beginning of 2024, which is reflected in our outlook. Speaker 300:08:15We ended the Q1 with a backlog of 2,075 railcars valued at approximately 238,000,000 dollars Our record quarterly delivery performance of the Mexico plant underscores our ability to operate at higher capacity levels to meet customer needs when the industry picks up and as our sales team continues to build our pipeline. As a reminder, our facility was purpose built to not only scale to industry demands but to remain nimble enough to meet niche customer needs around timing and our range of railcar types. On the commercial front, our inquiry activity remains steady with a healthy pipeline that includes a diverse mix of car types. Our strategy to provide customers with tailor made solutions coupled with a disciplined and straightforward approach to the deal proven successful in our efforts to grow market presence. Despite lower levels of order activity across the industry as reported by ARCI, we expect to remain in the cycle of new car, new railcar demand tied closely to replacement levels. Speaker 300:09:18We do not see any changes in forecasts calling for total railcar deliveries falling in the range of 35,000 to 40,000 railcars for the full year 2024. I'll now turn the call over to Mike for comments related to our financial performance. Mike? Speaker 400:09:34Thanks, Matt, and good morning, everyone. I'll begin with an overview of the Q1 financials. We are pleased with our Q1 results as we delivered year over year revenue growth and record quarter deliveries for our Mexico facility. Consolidated revenues for the Q1 of 2024 totaled $161,100,000 with deliveries of 1223 railcars compared to $81,000,000 on deliveries of 738 railcars in the Q1 of 2023. Gross profit in the Q1 of 2024 was $11,400,000 with a gross margin of 7.1% compared to gross profit of $7,500,000 and gross margin of 9.2% in the Q1 of last year. Speaker 400:10:16The lower gross margin performance was driven primarily by startup costs associated with launching our 4th production line, which started late in Q4 of 2023 and included labor cost inefficiencies as we completed the hiring of 2 shifts of new team members during the Q1 of 2024, which includes a significant amount of training time. Further, the mix of railcars delivered during the quarter was more heavily weighted towards lower margin profile cars. Despite the decrease year over year, we anticipate our freight car gross margin will remain at industry leading levels for the full year as we realize the operational efficiencies associated with our fully staffed and built facility. SG and A for the Q1 of 2024 totaled $7,500,000 up from $6,300,000 in the Q1 of 2023, primarily due to an increase in stock based compensation as the Q1 of 2023 had a favorable fair market value adjustment for certain cash settled awards. In the Q1 of 2024, we achieved adjusted EBITDA of $6,100,000 compared to $2,100,000 in the Q1 of 2023, primarily driven by increased railcar deliveries between the comparable periods. Speaker 400:11:27For the Q1 of 2024, our adjusted net income was $4,900,000 or $0.02 per share compared to an adjusted net loss of $5,700,000 or $0.21 per share in the Q1 of last year. Adjusted net income accounts for the impact of certain non cash items and non recurring charges such as 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. Capital expenditures for the Q1 of 2024 were approximately 1,000,000 dollars primarily related to the timing of payments for work that was finished at the end of 2023 to complete the 4th production line at our Mexico facility. I would like to reiterate that with the completion of our 4th production line, we expect future capital spend to decrease and to be in a maintenance cycle. We estimate the maintenance cycle to be approximately 0.5% to 0.75 percent of revenue. Speaker 400:12:22Looking ahead, we expect to be well positioned to be on the path to free cash flow generation allowing us to service down the debt we took out to support our transformation. With that financial overview, I'd like to now turn the call over to Nick for a few closing remarks. Speaker 100:12:38Thanks Mike. Would like to comment briefly on our outlook for the remainder of 2024. We would like to remind everyone that the Q1 played out as we expected and that we anticipate a progression throughout the year. Reiterating my earlier comments, our Q1 performance supports our initial outlook and we remain positive regarding our market position. This has given us confidence in reaffirming our previous stated guidance ranges. Speaker 100:13:04As a reminder, we are maintaining our forecasted revenues between $520,000,000 $572,000,000 up approximately 52.5 percent year over year at the midpoint of the range. This expectation is based on expected deliveries between 4,000 to 4,400 railcars, an increase of approximately 39% at the midpoint of the range. We are also maintaining our forecasted adjusted EBITDA guidance of between $32,000,000 $38,000,000 for the full year, representing a year over year increase of 74.1 percent at the midpoint and further underscoring the power of our transformation strategy. Finally, we expect positive operating cash flow for the 3rd consecutive year. With the heavy lifting of our plant expansion and testing behind us, we remain committed to executing our operational and commercial strategies to continue building our backlog into the fiscal year. Speaker 100:14:02With the benefits of higher productivity at our fingertips, I'm excited about the year ahead. I believe we will drive progressively better results as we realize the benefits of our business model. We remain focused on incremental cash generation and creating profitable growth for all of our shareholders. With that, I will ask the operator to open the lines for some Q and A. Operator00:14:25Thank you. We will now be conducting a question and answer The first question comes from the line of Justin Long with Stephens Inc. Please go ahead. Speaker 500:14:59Thanks and good morning. So I wanted to start with production levels. You mentioned the 200 units that were pushed from Q4 into the Q1 in terms of sales activity. So if you take that out, production was right around 1,000 units. Are you assuming that the quarterly cadence going forward continues around that 1,000 unit level? Speaker 500:15:27Or is there any reason to think we flex up or down meaningfully in the quarters ahead? Speaker 100:15:36Sorry, Mike. I was just saying good morning, Justin, but Mike is going to answer that question for us. Speaker 400:15:40Hey, Justin. Yes, based on the guidance you can see out there 1200 in the Q1, 4,200 at the midpoint. We would expect the production levels to be right around 1,000 or higher per quarter going forward for the remainder of the year. Speaker 500:15:56Okay, got it. So we should be pretty steady on that front. And I guess from a gross margin perspective to get to my second question, Mike, you mentioned mix maybe being a little bit of a headwind here in the Q1. Can you talk about what changes going forward to improve gross margins? Is this solely a function of better mix that's secured in the backlog? Speaker 500:16:21Or is there anything else that's driving that? And I think you talked last quarter about an expectation for full year gross margins to improve relative to 2023. So I'm curious if that's still your expectation? Speaker 400:16:37Yes. The guidance for the full year hasn't changed. And given our mentioned before, SG and A is relatively flat. You can kind of back into where we expect gross margin percentage to be on the revenue and adjusted EBITDA. So that hasn't changed. Speaker 400:16:51So we expect sequential improvement from Q1 into Q2, Q3, Q4. That's going to be driven by 2 things. 1, the mix of cars in the backlog shifts after Q1. And second, in Q1, as mentioned, we had start up costs and a slower ramp on our 4th production line, which actually held back production levels from where they could have been. And so as that's fully ramped up now with the full hiring of both shifts, you'll get natural labor cost efficiencies and production efficiencies for the balance of the year on that production line, which will in turn be accretive to gross margin. Speaker 500:17:30Very helpful. And I guess the last one for me is on inquiry and order levels that you're seeing in the market. I think you made a comment that things are pretty steady, but I was wondering if you could expand on what you're seeing thus far in the Q2 on that front. And Nick, I think you made a comment about the backlog building. So should we read into that that you feel like demand is strong enough to support a sequential improvement in the backlog over the remainder of the year? Speaker 100:18:03So just I'll let Matt comment on the industry and the market. I'll just reiterate kind of what Mike said that we've issued our guidance. We're still holding our guidance between 4000,400 units. So that's where we expect those to be able to ship this year. But Matt can give us a bit more color around the industry and inquiry levels. Speaker 300:18:28Yes. Good morning, Justin. So a couple of comments. On the inquiry level side, when we look at year over year activity, it's been on par with what we saw in 2023, which was pretty robust. So haven't seen significant changes year over year in terms of the type of inquiries. Speaker 300:18:45I would say that the car mix has changed somewhat, but overall, our demand continues to be driven by a replacement market. And if you think about where we are in the current marketplace, and you go back even looking at the last 20 years and the cycles of order activity, we always had a demand catalyst, which we simply don't have today, right? If you go back to 2000s, early 2000s, you had energy, plastics and coal. Mid teens, you had crude by rail and you had the fracking boom, which drove up significant demand. And as we look forward and over the course of the next several years in the forecast, we don't see that catalyst. Speaker 300:19:30We see replacement demand continuing. So, for us, as we look at inquiry activity levels and we look at what the forecast looks like, I think we stay in that 35,000 to 40000 a year demand cycle with some changes based upon fleet aging out, some changes in the overall mix of cars. But overall, we're seeing some steady inquiry activity from quarter to quarter. Speaker 500:20:00Got it. Thank you. Appreciate the time. Speaker 400:20:03Thanks Justin. Operator00:20:06Thank you. Next question comes from the line of Matt Elkott with TD Cowen and Company. Please go ahead. Speaker 600:20:14Good morning. Thank you. I think this question is for Matt. Matt, can you maybe give us a general idea on the customer mix and how it's trended over the last few quarters, the split between shipper and lessor. The reason I'm asking this is with capacity having been ramped up to over 5,000 cars now and you have a more diverse product portfolio. Speaker 600:20:44Can we expect maybe more multiyear supply agreement with lessors in the coming years than you've had in recent years? Speaker 300:20:56Good morning, Matt. A couple of things. So on the mix, we continue to hit the 3 primary segments, right? You've got Class 1 shippers and lessors. We're actively engaged with all of Speaker 600:21:14I won't speak to Speaker 300:21:14specific deals, but, clearly, I won't speak to specific deals, but clearly there's always interest among multiple customers that look to expand their plants, expand their fleets and address the looming aging fleet profile they have where those types of opportunities do exist. Speaker 600:21:38Okay. That's helpful. And then Matt, I think it might have been over a year ago when you guys filed for tank car authorization from the AAR. Can you update us on where that stands if you're still pursuing tank cars and how that would fit into the 5,000 car capacity you have? Would it mean incremental to that or would it be you have the existing footprint to the flexibility to switch some of the existing 5,000 car capacity to same cars? Speaker 300:22:14Yes. So a couple of things Matt. We've got multiple tank car designs that are AR approved. We're watching that market very closely and we'll enter at an appropriate time with the right customers that really fits with our capabilities. So there's more to come on that. Speaker 100:22:32Yes. So the question I'll ask Matt on the capacity wise. So we've got a current capacity, which we state is about 5,000 units a year, which were forecasted between 4,004,400 this year. If tank cars we can include in that 5,000 and there are some opportunities for with additional CapEx to increase beyond that $5,000 for any additional tank cars as we see fit. But the short answer is yes, they could fit within the $5,000 There'll be some CapEx to support that. Speaker 100:23:04But if we needed to, there's an opportunity to flex higher than that if the demand would justify it. Speaker 600:23:12Makes sense, Nick. Thank you. Just one last question on the broader market. It is good to see rail service improving and that eventually should be a tailwind for shift from the highway. But as you guys, I'm sure, would agree that rail velocity improving could be a headwind in the intermediate term to railcar demand. Speaker 600:23:36Are you expecting that to be a factor anytime in the coming few quarters where we see you need to your railcars to ship the same amount of freight and that could be a headwind to orders? Speaker 300:23:51Yes. I think I would go back to my earlier comments on the overall market and the efficiency that the railroads bring versus trucking, right? I know you're familiar with the ability for railroads to carry a ton of freight 4 50 miles on 1 gallon of diesel. And I think that's a compelling argument and continues to be one of the most efficient modes to carry freight. I don't I see where you're headed. Speaker 300:24:22I will tell you that I think the only real impact we're seeing is it's just taking a little bit longer as customers make decisions as they analyze their fleets and what they need. But I think the better story is that the growth opportunity as service metrics continue and improve present a really compelling argument for shippers to look to growth and maybe taking some of that freight off the highways. We see it as an upside, not really as a near term downside. And I would say our inquiry levels support that. Speaker 600:24:56Got Just one last follow-up related to interest rates. It's been somewhat of a roller coaster ride with interest rates over the last few quarters here. Have you seen any can you attribute any orders or lack thereof or cancellations or conversations you were having with customers and they want to pause now because of interest rate concerns? Speaker 300:25:25Yes. I would say that from the lesser community, which is obviously watching that closely, if you talk to the lessors, they'll tell you that from a majority perspective, each are in the 98% of utilization of their fleets right now, and which is great. But what is happening as it relates to the interest rates, I think, is the fact that they are all looking very carefully at any speculative build. So I think that's where you're seeing some more discipline in the marketplace is that previously we had seen significant ramp up of builds based on speculation. And I think the lesser community and the shippers as well are a lot more careful about speculating on the demand for rail versus not having a lease in hand before they make that decision. Speaker 600:26:20Great. Thank you guys very much. Appreciate it. Speaker 100:26:23Thanks, Matt. Thanks, Matt. Operator00:26:25Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by