Freightcar America (NASDAQ:RAIL) outlined what management called a year of “disciplined execution and resilience” during its fourth-quarter and fiscal 2025 earnings call, highlighting margin expansion, strong cash generation, and steps to diversify beyond new railcar manufacturing in a weak North American new-build environment.
Management cites margin expansion and cash generation despite weak industry volumes
CEO Nick Randall said 2025 was a challenging year for the North American rail market, with new-build rates among the lowest seen in more than a decade. Even so, he said the company delivered “significant margin expansion,” generated $31.4 million in free cash flow, gained delivery market share in the served markets, advanced tank car readiness, and expanded its aftermarket platform through the acquisition of Carli Railcar Components.
Industry backdrop: deliveries and orders down, but FreightCar gained share
Chief Commercial Officer Matt Tonn said customers remained cautious in 2025, emphasizing capital discipline and fleet optimization rather than expansion. He noted that overall industry deliveries declined to approximately 31,000 railcars from 42,000 in the prior year, while industry orders moderated to about 20,000 units from roughly 25,000 the year before.
Within that environment, Tonn said FreightCar increased its delivery market share by nearly 300 basis points and secured about 3,250 total orders, including roughly 2,500 new railcar orders. The remainder came from conversions, retrofits, and other specialized programs. He reiterated the company’s view that long-term replacement requirements imply annual industry demand of approximately 35,000 to 40,000 railcars, though timing remains uncertain.
Looking to 2026, Tonn said the company expects overall industry deliveries in the 25,000 to 30,000 range, with order activity likely similar to 2025 and “increases in activity” anticipated in the second half of the year.
Financial results: revenue and EBITDA growth for the full year; Q4 impacted by mix
CFO Mike Riordan reported full-year 2025 revenue of $501 million on 4,125 units. He said adjusted EBITDA for the year was $44.8 million, up $1.8 million or 4.2% from 2024, citing operating execution, an enhanced product mix, and a favorable manufacturing cost structure.
Riordan also flagged an accounting classification change related to the company’s Castaños lease. Lease expenses that were previously classified in interest expense will now be recorded in cost of goods sold. He said if the change had been in place at the start of 2025, it would have reduced adjusted EBITDA by approximately $3.5 million, but noted the change has no impact on cash flow, operating income, net income, or earnings per share.
Adjusted net income for the full year was $18.1 million, or $0.50 per diluted share. Riordan said results reflected non-cash items including a $51.9 million non-cash tax benefit recorded in the second quarter from releasing a valuation allowance on deferred tax assets, which more than offset a $32.2 million non-cash adjustment related to warrant liability.
For the fourth quarter, the company reported revenue of $125.6 million on deliveries of 1,172 railcars, compared with $137.7 million and 1,019 railcars in the year-ago quarter. Riordan attributed the year-over-year revenue decline primarily to the mix shift toward converted railcars, which carry a lower average selling price than newly manufactured railcars.
- Q4 gross profit: $16.8 million (13.4% margin) vs. $21.0 million (15.3% margin) a year ago, reflecting mix impacts partially offset by productivity and cost discipline.
- Q4 SG&A: $9.0 million vs. $9.4 million a year ago; excluding stock-based compensation, SG&A as a percentage of revenue rose about 50 basis points due to conversion-heavy mix.
- Q4 adjusted EBITDA: $10.4 million vs. $13.9 million a year ago, driven primarily by mix differences.
The company posted a Q4 net loss of $16.6 million, or $0.52 per share, which included $19.9 million of non-cash adjustments related to share appreciation accounting, partially offset by a $2.1 million non-cash acquisition-related gain. Adjusted net income for the quarter was $4.9 million, or $0.16 per diluted share, compared with $8.0 million, or $0.21 per diluted share, in the prior-year period.
Aftermarket expansion, backlog, and tank retrofit timeline
Randall said FreightCar completed the acquisition of Carli Railcar Components in the fourth quarter, describing it as the company’s first acquisition in the aftermarket space and a “foundational step” toward building a more recurring revenue platform. During Q&A, Riordan agreed with an analyst’s framework that aftermarket revenue could be around $40 million to $41 million in 2026, combining the existing business with expected contribution from Carli.
FreightCar ended 2025 with a backlog of 1,926 railcars valued at $137.5 million, which management said provides meaningful visibility into 2026 production and includes a diversified mix of conversion programs and new builds. Executives also discussed order timing variability, saying conversion from orders to deliveries can range “from a year down to days” depending on customer needs.
On tank initiatives, Randall said tank car readiness remains on schedule and the company is prepared to begin shipments for a retrofit order in the back half of the year. In Q&A, he said tank car retrofit volumes are included in 2026 guidance, but only a portion of the multi-year program is expected in 2026, with work continuing into 2027.
2026 outlook: revenue, deliveries, and EBITDA growth expected
For fiscal 2026, FreightCar forecast revenue of $500 million to $550 million and deliveries of 4,000 to 4,500 railcars. The company guided to adjusted EBITDA of $41 million to $50 million, with management expecting a stronger second-half cadence.
Riordan said capital expenditures were $3.4 million in 2025 and are expected to be $7 million to $10 million in 2026, including approximately $4 million to $5 million of maintenance spending and additional investment to support vertical integration aspects of tank car manufacturing. He said the company ended the year with $64.3 million in cash and low net debt, operating at the low end of its targeted leverage range of approximately 1 to 2.5 times.
In response to a question about interest expense, Riordan said the reclassification of certain lease expenses could move a portion of interest into cost of goods sold and that interest expense should decline as debt repayments are made, potentially coming in below the $14 million to $15 million range discussed on the call.
About Freightcar America (NASDAQ:RAIL)
FreightCar America, Inc is a designer and manufacturer of specialized railroad freight cars, offering a diverse range of products that include tank cars, open and covered hoppers, gondolas, boxcars and centerbeam lumber cars. The company supports both new car construction and the rebuilding of existing fleets, providing custom engineering solutions to meet customer specifications and industry regulations. FreightCar America also supplies aftermarket parts, maintenance services and component remanufacturing for its own fleet and for third-party car owners.
Headquartered in Chicago, Illinois, FreightCar America traces its origins to early 20th-century railcar builders and began trading as an independent, publicly-listed company on the NASDAQ under the ticker RAIL following a spin-off in 2010.
