FreightCar America (RAIL) 15th Annual Midwest IDEAS Investor Conference summary

Company transformation and market position

• Celebrating 125 years in 2025, the company has shifted from coal cars to a diversified freight car portfolio, relocating manufacturing to Mexico and shipping 10,000 units from the new facility as of June 2024.

• Achieved a 29.3% year-over-year revenue increase to nearly $500 million, with gross margin up to 10.3% and adjusted EBITDA per railcar improving from -$18,000 in 2020 to over $7,000.

• Holds 12-15% market share in a 40,000-unit annual North American replacement market, with a product portfolio currently covering 60% of demand and set to expand to 80% by 2027 through a tank car retrofit program.

• Differentiates through customizable products, independent leasing options, and flexible manufacturing, enabling growth in a flat industry and reducing reliance on price competition.

• Capacity can be increased from 5,000 to 8,000 units annually with minimal investment, supported by a scalable facility and efficient changeover processes.

Financial strategy and capital structure

• Plans to recapitalize debt by replacing high-cost preferred shares (17.5% interest) with lower-cost traditional debt, targeting $7-8 million in annual savings and improved free cash flow.

• 2024 guidance projects $37 million adjusted EBITDA, $21 million free cash flow before debt costs, and continued positive cash flow into 2025 and beyond.

• Net debt stands at $10.8 million with $40 million cash on hand, and the company aims to complete recapitalization by year-end 2024.

• Legacy pension liabilities have been reduced from $50 million to $10 million and are expected to be fully retired within a few years.

• No current plans to establish a company-owned lease fleet, maintaining a focus on not competing with leasing customers.

Growth initiatives and operational highlights

• Multi-year tank car retrofit contract for 2026-2027 will expand addressable market and margin profile, with new tank car builds expected from 2028 onward.

• Tank car segment is the most profitable in the industry, and the company targets 8-10% share of this market, or 700-1,000 units annually.

• Steel price volatility is hedged and largely passed through to customers, minimizing risk from raw material fluctuations.

• Backlog is managed at an optimal 6-9 months, with lead times from order to shipment typically 7-10 weeks.

• Labor and tariff risks are mitigated through collective bargaining agreements and hedging programs, with no current direct tariff impact.