FreightCar America (RAIL) investor relations material

Business overview and operational highlights

• Expanded manufacturing in Mexico with a modern, vertically integrated plant, enabling flexibility in new builds, conversions, and retrofits.

• Achieved industry-leading gross margins and consistent market share growth, delivering 3,600 railcars and $466M in revenue over the trailing twelve months through June 30.

• Transitioned all manufacturing to Mexico since 2020, scaling from one to four lines, with a fifth line ready for rapid expansion.

• Addressable market coverage at 70%, with leadership in open top hoppers and strong positions in gondolas and flat cars.

• Plans to enter the tank car market, which offers higher average selling prices and margins, aiming for full market coverage.

Financial performance and capital structure

• Generated $21.5M in adjusted free cash flow and improved adjusted EBITDA per car to $11,000, a significant year-over-year increase.

• Optimized capital structure by replacing expensive preferred shares with a lower-cost term loan and securing a new working capital facility.

• Targeting commercial banking and a revolving credit facility by 2026 to further reduce cost of capital and support growth initiatives.

• Maintained guidance for 2024: 4,500–4,900 cars delivered, $530M–$595M revenue, and $43M–$49M adjusted EBITDA.

• Low maintenance CapEx (0.5–0.75% of revenue) and consistent free cash flow position the company for organic and inorganic growth.

Market dynamics and customer strategy

• Exempt from tariffs under USMCA, enabling faster order-to-fulfillment times (3–5 months vs. industry norm of 8–9 months).

• Ability to deliver within the same year gives a competitive edge, especially as customers face annual budget cycles and capital constraints.

• Focus on customization for private car owners and a non-leasing model appeals to leasing companies, differentiating from competitors.

• Leasing community owns 57% of the North American fleet, but customer mix is shifting toward lessors as product offerings expand.

• Retrofit contract for 1,300 tank cars through 2027 will serve as a launchpad for new tank car production and market entry.