Freightcar America ((RAIL)) has held its Q1 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
FreightCar America’s Recent Earnings Call Reflects Optimism Amid Challenges
The recent earnings call of FreightCar America conveyed a predominantly positive sentiment, highlighting significant market share gains, strong financial performance, and a robust order pipeline. Despite facing challenges such as lower railcar production and increased SG&A expenses, the positive aspects of the company’s performance significantly outweighed the negatives.
Significant Market Share Gain
FreightCar America has made impressive strides in expanding its market share, growing from 8% to 27% over the past 12 months. This remarkable growth has positioned the company as the fastest-growing railcar manufacturer in North America, underscoring its competitive edge in the industry.
Strong Financial Performance
The company reported a substantial improvement in its financial metrics, with the gross margin expanding to 14.9%, up 780 basis points year-over-year. Adjusted EBITDA reached $7.3 million, surpassing last year’s figures despite facing lower revenue and deliveries. This indicates a resilient financial strategy and effective cost management.
Robust Order Pipeline and Backlog
FreightCar America secured 1,250 new railcar orders valued at approximately $141 million in the first quarter, boosting its backlog to 3,337 railcars worth $318 million. This strong order pipeline provides excellent visibility and stability for the company well into 2025.
Consistent Cash Flow Generation
The company demonstrated consistent cash flow generation, with $12.8 million in operating cash flow for the fourth consecutive quarter of positive cash flow from operations. Adjusted free cash flow improved significantly by $43 million compared to the previous year, reflecting robust financial health.
Positive Future Outlook
FreightCar America reaffirmed its full-year 2025 guidance, projecting deliveries of 4,500 to 4,900 railcars and revenue between $530 million and $595 million. The adjusted EBITDA is expected to range between $43 million and $49 million, indicating a positive future outlook for the company.
Lower Railcar Production
The company experienced planned lower railcar production in the first quarter as part of its manufacturing capacity was allocated to delivering large custom fabrications. This strategic decision resulted in fewer deliveries during the quarter but aligns with long-term growth objectives.
Increased SG&A Expenses
FreightCar America reported increased SG&A expenses for the first quarter of 2025, totaling $10.5 million, up from $7.5 million in the previous year. Excluding stock-based compensation, SG&A as a percentage of revenue increased by approximately 47 basis points, reflecting higher operational costs.
Guidance and Forward-Looking Statements
The company reaffirmed its full-year 2025 guidance, projecting deliveries of 4,500 to 4,900 railcars and revenue between $530 million and $595 million. The adjusted EBITDA target remains between $43 million and $49 million. Despite lower deliveries, the company booked 1,250 new railcar orders worth approximately $141 million, driving its backlog to 3,337 railcars valued at $318 million. With a market share increase from 8% to 27% over the past 12 months, FreightCar America maintains a positive outlook, expecting industry-wide deliveries to gain momentum throughout the year.
In conclusion, FreightCar America’s earnings call reflected a positive sentiment, driven by significant market share gains, strong financial performance, and a robust order pipeline. Despite some challenges, the company’s strategic decisions and forward-looking guidance paint an optimistic picture for the future, making it a compelling prospect for investors and stakeholders in the financial markets.