Freightcar America ((RAIL)) has held its Q2 earnings call. Read on for the main highlights of the call.
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FreightCar America’s recent earnings call painted a mixed picture of the company’s current standing and future prospects. While the company demonstrated strong financial discipline and operational efficiency, resulting in improved gross margins and positive cash flow, it also faced challenges such as declining revenue and deliveries year-over-year. The broader industry is experiencing a softening demand for new railcars, yet FreightCar America’s strategic investments and robust cash position offer a positive outlook for future growth.
Strong Commercial Momentum
FreightCar America showcased its resilience in a challenging market by maintaining strong commercial momentum. The company successfully added 300 units to its backlog, a significant achievement given the current industry conditions. This demonstrates FreightCar America’s ability to navigate market challenges and secure future business.
Improved Gross Margins
The company reported an expansion in gross margins to 15% in Q2 2025, up from 12.5% the previous year. This improvement is attributed to enhanced operational efficiency, highlighting FreightCar America’s focus on optimizing its operations to drive profitability.
Positive Cash Flow
FreightCar America generated $8.5 million in operating cash flow during the quarter, marking the fifth consecutive quarter of positive cash flow from operations. This consistent cash generation underscores the company’s strong financial management and operational performance.
Healthy Cash Position
The company ended Q2 2025 with a healthy cash position of $61.4 million and no borrowings under its revolving credit facility. This strong cash reserve provides FreightCar America with the financial flexibility to invest in growth opportunities and weather industry challenges.
Capital Investment in Tank Car Retrofit Program
FreightCar America announced a strategic investment in its tank car retrofit program. This initiative is expected to enhance the company’s margin profile and create long-term value, aligning with its strategy to focus on rebuilds and conversions.
Revenue and Deliveries Decline
The company experienced a decline in consolidated revenues and deliveries, with Q2 2025 revenues at $118.6 million and 939 deliveries, compared to $147.4 million and 1,159 deliveries in Q2 2024. This decline is primarily attributed to the timing of railcar deliveries.
Increased SG&A Expenses
FreightCar America reported an increase in SG&A expenses to $10.1 million in Q2 2025 from $8.5 million in the previous year. The rise in expenses is mainly due to the timing of spending on various professional services.
Softer New Railcar Demand
The demand for new railcars is softening, influenced by uncertainties around tariff policies. This trend is impacting total industry deliveries for 2025, presenting a challenge for FreightCar America and its peers.
Forward-Looking Guidance
FreightCar America remains optimistic about maintaining profitability and cash flow, supported by its diverse business model and ongoing investments. The company secured 1,226 new orders worth $107 million, boosting its backlog to 3,624 units. With adjusted EBITDA margins increasing and a focus on rebuilds and conversions, FreightCar America is well-positioned to navigate industry challenges and capitalize on growth opportunities.
In conclusion, FreightCar America’s earnings call highlighted a balanced narrative of challenges and opportunities. While the company faces industry-wide headwinds, its strategic investments, strong cash position, and operational efficiencies provide a solid foundation for future growth. Investors and stakeholders can take confidence in the company’s ability to adapt and thrive in a dynamic market environment.