FreightCar America Reports Strong Q3 Earnings Amid Industry Challenges

Freightcar America ((RAIL)) has held its Q3 earnings call. Read on for the main highlights of the call.

FreightCar America recently held its earnings call, revealing a strong operational performance with significant revenue growth and record adjusted EBITDA. The company has effectively navigated challenges within the broader railcar industry, maintaining a healthy backlog and achieving market share growth. Despite these successes, there are ongoing industry demand challenges and a revenue guidance adjustment reflecting current market conditions.

Significant Revenue Growth

FreightCar America reported an impressive revenue growth of over 42% in the third quarter of 2025 compared to the previous year. This substantial increase underscores the company’s ability to capitalize on market opportunities and enhance its financial performance.

Record Adjusted EBITDA

The company achieved a record adjusted EBITDA of $17 million, marking a 56% increase from the prior year. This milestone represents the most profitable quarter since the company relocated its production to Mexico, highlighting the effectiveness of its strategic initiatives.

Improvement in Margins

FreightCar America saw improvements in its margins, with the gross margin increasing to 15.1% and the adjusted EBITDA margin rising to 10.6%. These enhancements reflect an improvement of 80 basis points and 100 basis points, respectively, from the previous year, indicating a solid operational performance.

Healthy Backlog and Market Position

The company maintained a healthy backlog of 2,750 units valued at approximately $222 million. FreightCar America achieved over 20% of the addressable market order share for new car orders, reinforcing its strong market position.

Operational Efficiency and Initiatives

Operational improvements at the Castanos facility, including safety, quality, throughput, and cost structure, contributed to the record EBITDA performance. Initiatives such as the TrueTrack digital integration and enhancements to plant layout aim to further improve flow, productivity, and margins.

Industry Demand Challenges

Despite the company’s successes, the broader railcar industry continues to face demand challenges, operating below long-term replacement levels. Total deliveries are expected to remain under 30,000 railcars for the year, significantly below the normalized rate of approximately 40,000 units.

Revenue Guidance Adjustment

FreightCar America adjusted its revenue range to $500 to $530 million, maintaining its adjusted EBITDA and unit count guidance. This adjustment is due to a higher proportion of conversions, which have a lower average selling price, reflecting the current market conditions.

Non-Cash Charge Impact

The company reported a net loss of $7.4 million, which included a $17.6 million non-cash charge related to the change in warrant liability. This charge impacted the reported net income despite the operational performance improvements.

Forward-Looking Guidance

Looking ahead, FreightCar America aims to generate positive free cash flow and maintain strong margins. The company is strategically positioning itself for growth through initiatives like the TrueTrack process and tank car conversion readiness. Despite industry-wide order activity being below long-term replacement levels, FreightCar America reaffirmed its full-year adjusted EBITDA guidance and railcar delivery targets.

In summary, FreightCar America’s earnings call highlighted a robust financial performance with significant revenue growth and record profitability. The company continues to navigate industry challenges effectively, maintaining a strong market position and focusing on strategic initiatives for future growth. Despite some adjustments in revenue guidance, FreightCar America remains committed to achieving positive cash flow and sustaining strong margins.