FreightCar America, Inc. (NASDAQ: RAIL) posts Q2 loss as backlog rises
FreightCar America reported lower results for the quarter ended June 30, 2026. Revenue was $113,138 thousand, down from $118,623 thousand a year earlier, and gross margin fell to 5.5%. The company recorded a net loss of $30,103 thousand versus prior-year net income of $11,679 thousand, driven by weaker Manufacturing segment profitability and a $24,889 thousand loss from remeasuring its warrant liability.
For the first six months of 2026, revenue was $177,446 thousand compared with $214,913 thousand and net income was $11,546 thousand versus $62,127 thousand. Manufacturing revenue declined while Aftermarket sales increased, aided by the Carly Railcar Components acquisition. Total railcar orders rose to 3,550 units and backlog grew to 3,972 units with an estimated sales value of $344 million, improving future visibility.
Liquidity remained solid, with cash, cash equivalents and restricted cash of 62,978 thousand and $24,468 of availability under a $35,000 asset-based revolver, alongside a $100,725 thousand term loan outstanding. A June 2026 partial warrant exercise issued 13,619,377 shares and helped move stockholders’ equity to $36,201 thousand from $(107,413) thousand at December 31, 2025.
Positive
- Backlog 3,972 units valued at $344 million as of June 30, 2026, up from 1,926 units and $137 million at December 31, 2025, providing greater visibility into future Manufacturing activity.
- Stockholders’ equity $36,201 thousand at June 30, 2026, improving from a deficit of $(107,413) thousand at December 31, 2025, supported by warrant exercises and the reduced warrant liability.
Negative
- Six-month revenue $177,446 thousand declined from $214,913 thousand in 2025, and consolidated gross margin fell to 9.6% from 15.0%, reflecting an unfavorable product mix in Manufacturing railcars delivered.
- Q2 2026 net loss $30,103 thousand compared with net income of $11,679 thousand a year earlier, driven by lower Manufacturing gross profit and a $24,889 thousand loss on warrant liability remeasurement.
- Cash from operations $7,766 thousand for the first half of 2026 was lower than $21,322 thousand in the prior-year period, as working-capital inflows were smaller.
Filing Explained
The completed net exercise issued 13,619,377 shares without cash proceeds, while residual warrants and shareholder rights retain defined near-term mechanics.
The
The company reports that the
After quarter-end, the company completed its
As of
The filing also reports
Key Figures
Key Terms
warrant liability financial
asset-based revolving credit facility financial
cash flow hedges financial
bargain purchase gain financial
shareholder rights plan financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did FreightCar America (RAIL) perform financially in Q2 2026?
What were FreightCar America (RAIL)’s results for the first half of 2026?
How did railcar orders and backlog change for FreightCar America (RAIL)?
What impact did the warrant activity have on FreightCar America (RAIL)?
What is FreightCar America (RAIL)’s liquidity and debt position as of June 30, 2026?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly period ended
or
Commission File Number:
(Exact name of registrant as specified in its charter)
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(I.R.S. Employer Identification No.) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
As of July 31, 2026, there were
FREIGHTCAR AMERICA, INC.
INDEX TO FORM 10-Q
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PART I – FINANCIAL INFORMATION |
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Financial Statements: |
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Condensed Consolidated Balance Sheets (Unaudited) as of |
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Condensed Consolidated Statements of Operations (Unaudited) for the |
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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the |
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) for the |
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Condensed Consolidated Statements of Cash Flows (Unaudited) for the |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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4. |
Controls and Procedures |
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PART II – OTHER INFORMATION |
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Legal Proceedings |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Defaults Upon Senior Securities |
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Mine Safety Disclosures |
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Other Information |
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6. |
Exhibits |
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Signatures |
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2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except for share data)
(Unaudited)
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June 30, |
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December 31, |
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Assets |
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Current assets |
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Cash, cash equivalents and restricted cash equivalents |
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Accounts receivable, net of allowance for credit losses of $ |
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VAT receivable |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Right of use asset lease |
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Intangibles, net |
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Deferred income taxes |
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Other long-term assets |
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Total assets |
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Liabilities and Stockholders’ Equity (Deficit) |
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Current liabilities |
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Accounts and contractual payables |
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Accrued payroll and other employee costs |
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Accrued warranty |
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Deferred revenue |
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Current portion of long-term debt |
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Lease liability, current |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net of current portion |
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Warrant liability |
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Accrued pension costs |
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Lease liability, long-term |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Stockholders’ equity (deficit) |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity (deficit) |
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Total liabilities and stockholders’ equity (deficit) |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
3
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except for share and per share data)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Operating (loss) income |
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Interest expense |
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(Loss) gain in fair market value of warrant liability |
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Other (expense) income |
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( |
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(Loss) income before income taxes |
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Income tax (benefit) provision |
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Net (loss) income |
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$ |
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$ |
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$ |
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Net (loss) earnings per common share - basic |
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$ |
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$ |
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$ |
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Net (loss) earnings per common share - diluted |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding – basic |
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Weighted average common shares outstanding – diluted |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
4
FreightCar America, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(In thousands)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net (loss) income |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Pension liability activity: |
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Reclassification adjustment for amortization of net loss (pre-tax other income) |
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Other comprehensive (loss) income before reclassifications: |
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Unrealized gain on commodity swap derivatives |
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Unrealized gain on foreign currency derivatives |
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Amounts reclassified from accumulated other comprehensive (loss) income: |
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(Gain) loss on foreign currency derivatives reclassified into cost of sales |
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( |
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( |
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( |
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Comprehensive (loss) income |
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$ |
( |
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$ |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
5
FreightCar America, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands, except for share data)
(Unaudited)
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FreightCar America Stockholders |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Retained |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income |
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Deficit |
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Equity (Deficit) |
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Balance, March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Net income |
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- |
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- |
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- |
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- |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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Restricted stock awards |
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- |
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- |
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- |
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Exercise of stock appreciation rights |
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- |
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( |
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- |
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- |
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( |
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Stock-based compensation recognized |
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- |
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- |
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- |
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- |
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Balance, June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Balance, March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Net loss |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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Restricted stock awards |
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- |
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- |
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- |
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Exercise of stock options and appreciation rights |
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- |
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- |
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- |
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Exercise of warrants |
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- |
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- |
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Stock-based compensation recognized |
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- |
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- |
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- |
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- |
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Balance, June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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6
FreightCar America, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands, except for share data)
(Unaudited)
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FreightCar America Stockholders |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Retained |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income |
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Deficit |
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Equity (Deficit) |
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Balance, December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Net income |
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- |
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- |
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- |
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- |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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Restricted stock awards |
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( |
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- |
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- |
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- |
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Employee stock settlement |
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( |
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( |
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( |
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- |
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- |
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( |
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Exercise of stock option and appreciation rights |
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- |
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( |
) |
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- |
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- |
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( |
) |
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Stock-based compensation recognized |
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- |
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- |
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- |
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- |
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Balance, June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Balance, December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
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Net income |
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- |
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- |
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- |
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- |
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Other comprehensive loss |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
Restricted stock awards |
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- |
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- |
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- |
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Employee stock settlement |
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( |
) |
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- |
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( |
) |
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- |
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- |
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( |
) |
Exercise of stock options and appreciation rights |
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- |
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- |
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- |
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Exercise of warrants |
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|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||||
Stock-based compensation recognized |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Balance, June 30, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities |
|
|
|
|||||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash flows provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Non-cash lease expense on right of use assets |
|
|
|
|
|
|
||
(Gain) on change in fair market value for Warrant liability |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation recognized |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Other non-cash items, net |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
VAT receivable |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
|
|
|
( |
) |
|
Accounts and contractual payables |
|
|
|
|
|
|
||
Income taxes payable, net |
|
|
( |
) |
|
|
( |
) |
Customer deposits |
|
|
|
|
|
|
||
Other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash flows provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Acquisitions |
|
|
( |
) |
|
|
|
|
Purchase of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets held for sale, net of selling costs |
|
|
|
|
|
|
||
Net cash flows used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Deferred financing costs |
|
|
|
|
|
( |
) |
|
Borrowings on revolving line of credit |
|
|
|
|
|
|
||
Repayments on revolving line of credit |
|
|
( |
) |
|
|
|
|
Repayments on term loan |
|
|
( |
) |
|
|
( |
) |
Employee stock settlement |
|
|
( |
) |
|
|
( |
) |
Financing lease payments |
|
|
|
|
|
( |
) |
|
Net cash flows used in financing activities |
|
|
( |
) |
|
|
( |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid |
|
$ |
|
|
$ |
|
||
Change in unpaid construction in process |
|
$ |
( |
) |
|
$ |
|
|
Exercise of warrants |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
8
FreightCar America, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except for share and per share data and unless otherwise noted)
Note 1 – Description of the Business
FreightCar America, Inc. (“FreightCar”) operates primarily in North America through its direct and indirect subsidiaries (collectively with FreightCar, the “Company”, “we”, “us”, or “our”), and designs and manufactures a wide range of railroad freight cars, completes railcar rebody and repair services, provides railcar conversion services that repurpose idled rail assets back into revenue service, and supplies railcar replacement parts and components for all railcar types. The Company designs and builds high-quality railcars, including boxcars, covered and open-top hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and coal cars.
Note 2 – Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of FreightCar and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full year. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The 2025 year-end balance sheet data was derived from the audited financial statements as of December 31, 2025.
Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. Certain prior year amounts have been reclassified, where necessary, to conform to the current year presentation. There is no impact on previously reported consolidated statements of operations or statements of cash flows as a result of these reclassifications. These interim financial statements should be read in conjunction with the audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Note 3 – Revenue Recognition
The following table disaggregates the Company’s revenues by major source:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Manufacturing sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Aftermarket sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues from contracts with customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9
Contract Balances and Accounts Receivable
Contract assets represent the Company’s rights to consideration for performance obligations that have been satisfied but for which the terms of the contract do not permit billing at the reporting date. The Company had
Performance Obligations
The Company is electing not to disclose the value of the remaining unsatisfied performance obligations with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, Revenue from Contracts with Customers. The Company had remaining unsatisfied performance obligations with expected duration of greater than one year of $
Note 4 – Segment Information
The Company’s operations consist of
The Company’s designated Chief Operating Decision Maker (“CODM”) is our President and Chief Executive Officer. The CODM uses segment gross profit and segment operating income to allocate resources to segments during the planning and forecasting process and assess performance in a given period. Segment gross profit and segment operating income include all external revenues attributable to the segments as well as operating costs and income that management believes are directly attributable to the current production of goods and services. The Company’s management reporting package does not include interest revenue, interest expense or income taxes allocated to individual segments and these items are not considered as a component of segment operating income. Intersegment revenues were not material in any period presented.
A summary of segment information and reconciliation to consolidated income before income taxes is as follows:
10
|
|
Three Months Ended |
|
|||||||||
|
|
June 30, 2026 |
|
|||||||||
|
|
Manufacturing |
|
|
Aftermarket |
|
|
Total |
|
|||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of segment operating income to consolidated loss before income taxes: |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Loss on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated other expense |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of segment gross profit to consolidated loss before income taxes: |
|
|
|
|
|
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Loss on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated other expense |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
(1)
|
|
Three Months Ended |
|
|||||||||
|
|
June 30, 2025 |
|
|||||||||
|
|
Manufacturing |
|
|
Aftermarket |
|
|
Total |
|
|||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of segment operating income to consolidated loss before income taxes: |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Loss on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated other income |
|
|
|
|
|
|
|
|
|
|||
Consolidated loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of segment gross profit to consolidated loss before income taxes: |
|
|
|
|
|
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Loss on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated other income |
|
|
|
|
|
|
|
|
|
|||
Consolidated loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
(1)
11
|
|
Six Months Ended |
|
|||||||||
|
|
June 30, 2026 |
|
|||||||||
|
|
Manufacturing |
|
|
Aftermarket |
|
|
Total |
|
|||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of segment operating income to consolidated income before income taxes: |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
|
|||
Consolidated other expense |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of segment gross profit to consolidated income before income taxes: |
|
|
|
|
|
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
|
|||
Consolidated other expense |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
(1)
12
|
|
Six Months Ended |
|
|||||||||
|
|
June 30, 2025 |
|
|||||||||
|
|
Manufacturing |
|
|
Aftermarket |
|
|
Total |
|
|||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of segment operating income to consolidated income before income taxes: |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
|
|||
Consolidated other income |
|
|
|
|
|
|
|
|
|
|||
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of segment gross profit to consolidated income before income taxes: |
|
|
|
|
|
|
|
$ |
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment operating income |
|
|
|
|
|
|
|
|
|
|||
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated interest expense |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on change in fair market value of Warrant liability |
|
|
|
|
|
|
|
|
|
|||
Consolidated other income |
|
|
|
|
|
|
|
|
|
|||
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
(1)
13
A summary of segment depreciation, amortization and capital expenditures is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Aftermarket |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated depreciation and amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Aftermarket |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment assets represent operating assets and exclude intersegment accounts, deferred tax assets and income tax receivables. The Company does not allocate cash and cash equivalents to its operating segments as the Company’s treasury function is managed at the corporate level.
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Assets: |
|
|
|
|
|
|
||
Manufacturing |
|
$ |
|
|
$ |
|
||
Aftermarket |
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
|
||
Total operating assets |
|
|
|
|
|
|
||
Consolidated income taxes receivable and deferred income taxes |
|
|
|
|
|
|
||
Consolidated assets |
|
$ |
|
|
$ |
|
||
A summary of revenues and long-lived assets by geographic information is as follows:
|
Geographic Information |
|
||||||||||||||||||||||
|
|
Revenues (a) |
|
|
Long Lived Assets (b) |
|
||||||||||||||||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
|
|
||||||||||||
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
December 31, |
|
||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
(a)
(b)
14
Note 5 – Fair Value Measurements
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and the placement within the fair value hierarchy levels.
The Company classifies the inputs to valuation techniques used to measure fair value as follows:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 — Inputs other than quoted prices for Level 1 inputs that are either directly or indirectly observable for the asset or liability including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means.
Level 3 — Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability.
The following table sets forth by level within the fair value hierarchy the Company’s financial assets that were recorded at fair value on a recurring basis and the Company’s non-financial assets that were recorded at fair value on a non-recurring basis.
Recurring Fair Value Measurements |
|
As of June 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivative asset |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contingent consideration |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Recurring Fair Value Measurements |
|
As of December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivative asset |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contingent consideration |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair value of the Company’s foreign currency forward contracts, determined using exit prices obtained from each counterparty, which are based on currency spot and forward rates, as of June 30, 2026 and December 31, 2025 in an active market, is a Level 2 measurement. For further information, see Note 15 - Derivatives.
The fair value of the Company’s Warrant (as defined in Note 11 - Warrants) liability recorded in the Company’s financial statements, determined using the quoted price of the Company’s common stock, par value $
The fair value of the Company’s contingent consideration liability, related to the CRC acquisition and determined using projected financial results and a risk-adjusted discount rate, as of June 30, 2026 and December 31, 2025, is a Level 3 measurement. See Note 8 - Acquisitions.
15
Note 6 – Restricted Cash
The Company establishes restricted cash balances (i) when required by customer contracts and (ii) to collateralize corporate card programs. The carrying value of restricted cash approximates its fair value.
The Company’s restricted cash balances are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Restricted cash from customer deposit |
|
$ |
|
|
$ |
|
||
Restricted cash to collateralize corporate card program |
|
|
|
|
|
|
||
Total restricted cash and restricted cash equivalents |
|
$ |
|
|
$ |
|
||
Note 7 – Inventories
Inventories, net of reserve for excess and obsolete items, consist of the following:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished railcars |
|
|
|
|
|
|
||
Parts inventory |
|
|
|
|
|
|
||
Total inventories, net |
|
$ |
|
|
$ |
|
||
Inventory on the Company’s condensed consolidated balance sheets includes reserves of $
Note 8 – Acquisitions
On December 19, 2025, the Company acquired Carly Railcar Components, LLC (“CRC”), which operates as a wholly owned subsidiary and aligns with the Company’s aftermarket distribution business. Total consideration for the acquisition included cash paid at closing, indebtedness assumed and settled, a holdback liability, and contingent consideration based on future revenue and gross margin performance. The Company accounted for the transaction as a business combination under ASC 805 and recognized a bargain purchase gain of $
The acquisition included identifiable intangible assets, primarily customer relationships and a trade name, which are being amortized over their estimated useful lives. Contingent consideration related to the acquisition was recorded at its fair value of $
On July 16, 2026, the Company completed the acquisition of certain assets of Southern Parts & Equipment, Inc., consisting primarily of inventory and customer relationships, to further expand the Company's aftermarket business. The aggregate purchase price was $
16
Note 9 – Product Warranties
Warranty terms are based on the negotiated railcar sale, rebody or conversion contract, as applicable.
|
|
|
For the Six Months Ended June 30, |
|
|
||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Balance at the beginning of the period |
|
|
$ |
|
|
|
$ |
|
|
||
Current year provision |
|
|
|
|
|
|
|
|
|
||
Reductions for payments, costs of repairs and other |
|
|
|
( |
) |
|
|
|
( |
) |
|
Adjustments to prior warranties |
|
|
|
|
|
|
|
( |
) |
|
|
Balance at the end of the period |
|
|
$ |
|
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Adjustments to prior warranties include changes in the warranty reserve for warranties issued in prior periods due to expiration of the warranty period, revised warranty cost estimates and other factors.
Note 10 – Debt Financing and Credit Facilities
Long-term debt consists of the following as of June 30, 2026 and December 31, 2025:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Term loan |
|
$ |
|
|
$ |
|
||
Less term loan deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Total debt, net of deferred financing costs |
|
|
|
|
|
|
||
Less amounts due within one year |
|
|
( |
) |
|
|
( |
) |
Long-term debt, net of current portion |
|
$ |
|
|
$ |
|
||
On December 31, 2024, the Company entered into a term loan agreement with FreightCar North America, LLC, certain of its subsidiaries, the lenders party thereto, and Blue Torch Finance LLC, as administrative and collateral agent, providing for a $
The Term Loan bears interest at the Term Secured Overnight Refinancing Rate (“Term SOFR”), with a floor of
On February 12, 2025, the Company entered into a $
The ABL contains customary affirmative and negative covenants and financial covenants that are triggered upon reduced availability and remain in effect while such condition exists. The Company was in compliance with these covenants as of June 30, 2026. Revolving loans outstanding bear interest at the Term SOFR rate plus an applicable margin ranging from
17
As of June 30, 2026, the Company had $
The fair value of debt approximates its carrying value as of June 30, 2026 as the borrowings bear interest at variable rates that approximate current market rates, and there have been no significant changes in the Company’s credit risk since origination.
Note 11 – Warrants
The Company issued warrants to OC III LFE II LP (“OC III LFE”) and various affiliates of OC III LFE (collectively, the “Warrantholder”) in previous years to purchase a number of shares of Common Stock equal to
On June 26, 2026, the Warrantholder partially exercised the 2020 Warrant, the 2021 Warrant and the 2022 Warrant through the net exercise provisions contained in each warrant agreement. Pursuant to the exercise, the Warrantholder exercised portions of the warrants representing
In connection with the partial exercise, the Company issued three amended and restated replacement warrants (collectively, the “Replacement Warrants” and individually a “Replacement Warrant”), each representing the remaining unexercised portion of the original warrants equal to
Following the partial exercise, the Replacement Warrant related to the 2020 Warrant was exercisable for an aggregate of
The Company also issued a warrant to the Warrantholder in May 2023 to purchase an aggregate of
The Replacement Warrants, together with the 2023 Warrant, are collectively referred to herein as the “Warrants.” As of June 30, 2026, the Warrants were classified as liabilities and subject to fair value remeasurement at each balance sheet date. The fair value of the Warrants was $
Note 12 – Accumulated Other Comprehensive Income
The changes in accumulated other comprehensive income consist of the following:
Three months ended June 30, 2026 |
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive gain before reclassifications: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on foreign currency derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|||
(Gain) on foreign currency derivatives reclassified into cost of sales |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
18
Three months ended June 30, 2025 |
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive loss before reclassifications: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on commodity swap derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Unrealized gain on foreign currency derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|||
(Gain) on foreign currency derivatives reclassified into cost of sales |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Six months ended June 30, 2026 |
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive gain before reclassifications: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on foreign currency derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|||
(Gain) on foreign currency derivatives reclassified into cost of sales |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Six months ended June 30, 2025 |
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive loss before reclassifications: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on commodity swap derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Unrealized gain on foreign currency derivatives |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|||
Loss on foreign currency derivatives reclassified into cost of sales |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The components of accumulated other comprehensive income consist of the following:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Unrecognized pension income, net of tax of $ |
|
$ |
|
|
$ |
|
||
Unrealized (loss) gain on foreign currency derivatives, net of tax of ($ |
|
|
( |
) |
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Note 13 – Stock-Based Compensation
Total stock-based compensation was $
19
Note 14 – Employee Benefit Plans
The Company has a qualified, defined benefit pension plan (the “Plan”) that was established to provide benefits to certain employees. The Plan is frozen and participants are no longer accruing benefits. Generally, contributions to the Plan were not less than the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and not more than the maximum amount that can be deducted for federal income tax purposes. The Plan assets are held by an independent trustee and consist primarily of equity and fixed income securities.
The components of net periodic benefit cost for the three and six months ended June 30, 2026 and 2025, are as follows:
|
|
Three Months Ended |
|
Six Months Ended |
|
|||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
Pension Benefits |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Interest cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of unrecognized net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company made
Note 15 – Derivatives
The Company’s operations and expenditures in its normal course of business are subject to opportunities and risks related to foreign currency and commodity price fluctuations. From time to time, the Company utilizes foreign currency forward contracts to hedge Mexican Peso denominated expenses against exchange rate volatility, and commodity swap contracts to hedge anticipated and probable commodity price fluctuations.
Since 2023, the Company has entered into foreign currency forward
The Company does not have any non-designated derivatives. The Company assesses the assumed effectiveness of the contracts at each reporting period. The derivative instruments are recorded on the balance sheets at fair value. The Company records unrealized gains or losses related to changes in the fair value of the derivative instruments in other comprehensive income as long as the contracts are assumed to be effective. Amounts accumulated in other comprehensive income are reclassified to the condensed consolidated statements of operations on the same line as the items being hedged when the hedged item impacts earnings or upon determination that the contract is no longer assumed to be effective.
The notional amounts of outstanding derivative instruments are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
Notional Amount |
|
2026 |
|
|
2025 |
|
||
Derivative instruments designated as hedges: |
|
|
|
|
|
|
||
Foreign currency derivatives |
|
$ |
|
|
$ |
|
||
20
The fair value of outstanding derivative instruments designated as hedges are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
Fair Value |
|
2026 |
|
|
2025 |
|
||
Prepaid expenses and other current assets: |
|
|
|
|
|
|
||
Foreign currency derivatives |
|
$ |
|
|
$ |
|
||
The pre-tax realized (gains) losses on foreign currency derivatives are recognized in the condensed consolidated statements of operations as follows:
|
|
|
|
Amount of (Gain)/Loss Recognized |
|
|
Amount of (Gain)/Loss Recognized |
|
||||||||||
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
Location of Realized (Gain)/Loss Recognized in the Consolidated Statements of Operations |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Derivative instruments designated as cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
Cost of sales |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Note 16 - Commitments and Contingencies
The Company is involved in various litigation matters from time to time, including intellectual property litigation, and warranty and repair claims incidental to the conduct of our business. Although the Company is taking actions to vigorously contest these matters, it is not possible to determine the outcome of these matters and proceedings. The Company does not believe these actions will have a material adverse effect on our financial position, results of operations or cash flows.
Note 17 – (Loss) Earnings Per Share
The net income available to common stockholders and weighted-average common shares outstanding are as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Allocation of undistributed earnings to nonvested restricted shares |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net income available to common stockholders - basic |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Undistributed earnings reallocated to nonvested restricted shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available to common stockholders - diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Issuance of Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Issuance of Fixed Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of employee stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
21
The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for Common Stock and participating securities. The Company’s participating securities are its grants of restricted stock which contain non-forfeitable rights to dividends. The Company allocates earnings between both classes; however, in periods of undistributed losses, they are only allocated to common shares as the unvested restricted stockholders do not contractually participate in losses of the Company. The Company computes basic earnings per share by dividing net income allocated to common shareholders by the weighted average number of shares outstanding during the period. Warrants issued in connection with the Company’s long-term debt were issued at a nominal exercise price and are considered outstanding at the date of issuance. The 2023 Warrant was issued out-of-the money and the Company will apply the treasury stock method to the 2023 Warrant when computing earnings per share. Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the period. Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and the assumed vesting of non-vested share awards. For the three months ended June 30, 2026 and 2025,
Shareholder Rights Plan
On September 2, 2025, the Company’s Board of Directors declared a dividend of one preferred share purchase right (a “Right”), payable on September 8, 2025, for each outstanding share of the Company’s common stock to stockholders of record on September 2, 2025. Each Right entitles the shareholder to purchase from the Company one one-hundredth of a share of Series D Junior Participating Preferred Stock for $
Note 18 – Related Parties
Fabricaciones y Servicios de México, S.A. de C.V. (“Fasemex”) is owned by Jesús Gil, a director of the Company, and Alejandro Gil and Salvador Gil, siblings of Jesús Gil. Both Jesús Gil and Alejandro Gil are beneficial owners of over
The Company paid $
Until June 9, 2025, Commercial Specialty Truck Holdings, LLC (“CSTH”) was minority owned by James R. Meyer, a member of our Board, our former CEO, and beneficial owner of over
22
Note 19 – Income Taxes
The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s reported effective income tax rate was
The Company's reported effective tax rate was
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements including, in particular, statements about our plans, strategies and prospects. We have used the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “likely,” “unlikely,” “intend” and similar expressions in this report to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. However, forward-looking statements inherently involve potential risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These potential risks and uncertainties relate to, among other things, the cyclical nature of our business; adverse economic and market conditions, including inflation; material disruption in the movement of rail traffic for deliveries; fluctuating costs of raw materials, including steel and aluminum; delays in the delivery of raw materials; our ability to maintain relationships with our suppliers of railcar components; our reliance upon a small number of customers that represent a large percentage of our sales; the variable purchase patterns of our customers and the timing of completion; delivery and customer acceptance of orders; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings; potential unexpected changes in laws, rules, and regulatory requirements, including tariffs and trade barriers (including recent United States tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries); and other competitive factors. The factors listed above are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could materially and adversely affect our business, financial condition and results of operations. New factors emerge from time to time and it is not possible for management to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws.
OVERVIEW
You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
We are a diversified manufacturer of railcars and railcar components. We design and manufacture a broad variety of railcar types for transportation of bulk commodities and containerized freight products primarily in North America. We also provide railcar rebody and repair services, railcar conversion services that repurpose idled rail assets back into revenue service, and supply railcar parts. We have been manufacturing railcars since 1901.
The Company’s operations consist of two operating and reportable segments, Manufacturing and Aftermarket. The Company identifies reportable segments based on differences in products and services. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, and major conversions and rebodies. The Company’s Aftermarket segment includes the selling of railcar parts and supplies for all railcar types, and provides aftermarket services including safety training, railcar inspections, and preventative maintenance.
Our Manufacturing segment revenues are generated primarily from sales of the railcars that we manufacture. Our Manufacturing segment sales depend on industry demand for new railcars, which is driven by overall economic conditions and the demand for railcar transportation of various products such as steel products, minerals, cement, motor vehicles, forest products, agricultural commodities and coal. Our Manufacturing segment sales are also affected by competitive market pressures that impact our market share, the prices for our railcars and by the types of railcars sold. Our Manufacturing segment revenues also include revenues from railcar conversions and rebodies. Our Aftermarket segment revenues are generated primarily from sales of railcar parts and supplies for all railcar types.
The variable purchase patterns of our customers and the timing of completion, delivery and customer acceptance may cause our revenues and income from operations to vary substantially each quarter, which will result in significant fluctuations in our quarterly results. Further, recent changes to United States and foreign trade policies, including the imposition of new tariffs, have created increased geopolitical and macroeconomic uncertainty. Future changes in governmental and economic policies could impact our cost structure, demand for our products and results of operation. We continue to actively monitor new global trade policies and remain focused on strategic initiatives to drive operational efficiencies.
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Total net railcar orders received for the six months ended June 30, 2026 were 3,550 units, consisting of 3,150 new railcars and 400 converted and rebodied railcars, compared to orders for 2,476 units, consisting of 1,776 new railcars and 700 converted and rebodied railcars, for the six months ended June 30, 2025. Total backlog of unfilled orders was 3,972 units as of June 30, 2026, compared to 1,926 railcars as of December 31, 2025. The estimated sales value of the backlog was $344 million and $137 million as of June 30, 2026 and December 31, 2025, respectively. The increase in the number of net railcar orders received for the six months ended June 30, 2026 compared to the prior year period represents the continued growth of the Company’s commercial footprint.
Our backlog is not necessarily indicative of future operating results. Certain orders included in backlog remain subject to customary documentation and completion of contractual terms. Customers may modify or cancel orders, although historically there has been limited variation between the number of railcars ordered and those ultimately delivered. Delivery schedules may also change from time to time.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2026 compared to Three Months Ended June 30, 2025
Revenues
Our consolidated revenues for the three months ended June 30, 2026 were $113.1 million, compared to $118.6 million for the three months ended June 30, 2025. Manufacturing segment revenues for the three months ended June 30, 2026 were $104.3 million, compared to $110.8 million for the corresponding prior year period. The $6.5 million decrease in Manufacturing segment revenues was primarily driven by an unfavorable product mix in the cars delivered in the period. Aftermarket segment revenues for the three months ended June 30, 2026 were $8.9 million, compared to $7.9 million for the three months ended June 30, 2025, primarily reflecting revenues generated by Carly Railcar Components, acquired in December 2025, which expanded the Company's aftermarket parts distribution business.
Gross Profit
Our consolidated gross profit was $6.2 million for the three months ended June 30, 2026, compared to $17.8 million for the three months ended June 30, 2025. Consolidated gross margin for the three months ended June 30, 2026 and 2025 was 5.5% and 15.0%, respectively. Manufacturing segment gross profit was $3.3 million for the three months ended June 30, 2026, compared to $14.9 million for the three months ended June 30, 2025. Manufacturing segment gross margin for the three months ended June 30, 2026 and 2025, was 3.2% and 13.4%, respectively. The $11.6 million decrease and 9.5% decrease in consolidated gross profit and gross margin, respectively, driven by the $11.6 million and 10.2% decreases in Manufacturing segment gross profit and gross margin, respectively resulted from an unfavorable product mix in the cars delivered in the period. Aftermarket segment gross profit was $2.9 million for each of three months ended June 30, 2026 and 2025.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses were $10.5 million for the three months ended June 30, 2026, compared to $10.1 million for the three months ended June 30, 2025. The $0.4 million increase in consolidated selling, general and administrative expenses was primarily due to a $0.5 million increase in legal costs during the three months ended June 30, 2026. Manufacturing segment selling, general and administrative expenses were $0.6 million for the three months ended June 30, 2026, compared to $0.4 million for the three months ended June 30, 2025. Manufacturing segment selling, general and administrative expenses for each of the three months ended June 30, 2026 and 2025, were 0.6% and 0.4% of revenue, respectively. Aftermarket segment selling, general and administrative expenses were $0.9 million for the three months ended June 30, 2026, compared to $0.5 million during the three months ended June 30, 2025. Corporate selling, general and administrative expenses were $8.9 million for the three months ended June 30, 2026, compared to $9.2 million for the three months ended June 30, 2025, primarily driven by the aforementioned increase in legal costs during the three months ended June 30, 2026.
Loss on Change in Fair Market Value of Warrant Liability
Our loss on change in fair market value of Warrant liability was $24.9 million for the three months ended June 30, 2026, compared to $47.6 million for the three months ended June 30, 2025. The change in fair market value of Warrant liability is driven by the fluctuation of stock price used to remeasure the liability at the end of each period as well as fluctuations in the number of implied warrant shares.
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Other (Expense) Income
Other expense was $0.2 million for the three months ended June 30, 2026, compared to other income of $3.3 million for the three months ended June 30, 2025. The decrease in other (expense) income is primarily driven by the $3.1 million Employee Retention Credit received during the three months ended June 30, 2025.
Income Tax (Benefit) Provision
Our income tax benefit was $2.3 million for the three months ended June 30, 2026, compared to our income tax benefit of $52.7 million for the three months ended June 30, 2025. The income tax benefit is due to the release of the majority of the valuation allowance in the United States on federal deferred tax assets during the three months ended June 30, 2025.
Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025
Revenues
Our consolidated revenues for the six months ended June 30, 2026 were $177.4 million, compared to $214.9 million for the six months ended June 30, 2025. Manufacturing segment revenues for the six months ended June 30, 2026 were $157.2 million, compared to $200.9 million for the six months ended June 30, 2025. The $43.7 million decrease in Manufacturing segment revenues was primarily driven by an unfavorable product mix in the cars delivered in the period. Aftermarket segment revenues for the six months ended June 30, 2026 were $20.2 million, compared to $14.0 million for the six months ended June 30, 2025, primarily reflecting revenues generated by Carly Railcar Components, acquired in December 2025, which expanded the Company's aftermarket parts distribution business.
Gross Profit
Our consolidated gross profit was $17.0 million for the six months ended June 30, 2026, compared to $32.2 million for the six months ended June 30, 2025. Consolidated gross margin for the six months ended June 30, 2026 and 2025, was 9.6% and 15.0%, respectively. Manufacturing segment gross profit was $10.6 million for the six months ended June 30, 2026, compared to $27.0 million for the six months ended June 30, 2025. Manufacturing gross margin for the six months ended June 30, 2026 and 2025, was 6.7% and 13.4%, respectively. The $15.2 million and 5.4% decreases in consolidated gross profit and gross margin, respectively, driven by the $16.4 million and 6.7% decreases in Manufacturing segment gross profit and gross margin, respectively, were due to an unfavorable product mix in the cars delivered in the period. Aftermarket segment gross profit for the six months ended June 30, 2026 was $6.4 million, compared to $5.2 million for the six months ended June 30, 2025. The $1.2 million increase in Aftermarket segment gross profit is driven primarily by the acquisition of Carly Railcar Components in December 2025, which increased the Company's aftermarket parts distribution gross profit.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses were $21.9 million for the six months ended June 30, 2026, compared to $20.6 million for the six months ended June 30, 2025. The $1.3 million increase in consolidated selling, general and administrative expenses was primarily due to a $2.3 million increase in legal expenses and a $0.4 million increase in finance costs, partially offset by a decrease of $1.4 million in labor and stock-based compensation expenses during the six months ended June 30, 2026. Manufacturing segment selling, general and administrative expenses were $1.0 million for the six months ended June 30, 2026, compared to $0.8 million for the six months ended June 30, 2025. Manufacturing segment selling, general and administrative expenses for the six months ended June 30, 2026 and 2025, were 0.6% and 0.4% of revenue, respectively. Aftermarket segment selling, general and administrative expenses were $1.9 million for the six months ended June 30, 2026 compared to $1.1 million during the six months ended June 30, 2025. Corporate selling, general and administrative expenses were $19.0 million for the six months ended June 30, 2026, compared to $18.8 million for the six months ended June 30, 2025, primarily driven by the aforementioned increase in legal and finance expenses, partially offset by reductions in labor and stock-based compensation during the six months ended June 30, 2026.
Gain on Change in Fair Market Value of Warrant Liability
Our gain on change in fair market value of Warrant liability was $24.2 million for the six months ended June 30, 2026, compared to $5.3 million for the six months ended June 30, 2025. The change in fair market value of Warrant liability is driven by the fluctuation of stock price used to remeasure the liability at the end of each period as well as fluctuations in the number of implied warrant shares.
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Other (Expense) Income
Other expense was $24.0 thousand for the six months ended June 30, 2026, compared to other income of $3.2 million for the six months ended June 30, 2025. The decrease in other income is primarily driven by the $3.3 million Employee Retention Credit received during the six months ended June 30, 2025, partially offset by a $0.1 million loss on sale of assets held for sale.
Income Tax Provision (Benefit)
Our income tax provision was $1.3 million for the six months ended June 30, 2026, compared to our income tax benefit of $50.9 million for the six months ended June 30, 2025. The income tax benefit primarily reflects the release of the majority of the valuation allowance in the United States on federal deferred tax assets during the six months ended June 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
(In thousands, except for share and per share data and unless otherwise noted)
Our primary sources of liquidity are our cash and cash equivalents on hand and our credit and debt facilities outlined below.
On December 31, 2024, the Company entered into a term loan agreement with FreightCar North America, LLC, certain of its subsidiaries, the lenders party thereto, and Blue Torch Finance LLC, as administrative and collateral agent, providing for a $115,000 term loan maturing December 31, 2028 (the “Term Loan”). The Term Loan includes customary affirmative and negative covenants and financial covenants, including minimum liquidity requirements and quarterly leverage ratio testing beginning March 31, 2025. The Company was in compliance with these covenants as of June 30, 2026. The Term Loan also includes an annual mandatory prepayment provision based on Excess Cash Flow, as defined in the agreement, requiring the Company to apply a portion of such cash flow to repay outstanding borrowings. Deferred financing costs of $6,511 are recorded as a reduction of long-term debt and amortized to interest expense over the term of the Term Loan.
The Term Loan bears interest at the Term Secured Overnight Refinancing Rate (“Term SOFR”), with a floor of 3.00% per annum, plus an applicable margin of 6.00% per annum or at a base rate, as selected by the Company as the borrower. Base rate loans, with respect to the Term Loan, bear interest at the highest of (a) 4.00% per annum, (b) the federal funds rate plus 0.50%, (c) the prime rate or (d) the Term SOFR rate plus 1.00% per annum plus an applicable margin of 5.00%. The Term Loan bears interest at 9.7% as of June 30, 2026.
On February 12, 2025, the Company entered into a $35,000 asset-based revolving credit facility (the “ABL”) with Bank of America, N.A., as administrative agent, maturing February 12, 2030, subject to a springing maturity of October 2, 2028 if the Term Loan is not repaid or refinanced by October 1, 2028. Availability under the ABL is subject to a borrowing base derived from eligible inventory and accounts receivable, which secure the facility.
The ABL contains customary affirmative and negative covenants and financial covenants that are triggered upon reduced availability and remain in effect while such condition exists. The Company was in compliance with these covenants as of June 30, 2026. Revolving loans outstanding bear interest at the Term SOFR rate plus an applicable margin ranging from 1.50% to 2.00% per annum or at a base rate plus an applicable margin ranging from 0.50% to 1.00% per annum, as selected by the Company as the borrower. Base rate loans, with respect to the ABL, bear interest at the highest of (a) the prime rate, (b) the federal funds rate plus 0.50% or (c) Term SOFR rate plus 1.00%, provided that the base rate may not be less than 1.00%. As of June 30, 2026, the ABL bears interest at 5.5%.
As of June 30, 2026, the Company had $24,468 of availability under the ABL, net of $452 reserved for foreign currency derivative mark-to-market adjustments and $197 reserved for a standby letter of credit. Deferred financing costs of $874 are recorded as an asset and amortized to interest expense over the term of the ABL.
Warrant
The Company issued warrants to OC III LFE II LP (“OC III LFE”) and various affiliates of OC III LFE (collectively, the “Warrantholder”) in previous years which are exercisable on the terms described in Note 11 - Warrants.
During the three months ended June 30, 2026, the Warrantholder partially exercised the 2020, 2021 and 2022 Warrants through the contractual net exercise provisions, resulting in the issuance of 13,619,377 shares of Common Stock. Because the warrants were exercised on a net settlement basis, the Company did not receive any cash proceeds from the transaction.
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Additional Liquidity Factors
Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our cash balances will be sufficient to meet our expected liquidity needs for at least the next twelve months. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit facilities, any other indebtedness and the availability of additional financing if needed. We may also require additional capital in the future to fund working capital for various reasons, such as future railcar demand; payments for contractual obligations; organic growth opportunities, including new plant and equipment and development of railcars; joint ventures; international expansion; and acquisitions, and these capital requirements could be substantial.
Based upon our operating performance and capital requirements, we may, from time to time, be required to raise additional funds through additional offerings of our equity or debt and through long-term borrowings. There can be no assurance that long-term debt, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse effect on our results of operations and financial condition.
Cash Flows
The following table summarizes our cash flow activities for the six months ended June 30, 2026 and 2025:
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2026 |
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2025 |
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(In thousands) |
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Net cash (used in) provided by: |
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Operating activities |
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$ |
7,766 |
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$ |
21,322 |
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Investing activities |
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(1,317 |
) |
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(353 |
) |
Financing activities |
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(7,766 |
) |
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(4,066 |
) |
Total |
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$ |
(1,317 |
) |
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$ |
16,903 |
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Operating Activities. Our net cash provided by operating activities reflects net income adjusted for non-cash charges and changes in operating assets and liabilities. Cash flows from operating activities are affected by several factors, including fluctuations in business volume, contract terms for billings and collections, the timing of collections on our contract receivables, processing of payroll and associated taxes, payments to our suppliers and other operating activities. As some of our customers accept delivery of new railcars in train-set quantities, variations in our sales could lead to significant fluctuations in our operating profits and cash from operating activities.
Our net cash provided by operating activities for the six months ended June 30, 2026 was $7.8 million compared to $21.3 million provided by operating activities for the six months ended June 30, 2025. Our net cash provided by operating activities for the six months ended June 30, 2026 reflects changes in working capital, including a decrease in inventory of $10.3 million and an increase in accounts and contractual payables of $8.3 million. Our net cash provided by operating activities for the six months ended June 30, 2025 reflects changes in working capital, including increases in accounts payable of $41.2 million and customer deposits of $17.6 million, offset by increases in inventory of $32.8 million and accounts receivable of $3.7 million. The decrease in inventory relates to inventory on hand at December 31, 2025 used in production of railcars delivered during the period, and the increase in accounts payable relates to purchases of raw materials used to support production during the six months ended June 30, 2026.
Investing Activities. Net cash used in investing activities for the six months ended June 30, 2026 was $1.3 million and consisted of $0.9 million in capital expenditures related to enhancement of machinery and equipment on current production lines of the Manufacturing Facility and $0.4 million payment of holdback liability in connection with the CRC acquisition. Net cash used in investing activities for the six months ended June 30, 2025 was $0.4 million and consisted of capital expenditures of $0.9 million related to additional machinery and equipment on current production lines of the Manufacturing Facility, offset by proceeds of $0.6 million from the sale of assets held for sale.
Financing Activities. Net cash used in financing activities for the six months ended June 30, 2026 was $7.8 million which included borrowing and repayment on revolving line of credit of $8.0 million, repayment on term loan of $7.3 million, and employee stock settlements of $0.4 million. Net cash used in financing activities for the six months ended June 30, 2025 was $4.1 million which included deferred financing costs of $1.3 million, repayments on term loan of $1.4 million, employee stock settlements of $0.5 million, and principal payments on the finance lease of $0.8 million.
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Capital Expenditures
Our capital expenditures were $0.9 million for the six months ended June 30, 2026 and 2025. We anticipate capital expenditures during 2026 to be in the range of $7 million to $10 million, related to the replacement and enhancement of machinery and equipment used in manufacturing, as well as investment in new machinery and equipment related to production of tank cars.
Item 4. Controls and Procedures.
Management’s Report on Internal Control over Financial Reporting
The Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of June 30, 2026. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
For further information, see Note 16 - Commitments and Contingencies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
4.1 |
Warrant No. W-005 issued to OC III LFE II LP On June 30, 2026. |
4.2 |
Warrant No. W-006 issued to OC III LFE II LP On June 30, 2026. |
4.3 |
Warrant No. W-007 issued to OC III LFE II LP On June 30, 2026. |
31.1 |
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32 |
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
Inline XBRL Instance Document |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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|
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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FREIGHTCAR AMERICA, INC. |
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Date: August 3, 2026 |
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By: |
/s/ NICHOLAS J. RANDALL |
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Nicholas J. Randall, President and Chief Executive Officer (Principal Executive Officer) |
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Date: August 3, 2026 |
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By: |
/s/ MICHAEL A. RIORDAN |
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Michael A. Riordan, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer) |
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Date: August 3, 2026 |
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By: |
/s/ JUAN CARLOS FUENTES SIERRA |
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Juan Carlos Fuentes Sierra, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) |
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