FreightCar America (RAIL -1.78%), a leading manufacturer of freight railcars in North America, reported its second quarter 2025 financial results on August 4, 2025. The headline news: Both GAAP revenue and non-GAAP earnings per share in Q2 2025 surpassed analyst consensus. GAAP revenue reached $118.6 million in Q2 2025, topping the $114.9 million GAAP estimate, and Non-GAAP earnings per share came in at $0.11 in Q2 FY2025 against a $0.055 non-GAAP estimate. GAAP gross margins improved meaningfully in Q2 2025. Overall GAAP revenue fell 19.6% in Q2 2025 compared to Q2 2024. The operating results, combined with solid order activity, led management to reaffirm full-year guidance despite sector-wide uncertainties.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.11 | $0.06 | $0.10 | 10.0% |
| Revenue | $118.6 million | $114.9 million | $147.4 million | (19.5%) |
| Adjusted EBITDA | $10.0 million | $12.1 million | (17.4%) | |
| Gross Margin | 15.0% | 12.5% | 2.5 pp | |
| Adjusted Free Cash Flow | $7.9 million | $51.5 million | (84.7%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About FreightCar America
FreightCar America specializes in designing and producing a wide range of railcars, including open-top hoppers, covered hoppers, mill gondolas, and intermodal railcars. Based in Chicago and operating a large manufacturing facility near the U.S.-Mexico border, it serves freight rail operators across North America.
The company’s recent business strategy has focused on product diversification and operational efficiency. Its ability to introduce new railcar types—22 products launched or redesigned in the past seven years—helps the company respond to a shifting marketplace. Key success factors include managing customer relationships, optimizing the manufacturing process, and keeping supply risk in check.
Quarter Highlights and Performance Drivers
The quarter showed mixed results across metrics. GAAP revenue declined by 19.6% in Q2 2025 compared to Q2 2024 as deliveries dropped to 939 units from 1,159 a year earlier. GAAP gross margin climbed to 15.0% in Q2 2025, up 2.5 percentage points from the previous year, driven by a stronger product mix and disciplined pricing. Adjusted EBITDA of $10.0 million in Q2 2025 represented a drop from last year’s $12.1 million, but as a percent of revenue, non-GAAP EBITDA margin inched higher.
The company’s operational execution helped it beat analyst expectations. Non-GAAP EPS was $0.11, double the consensus estimate. In the same period, reported net income included significant non-cash items—a $51.9 million release of a tax valuation allowance and a $47.6 million warrant loss. Excluding these, adjusted net income landed at $3.842 million, essentially flat with last year’s $3.471 million. Adjusted free cash flow was $7.9 million (non-GAAP).
Order activity was a strong point for the quarter. New railcar orders totaled 1,226, valued at $106.9 million. Backlog at quarter end was 3,624 units, up about 300 sequentially and representing $316.9 million in value. A larger backlog increases visibility into expected production and sales over coming quarters.
Balance sheet data showed some noteworthy shifts. Inventory and accounts payable increased. The company’s cash position strengthened to $61.4 million at quarter end (June 30, 2025). Stockholders’ deficit (GAAP) improved due to the tax valuation allowance adjustment, narrowing to $(83.5) million at June 30, 2025 from $(150.3) million at December 31, 2024.
Product Mix, Strategic Moves, and Trends
FreightCar America’s business depends on its ability to design and produce a mix of railcars that meet customer needs. Product families include open-top hoppers (used for transporting commodities like coal and aggregates), covered hoppers (for grains and chemicals), and gondolas (for bulk materials like scrap metal and aggregates). The company also works on conversions and rebuilds, which extend the lifespan and utility of existing railcars—a practice that supports its environmental sustainability goals.
The quarter’s margin gains reflect ongoing success with higher-margin railcar types and services, as gross margin reached 15.0%. Management emphasized “a richer product mix from disciplined pricing,” with particular strength in rebuilds and conversions. Tank car capabilities are another current investment focus. While shipments of new tank cars have not yet started, investment in this area is guided by an aim to access future growth and diversify away from the bulk freight segment.
Customer concentration remains a risk, with the top five customers contributing approximately 48% of total revenue for the year ended December 31, 2024. While repeat business offers some stability, any reduction or delay in orders from large customers could affect quarterly results. The company also faces supply chain risk due to reliance on a sole supplier for certain key components, though vertical integration helps mitigate this risk to some extent.
The company did not report material one-time events outside of the noted non-cash tax adjustment and warrant liability swing, both of which impacted reported net income. There were no changes to dividend policy during the period—FreightCar America does not currently pay a dividend.
Outlook and What to Watch
Management reaffirmed its FY2025 guidance: railcar deliveries are expected in the range of 4,500 to 4,900, with projected revenue of $530 to $595 million, and adjusted EBITDA between $43 million and $49 million. At the midpoint of the range, each of these targets signals moderate year-over-year growth.
The company expects a back-weighted year, with production and deliveries ramping up in the second half. Investors should monitor the pace and conversion of backlog into delivered sales, as well as ongoing changes in working capital investment that affect free cash flow. Backlog trends and customer order patterns will remain important given historic customer concentration and sector exposure. No additional guidance was offered by management beyond the reaffirmation of full-year expectations. FreightCar America does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
