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Date

Tuesday, May 5, 2026 at 11 a.m. ET

Call participants

  • President and Chief Executive Officer — Nicholas J. Randall
  • Chief Financial Officer — Michael Anthony Riordan
  • Chief Commercial Officer — W. Matthew Tonn
  • Vice President, Investor Relations — Chris O'Dea

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Takeaways

  • Revenue -- $64.3 million, down from $96.3 million in the prior year, attributed to lower railcar deliveries.
  • Railcar Deliveries -- 577 units delivered, compared to 710 units previously, reflecting production timing and demand factors.
  • Backlog -- 2,058 units valued at $156 million at quarter-end, with a mix of new builds, conversions, and retrofit programs.
  • Gross Margin -- 16.8%, up 190 basis points from 14.9%, representing one of the highest quarters in over a decade.
  • Aftermarket Revenue Growth -- 86% year-over-year increase, emphasizing expansion in parts and services.
  • Gross Profit -- $10.8 million, down from $14.4 million in the prior period, with improved margins despite lower volumes.
  • Adjusted Net Result -- Adjusted net loss of $500,000, or $0.04 per share, compared to adjusted net income of $1.6 million, or $0.05 per share, in the prior year.
  • Net Income (GAAP) -- $41.6 million, or $1.15 per share, including a $49.1 million non-cash warrant remeasurement gain.
  • Adjusted EBITDA -- $3.2 million with a 4.9% margin, versus $6.4 million and 6.7% margin prior year.
  • SG&A as % of Revenue -- 17.7%, increased due to lower revenues, with no meaningful change in absolute expense.
  • Cash Balance -- $52.8 million in cash and cash equivalents at quarter-end.
  • Capital Expenditures -- $147 thousand for the quarter; full-year 2026 expected at $7 million to $10 million, including $4 million to $5 million for maintenance and tank car initiatives.
  • Productivity Gains -- Productivity increased approximately 50% over the last 24 months.
  • Market Share (New Railcars, ex-tank cars) -- Estimated at 17% for the quarter, consistent with prior levels and excluding conversions, retrofits, and rebodies.
  • Order Intake and Pipeline -- Sequential backlog increased by $19 million, with order activity described as “significantly improved pipeline activity.”
  • Industry Orders -- 5,654 industry orders for the quarter, compared to 5,085 units in the prior year period.
  • Guidance -- Full-year 2026 guidance reaffirmed, with expectations for second-half weighting tied to backlog and retrofit activity.
  • Average Selling Price Outlook -- CFO Michael Anthony Riordan stated, “From an average selling price, we should see that go up from where we were in Q1 as well, and then build throughout the year.”
  • Retrofit Program -- Shipments under the tank car retrofit program are set to begin in the third quarter, with greater volume in the fourth quarter and ongoing activity into 2027.
  • Manufacturing Footprint and Capacity -- Four operational production lines are established; productivity improvements may allow tank car conversions without activating a fifth line.

Summary

FreightCar America (RAIL 4.22%) reported lower revenue and deliveries, yet achieved significant gross margin expansion by leveraging a favorable product mix and operational efficiencies. Management highlighted strong growth in the aftermarket segment, alongside a growing commercial pipeline and confirmed backlog. Strategic initiatives focus on productivity gains, flexible manufacturing, and high confidence in meeting full-year guidance based on a diversified and actively managed order book.

  • CEO Nicholas J. Randall emphasized, “FreightCar America is a truly diversified railcar company and that remains central to our strategy.”
  • Management outlined that productivity improvements have raised operational throughput and reduced reliance on additional manufacturing capacity.
  • CFO Michael Anthony Riordan stated, “the retrofit program we have is a two-year program. It kicks off in Q3 for us and really starts going in Q4.”
  • Rail industry data revealed U.S. carload traffic increased over 4% year over year, with notable demand in grain and chemical shipments driving new order opportunities for covered hopper cars.
  • Commercial initiatives, including rapid order conversion and increased agility, are supporting customer-specific delivery timing needs as market cycles evolve.

Industry glossary

  • Aftermarket: The business segment that provides parts, maintenance, retrofits, and services for existing railcars post-original sale.
  • Conversion: Modification of an existing railcar to serve a different function or extend useful life.
  • Retrofit: Updating or upgrading railcars, often for regulatory compliance or performance improvements, distinct from new-build production.
  • TrueTrack: FreightCar America’s proprietary real-time production management and quality program referenced for driving manufacturing consistency.
  • ASP (Average Selling Price): The average amount received per railcar sold, influenced by product mix between new builds, conversions, and retrofits.
  • SG&A: Selling, General, and Administrative expenses.
  • Tank Car: Railcar specifically designed for transporting liquids or gases, distinct from covered hoppers, gondolas, or boxcars.

Full Conference Call Transcript

Chris O'Dea: Thank you, and welcome. Joining me today are Nicholas J. Randall, president and chief executive officer, Michael Anthony Riordan, chief financial officer, and W. Matthew Tonn, chief commercial officer. I would like to remind everyone that statements made during the conference call related to the company's expected future performance, future business prospects, future events, or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Participants are directed to FreightCar America, Inc.'s Form 10-K description of certain business risks, some of which may be outside of the control of the company, that may cause actual results to materially differ from those expressed in the forward-looking statements.

We expressly disclaim any duty to provide updates to our forward-looking statements, whether as a result of new information, future events, or otherwise. During today's call, there will also be a discussion of some items that do not conform to U.S. Generally Accepted Accounting Principles, or GAAP. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the earnings release issued yesterday afternoon. Our earnings release for the first quarter 2026 is posted on the company's website at freightcaramerica.com along with the 8-K, which was filed at market close yesterday. With that, I will now turn the call over to Nick for a few opening remarks.

Nicholas J. Randall: Thank you, Chris. Good morning, everyone, and thank you all for joining us today. Our first quarter results were in line with expectations and remained consistent with the operating cadence we expect for 2026. At the same time, our commercial differentiation and expanding aftermarket business, which grew 86% year over year, continues to distinguish FreightCar America, Inc. and reinforces the resilience of our business model across market cycles. Our ability to serve specialized customer needs through not only new car builds, but also retrofits, conversions, and our expanding aftermarket platform all play a key role in growing our addressable revenue opportunities and allowing us to fulfill a broader set of customer programs.

In short, FreightCar America, Inc. is a truly diversified railcar company and that remains central to our strategy. Supported by our manufacturing expertise and strong productivity improvements, we realized one of the highest gross margin quarters in over a decade, with 17% gross margin in the quarter. This represents an expansion of 190 basis points year over year. What is especially encouraging is that we achieved this performance on lower utilization, highlighting the operational agility and the variable structure of the business. Commercial activity was also encouraging in the quarter, with significantly improved pipeline activity amongst key accounts and solid order intake, including demand for our conversion and retrofit work.

We increased our backlog by $19 million sequentially and, together with the expected contribution from retrofit and aftermarket activity, we continue to expect performance to be weighted towards the back half of the year. Internally, as we have scaled our manufacturing footprint, we have been on a continuous improvement journey focused on enhancing productivity and strengthening execution across our manufacturing operations. During that time, we have successfully established four fully operational production lines and have taken a relentless approach in driving efficient manufacturing practices. We are extremely pleased with our progress to date, noting that we have increased productivity by approximately 50% over the last 24 months.

In addition, we remain agile and are able to remain flexible as needed, giving us additional operating capacity capability as demand evolves. Together, these actions and capabilities provide additional support to drive consistent margin performance over the long term. At the same time, programs like TrueTrack are helping reinforce accountability, real-time build visibility, and quality throughout the production process, driving greater consistency, reducing rework, and strengthening production discipline across our operations. We also remain focused on the continued expansion of our aftermarket platform, an important part of our strategy to build a broader and more balanced rail business over time.

We are excited with the progress we have seen so far with our recent [inaudible], which represents an important step in expanding our aftermarket capabilities. We remain disciplined in how we invest behind that, with a focus on selective adjacent opportunities that strengthen our position in core rail markets, expand our capabilities, and support attractive long-term returns. Overall, we remain mindful of the current new build environment, where industry order activity has remained relatively consistent with last year's levels. Importantly, that dynamic continues to point to underlying pent-up demand as fleets age and deferred replacement needs build over time.

As those fleets reach retirement age, customers are increasingly likely to place orders closer to the required delivery timing, which tends to favor more agile manufacturers by creating a shorter lead time environment. FreightCar America, Inc. is well positioned in that regard. With our improved productivity, stronger operating discipline, and a flexible manufacturing model with scalable capacity, we are well equipped to respond efficiently and capitalize on opportunities as replacement demand returns over time. With that, I will turn it over to Matt to discuss the market environment in more detail.

W. Matthew Tonn: Thanks, Nick, and good morning, everyone. I will start with a brief update on the market and our commercial activity during the quarter. Industry conditions for new railcar builds remain relatively consistent with the prior year, with expected annual deliveries tied to replacement demand. This dynamic reflects underlying demand as fleets continue to age and replacement needs build over time. Order activity during the quarter was also consistent with this environment, with industry orders totaling 5,654 units compared to 5,085 units in the prior year period. Railroad service metrics continue to trend positively across the industry.

Key indicators like reductions in dwell time and increased velocity speak to improved rail service, customer confidence in rail operations, and support long-term rail demand. Through the first quarter, U.S. carload traffic was up over 4% year over year, with 13 of the 20 carload segments showing growth. Grain and chemical carloads posted the strongest growth, which has also been reflected in our pipeline for new covered hopper cars. Overall, first quarter car loadings excluding coal were the highest since 2015 and indicate that despite softness in some sectors, underlying rail demand remains resilient. During the quarter, we saw strong commercial activity, including growth of our sales pipeline across our broad product portfolio of new build and conversion railcars.

Further, we continue to see increasing interest in our aftermarket business as customers look to extend the useful lives of their aging railcar fleets through scheduled maintenance activity. Backlog at the end of the quarter totaled 2,058 units valued at approximately $156 million, with a diversified mix across new builds, conversions, and retrofit programs that support a balanced revenue profile. Importantly, we are beginning to see customers who were evaluating new car orders moving forward with purchase decisions. In those instances, our flexible manufacturing footprint and ability to pivot quickly positions us well to meet customer-specific delivery timing requirements.

From a market share perspective, we estimate our addressable share of industry new railcars, excluding tank cars, was approximately 17% for the quarter, which is in line with our typical market share. Importantly, this metric does not include our work outside of new railcars, including railcar conversions, retrofits, and rebodies, which further diversifies our revenue base and expands our participation across the broader railcar market. Looking ahead, as Nick mentioned, we remain on track to begin shipments under our tank car retrofit program in the second half of the year, with initial activity expected in the third quarter and more meaningful contribution in the fourth quarter.

Overall, while near-term market conditions remain measured, we are encouraged by the level of commercial activity, the strength of our pipeline, and the continued diversification of our backlog. With that, I will turn the call over to Mike to walk through the financials in more detail.

Michael Anthony Riordan: Thanks, Matt, and good morning, everyone. I would like to begin with a few first quarter highlights. Revenue for the quarter was $64.3 million compared to $96.3 million in 2025. The year-over-year decline primarily reflects lower railcar deliveries, with 577 units delivered in the quarter versus 710 units in the prior year period. As noted, this was largely driven by underlying demand and expected timing. While production timing impacted first quarter deliveries, we were encouraged by the momentum in our aftermarket business, where sales grew 86% compared to the prior year period. This growth reflects the progress we are making in expanding our presence in the aftermarket, driving further diversification to our business over time.

Gross profit for the quarter was $10.8 million compared to $14.4 million in the prior year period. Gross margin was 16.8%, up 190 basis points from 14.9% last year. The improvement in margin was driven primarily by a more favorable product mix that expands beyond new railcars, as well as the productivity gains and operational efficiencies across our manufacturing operations that Nick mentioned earlier. Importantly, we delivered this margin improvement despite lower production volumes, underscoring the benefits of our mix, productivity, and cost discipline. This improvement reflects the progress we have made in strengthening execution, improving throughput, and driving a more disciplined operating model.

Selling, general, and administrative expenses as a percentage of revenue increased to 17.7% from 10.9% in the prior year period, primarily reflecting lower revenue in the quarter rather than a meaningful increase in absolute SG&A expense. On the bottom line, we reported net income of $41.6 million, or $1.15 per share, compared to $50.4 million, or $1.52 per share, in the prior year period. Results for the quarter include a $49.1 million non-cash gain related to the remeasurement of our warrant liabilities. Excluding non-cash items, adjusted net loss was $500,000, or $0.04 per share, compared to adjusted net income of $1.6 million, or $0.05 per share, in 2025. This change primarily reflects lower volumes in the quarter.

Adjusted EBITDA for the quarter was $3.2 million, representing a margin of 4.9%, compared to $6.4 million, a margin of 6.7%, in the prior year period. The year-over-year decline in adjusted EBITDA was primarily driven by lower deliveries, consistent with the expected quarterly cadence, partially offset by the margin improvements mentioned earlier. We continued to execute a disciplined and measured capital allocation strategy, balancing targeted investment in the business with a continued focus on liquidity and financial flexibility. From a balance sheet perspective, we further reduced debt in the quarter and ended with $52.8 million in cash and cash equivalents. Capital expenditures for the first quarter totaled $147 thousand.

Moving forward, we continue to expect 2026 capital spending of $7 million to $10 million, including approximately $4 million to $5 million of maintenance spending as well as targeted investments to complete our previously announced tank car manufacturing initiatives. The productivity improvements we have made, together with our flexible manufacturing footprint and existing production lines, gives us the capacity to support higher production levels as demand improves without significant additional capital investment.

Because that capacity is already in place within our current footprint, we can scale production as needed while continuing to direct capital towards opportunities to strengthen the business over the long term, including expanding our aftermarket platform and pursuing selective opportunities that enhance the stability and durability of our revenue and cash flow profile. Overall, first quarter results were in line with our expectations and reflect the planned production cadence for the year. We are reaffirming our full-year 2026 guidance, and our expectations for a stronger second half remain intact, supported by backlog visibility, scheduled program activity, aftermarket momentum, and continued productivity improvements. We will now open the call for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Mark Reichman with Noble Capital Markets. Please state your question.

Mark Reichman: Thank you. So if I look at railcar sales revenue divided by railcars delivered, it was a little under $92 thousand for the first quarter. That number drifted down throughout 2025, and that was also true for the backlog value per railcar. So I was just wondering if you could talk a little bit about the product mix changes throughout the year. Would you expect that number to get above $100 thousand?

Michael Anthony Riordan: Hi, Mark. This is Mike. You are right. In the back half of 2025, we talked about mix shifting more towards conversions and rebody opportunities we had. The same thing in Q1; it was a heavier conversion quarter. I would expect, as we move into the back half, to see that number go above $100 thousand as the mix will shift back towards new car activity in the second half of the year.

Operator: Does that answer your question, Mark?

Mark Reichman: It does. The second quarter, would you expect an improvement from the first quarter in that regard as well?

Michael Anthony Riordan: From an average selling price, we should see that go up from where we were in Q1 as well, and then build throughout the year.

Mark Reichman: Okay. And then just my next question is, I think expectations were for a much stronger second half, but with rail deliveries at 577 in the first quarter, it seems like there might be a little catching up to do to get within guidance. Could you maybe talk a little bit about the cadence of railcar deliveries? And do you think your net railcar orders received, I mean, I think it was 709 in the first quarter, are going to fuel strength into the second half of the year?

Nicholas J. Randall: Mark, I will start answering that question. It is really an order pipeline question, and then that will drive the delivery cadence in the second half. This time last year, we talked about how improving our agility in manufacturing—effectively shortening our lead time and improving our response time—would favor people in a market where the number of orders being placed is lower than the replacement average. That is what we are seeing again. We drove a lot of productivity improvements and we have shortened our, or improved, our velocity and shortened our dwell time in the manufacturing plant, which allows us to keep capacity open in the near term for customers as they place orders.

Then we get visibility into the full pipeline of our commercial opportunities. We have an increase in the pipeline activity—that is customers talking to us about orders in the 2026 timeframe and our ability to fulfill those orders still within the 2026 timeframe. We are able to have more insights than we do talking about pure booked orders on the pipeline activity—the type of product, what the product is waiting for to become a live order, etc. So yes, it is going to be weighted towards the second half. We said that last year, and it was. We are committing that it will be the same this year.

A lot of the work we did, both in our scalable manufacturing and our ability to ramp up from what we did in Q1 to significantly higher numbers without introducing risks, is key to our success in that as well. The order activity, I will pass on to Matt; he can talk a bit more about that. But yes, it is heavy weighted to the second half. We knew that going in and we have designed our plan around that, and we are still confident we can deliver on that.

W. Matthew Tonn: I will just add that we have been adept at being able to convert orders with very short lead times. Customers that have been on the sidelines are now moving into the order stage, and our ability with our efficient footprint has allowed us to convert those orders very quickly and deliver. That was executed multiple times within the quarter. And just to comment on the pipeline, the pipeline is continuing to grow. It has been quite active in the latter part of the first quarter and into Q2. I will not speak to order activity in the quarter; we will save that for the next earnings call.

But overall, we have a high level of confidence in the strength of the pipeline for 2026, and even pipeline activity into 2027 and beyond.

Mark Reichman: That is great. That is very helpful. Thank you very much.

Operator: Our next question comes from Aaron Bruce Reed with Northcoast Research. Please state your question.

Aaron Bruce Reed: Thank you. A little bit of a follow-on to the comment on the lower deliveries. I was wondering if you could shed a little light around whether deliveries were impacted at all by preparing for the tank car deliveries in the back half of this year. You are not going to be operating on that fifth line, but that fourth line. Did that have any impact as well?

Nicholas J. Randall: No, Aaron. The opposite. We have historically talked about having a fifth line on the roof, and we can open that fifth line pretty quickly, in under 90 days. But with our productivity improvements, what we are finding is we are raising the throughput on those first four lines in our ability to convert more cars on those four in a more productive manner. What that means is our installed capacity on those first four is increasing quite significantly compared to what we originally intended, with those productivity and velocity improvements. So yes, we will more than likely do the conversions you mentioned—some tank car conversions—on the footprint we have, possibly not even needing the fifth line for that.

It is available to us should we need it. But I would rather sweat the assets as much as possible before we commit to expanded capacity. In short, the volume was not impacted negatively because of preparation work. The preparation work has gone to plan. We have the certification as required, but that has not impeded our freight car business or our freight car capacity. We were simply responding to customer demand profiles during the quarter.

Aaron Bruce Reed: Okay, great. And then another follow-up question to that is, last year I think overall deliveries across the industry were around 30,000. Do you have any more insights about what you might expect for the total number of deliveries for the remainder of 2026? And have you gotten any indication of what 2027 might look like?

Nicholas J. Randall: I am not going to try to quote year-to-date; I will do it in full years because it is easier to do the math that way. Typically, when we look at deliveries, deliveries are going to lag behind order activity. So we look at the order activity for 2025, which would suggest that deliveries in 2026 are going to be somewhere between 25,000 to 30,000, giving a wide range, given that some can still convert in 2026. That would be kind of consistent. Then I would expect the orders in 2026 to be about that range or slightly higher as they start receiving orders in the back end of 2026 that go into 2027. There is a lag time.

Traditionally, if you look in the rail industry, that lag time between order placement and delivery has been as far as 18 months or longer. Typically now, certainly with our agile manufacturing platform, that timing from order placement to delivery can be as short as 9 to 12 weeks in some cases. What we are seeing is a compression of that order cycle from order placement to delivery. We have structurally aligned our operations, supply chain, and support engineering roles so that we are very agile in that process, which allows us to capitalize on that shortened lead time that the market and the customers are beginning to look for.

Aaron Bruce Reed: Super helpful. And then I guess one last question: when you look at the total overall number of deliveries throughout the year and your overall market share, even as the industry is seeing deliveries fall a little bit, you are continuing to take market share. Have you seen any competitors take any competitive pricing action to combat the market share you are taking, or is it pretty much the same as it was before?

Nicholas J. Randall: I will answer at a very high level and then get more specific. In a free market economy, competitors always respond in some way, whether it be pricing or value proposition or some other way. I would expect that to always be true in the rail space. For us, that means we are very conscious that we have to earn the right to win our work and earn the right to win our market share. We take that very seriously. We have never said we are going to be the lowest-cost producer, but we will be the most valuable producer. We will make sure that we deliver exactly what our customers want and need and enhance our value proposition.

We truly believe in our products, our services, and the relationships that we build. When we combine all that together, we win work on our own merits. Competitors can respond to that how they see fit. We will keep an eye on it, but we have grown both in account count and in market share, as you said, and we fully expect to sustain those gains and, in fact, build upon them. As the market deliveries respond back to the normal 38,000 to 40,000 units a year, we truly expect to protect that market share gain through that growth cycle as well.

Aaron Bruce Reed: Super helpful. Thank you.

Nicholas J. Randall: Thanks, Aaron.

Operator: Our next question comes from Brendan Michael McCarthy with Sidoti. Please state your question.

Brendan Michael McCarthy: Great. Good morning, everybody. Thanks for taking my questions here. I just wanted to start off on the Q1 gross margin and see if we could dissect that a little bit more. How much of that was structural in nature, or was that more so driven by your higher conversion deliveries in the quarter?

Michael Anthony Riordan: Hey, Brendan, this is Mike. I would call the majority of that structural. We did not have any retrofits. But as alluded to, with the average selling price being down, we had more conversions; you will naturally see the gross margin up. As we have mentioned, typically, the bottom-line gross profit on a per-unit basis is relatively similar between conversions and new cars. But you have a lower price tag on a conversion, so you see the margin a little higher.

Brendan Michael McCarthy: Got it. That makes sense. I meant to say conversions actually because I think the retrofits are more back-half weighted in the year. Is that correct?

Michael Anthony Riordan: Yeah.

Brendan Michael McCarthy: Got it. On that point, with the retrofits in the back half of the year, I think you mentioned you are still expecting to see the average sales price step up throughout the year. Can you differentiate that between the two, in terms of delivery cadence?

Michael Anthony Riordan: Sure. I think we have mentioned that the retrofit program we have is a two-year program. It kicks off in Q3 for us and really starts going in Q4. Probably about a quarter of that total order will take place in calendar year 2026, with the balance going through 2027. So the retrofits will have a lower impact on ASP this year compared to next year, where the bulk of them are taking place.

Brendan Michael McCarthy: Okay. That makes sense. That is helpful. And then last question for me: on the guidance affirmation, how confident are you that you can really hit the midpoint there, and how much of that is backed by you banking on a recovery in industry order flow in the back half of the year and really capitalizing on those short lead times? What is underpinning the confidence there?

Nicholas J. Randall: I will walk through that first, and then Matt can put some color around some of the order activity. Yes, the year is back-half loaded. We know that; we planned around that. The back half is not really requiring the industry to get back to normal. We have always planned on the industry order quantity being somewhere around 25,000 to 30,000, similar to what it was last year, and that is what our guidance is based on. If there is a sooner-than-expected return to normal replacement levels, then that would probably support a stronger result.

But the assumptions we have in that are based less about industry dynamics, which are good to look at, and more on our relationships and our actual customers and the orders they are working through, and the projects that those orders are going to be delivered for. We are able to base it on the facts of the order pipeline and gestation process and risk-adjust from that.

While the industry level is a background that helps set the main scene, when we look at our guidance and our forecast, we are really looking at our own pipeline with a lot more detail and risk-assessing against the orders we have and the projects we are working on and what may or may not influence accelerating or deferring any of those projects. It is not always fully reflective. Last year, we grew market share and we grew unit count even though the industry counts went down significantly. It is going to be a rinse and repeat for us this year—similar dynamics.

Still a lot to do, clearly, but I am confident that we are not just mapping it simply to “here is what the industry does, so therefore here is what we do.” We truly believe we have to earn the right for every order, and we work on it on an order-by-order basis with our customers and our projects. Matt, if I missed anything on that.

W. Matthew Tonn: Just a couple of comments, Brendan. The back-to-back years of order activity have averaged 23,000 units. We are scrapping more cars than are being ordered. When we have conversations with customers about their needs, we are getting to an inflection point where we cannot keep this low level of order activity and high level of car scrapping and not start replacing railcars. We have spoken in the past about impending demand as we approach the end of the decade, and customers are starting to get— I will not say more serious, but certainly focused on—their demand for railcar needs now. This is what we refer to as a high-quality pipeline.

We are seeing much more activity in terms of permitting and funding for railcar builds. So when we talk about how the outlook is for the remainder of the year, it is based upon good order activity that we have seen so far in the quarter, but I think there is also solid, high-quality pipeline activity that gives us high confidence in meeting our guidance.

Brendan Michael McCarthy: That makes sense. I appreciate the detail there. That is all for me.

Operator: Our next question comes from Mark Reichman with Noble Capital Markets. Please state your question.

Mark Reichman: Thank you. Just a follow-up. You can imagine, with 577 deliveries in the first quarter and guidance between 8,000 and 8,500, people are going to be a little skeptical about meeting that guidance. But on the other hand, you have that ABL facility, and that gave you a lot more production flexibility. We cannot really see what is going on behind the scenes, but do you have some deliveries already in the bag that you know are going to get delivered in the third and fourth quarters?

I guess what I am asking is whether your recent flexibility in terms of being able to produce and deliver is part of what is behind the lumpiness in the delivery schedule this year.

Nicholas J. Randall: I will try to break down the couple of questions wrapped up in that one, and then Matt and Mike can add some color. First, if you just look at our guidance at the entry level, as you said, it is just over 3,450 or so still to do at the end of Q1 to ship in the year. That would say, on a level-loaded basis, call it 1,200 units a quarter, or about 90-something units a week. That is well within our capacity. We have demonstrated much higher shipment profiles than that before. So I do not think there is a capacity concern or ability to flex.

We drove the productivity improvements so that we can handle a lot of those delivery commitments sometimes in a single shift as opposed to a double shift. We have a lot of improvements baked into that. So I do not think we have a risk from a capacity perspective; we can flex our volume and throughput very high. Second, on timing: we may build cars ahead of schedule. We may do a build sequence in a prior quarter, but then you have finished goods or on the ABL or some of the financial mechanics that then get the revenue recognition in a later quarter. We sometimes do that.

There is not a lot of that in Q1, but you will see some of those in Q2 builds that will ship in Q3 and Q4. That is normal for us as we smooth out that process. Those things do happen and will happen, but they allow us to buffer supply chain variability and maintain consistent output. That usually works better for us. From a pipeline perspective, there is higher customer demand in the second half than there was in the first half, certainly in the first quarter. There is only so much prebuild you can do ahead of time because then you have to pay the storage fees, the movement fees, and a whole bunch of things.

With our flexible manufacturing, we are able to deliver when our customers need them rather than having the customer make compromises on shipment timing and storage, etc. When you roll all these things together—between our scalable manufacturing, our operational excellence, our TrueTrack, and our deep relationships with our customers—we are able to flex our delivery times so that our customers do not have to make compromises. That allows us to have another edge as to why we are a supplier of choice for most of our customers.

Mark Reichman: That is great. That is very helpful detail, Nick. Thank you.

Operator: That was the last question for today, and it concludes the teleconference call. You may now disconnect your lines at this time. Thank you for your participation, and have a great day.