QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 2026
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-51237
FREIGHTCAR AMERICA, INC.
(Exact name of registrant as specified in its charter)
Delaware
25-1837219
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
125 South Wacker Drive, Suite 1500
Chicago, Illinois
60606
(Address of principal executive offices)
(Zip Code)
(800) 458-2235
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
RAIL
The Nasdaq Global Market
Preferred Stock Purchase Rights
N/A
The Nasdaq Global Market
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 ☐
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 32,791,280 shares of the registrant’s common stock outstanding.
Cash, cash equivalents and restricted cash equivalents
$
62,978
$
64,295
Accounts receivable, net of allowance for credit losses of $152 and $121, respectively
13,215
12,443
VAT receivable
6,665
6,097
Inventories, net
57,831
68,295
Prepaid expenses and other current assets
10,226
8,875
Total current assets
150,915
160,005
Property, plant and equipment, net
28,384
30,969
Right of use asset lease
39,381
40,281
Intangibles, net
4,491
4,877
Deferred income taxes
52,053
52,970
Other long-term assets
872
947
Total assets
$
276,096
$
290,049
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts and contractual payables
$
63,177
$
55,671
Accrued payroll and other employee costs
5,803
9,110
Accrued warranty
1,989
2,050
Deferred revenue
3,046
539
Current portion of long-term debt
2,875
9,728
Lease liability, current
1,990
1,888
Other current liabilities
4,390
6,611
Total current liabilities
83,270
85,597
Long-term debt, net of current portion
97,850
97,514
Warrant liability
13,977
168,529
Accrued pension costs
1,292
1,256
Lease liability, long-term
42,205
43,233
Other long-term liabilities
1,301
1,333
Total liabilities
239,895
397,462
Commitments and contingencies (Note 16)
Stockholders’ equity (deficit)
Common stock, $0.01 par value, 50,000,000 shares authorized, 32,775,760 and 19,091,736 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
358
221
Additional paid-in capital
204,519
72,557
Accumulated other comprehensive income
2,293
2,324
Accumulated deficit
(170,969
)
(182,515
)
Total stockholders’ equity (deficit)
36,201
(107,413
)
Total liabilities and stockholders’ equity (deficit)
$
276,096
$
290,049
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)
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
Revenues
$
113,138
$
118,623
$
177,446
$
214,913
Cost of sales
106,967
100,802
160,465
182,698
Gross profit
6,171
17,821
16,981
32,215
Selling, general and administrative expenses
10,467
10,114
21,871
20,637
Operating (loss) income
(4,296
)
7,707
(4,890
)
11,578
Interest expense
(3,045
)
(4,382
)
(6,421
)
(8,718
)
(Loss) gain in fair market value of warrant liability
(24,889
)
(47,630
)
24,215
5,258
Other (expense) income
(218
)
3,296
(24
)
3,157
(Loss) income before income taxes
(32,448
)
(41,009
)
12,880
11,275
Income tax (benefit) provision
(2,345
)
(52,688
)
1,334
(50,852
)
Net (loss) income
$
(30,103
)
$
11,679
$
11,546
$
62,127
Net (loss) earnings per common share - basic
$
(0.94
)
$
0.36
$
0.35
$
1.89
Net (loss) earnings per common share - diluted
$
(0.94
)
$
0.34
$
0.32
$
1.79
Weighted average common shares outstanding – basic
31,939,312
31,793,746
31,933,492
31,727,903
Weighted average common shares outstanding – diluted
31,939,312
33,398,330
35,549,254
33,603,627
See Notes to Condensed Consolidated Financial Statements (Unaudited).
4
FreightCar America, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
Net (loss) income
$
(30,103
)
$
11,679
$
11,546
$
62,127
Other comprehensive (loss) income, net of tax:
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)
27
19
52
51
Other comprehensive (loss) income before reclassifications:
Unrealized gain on commodity swap derivatives
—
116
—
116
Unrealized gain on foreign currency derivatives
700
1,476
809
1,829
Amounts reclassified from accumulated other comprehensive (loss) income:
(Gain) loss on foreign currency derivatives reclassified into cost of sales
(521
)
(72
)
(892
)
519
Comprehensive (loss) income
$
(29,897
)
$
13,218
$
11,515
$
64,642
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)
FreightCar America Stockholders
Accumulated
Additional
Other
Total
Common Stock
Paid-In
Comprehensive
Retained
Stockholders’
Shares
Amount
Capital
Income
Deficit
Equity (Deficit)
Balance, March 31, 2025
19,040,310
$
221
$
70,854
$
1,697
$
(170,171
)
$
(97,399
)
Net income
-
-
-
-
11,679
11,679
Other comprehensive income
-
-
-
1,539
-
1,539
Restricted stock awards
73,220
1
-
-
-
1
Exercise of stock appreciation rights
13,882
-
(43
)
-
-
(43
)
Stock-based compensation recognized
-
-
761
-
-
761
Balance, June 30, 2025
19,127,412
$
222
$
71,572
$
3,236
$
(158,492
)
$
(83,462
)
Balance, March 31, 2026
19,074,495
$
221
$
73,280
$
2,087
$
(140,866
)
$
(65,278
)
Net loss
-
-
-
-
(30,103
)
(30,103
)
Other comprehensive income
-
-
-
206
-
206
Restricted stock awards
70,888
1
-
-
-
1
Exercise of stock options and appreciation rights
11,000
-
47
-
-
47
Exercise of warrants
13,619,377
136
130,201
-
-
130,337
Stock-based compensation recognized
-
-
991
-
-
991
Balance, June 30, 2026
32,775,760
$
358
$
204,519
$
2,293
$
(170,969
)
$
36,201
6
FreightCar America, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands, except for share data)
(Unaudited)
FreightCar America Stockholders
Accumulated
Additional
Other
Total
Common Stock
Paid-In
Comprehensive
Retained
Stockholders’
Shares
Amount
Capital
Income
Deficit
Equity (Deficit)
Balance, December 31, 2024
18,960,608
$
221
$
69,404
$
721
$
(220,619
)
$
(150,273
)
Net income
-
-
-
-
62,127
62,127
Other comprehensive income
-
-
-
2,515
-
2,515
Restricted stock awards
195,975
2
(2
)
-
-
-
Employee stock settlement
(50,010
)
(1
)
(486
)
-
-
(487
)
Exercise of stock option and appreciation rights
20,839
-
(45
)
-
-
(45
)
Stock-based compensation recognized
-
-
2,701
-
-
2,701
Balance, June 30, 2025
19,127,412
$
222
$
71,572
$
3,236
$
(158,492
)
$
(83,462
)
Balance, December 31, 2025
19,091,736
$
221
$
72,557
$
2,324
$
(182,515
)
(107,413
)
Net income
-
-
-
-
11,546
11,546
Other comprehensive loss
-
-
-
(31
)
-
(31
)
Restricted stock awards
70,888
1
-
-
-
1
Employee stock settlement
(40,531
)
-
(436
)
-
-
(436
)
Exercise of stock options and appreciation rights
34,290
-
125
-
-
125
Exercise of warrants
13,619,377
136
130,201
-
-
130,337
Stock-based compensation recognized
-
-
2,072
-
-
2,072
Balance, June 30, 2026
32,775,760
$
358
$
204,519
$
2,293
$
(170,969
)
$
36,201
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
$
11,546
$
62,127
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
3,709
3,046
Non-cash lease expense on right of use assets
900
1,572
(Gain) on change in fair market value for Warrant liability
(24,215
)
(5,258
)
Stock-based compensation recognized
2,072
2,701
Deferred income taxes
917
(52,647
)
Other non-cash items, net
865
5,690
Changes in operating assets and liabilities:
Accounts receivable
(773
)
(3,698
)
VAT receivable
(550
)
(2,397
)
Inventories
10,333
(32,807
)
Accounts and contractual payables
8,326
41,164
Income taxes payable, net
(1,286
)
(665
)
Customer deposits
—
17,611
Other assets and liabilities
(4,078
)
(15,117
)
Net cash flows provided by operating activities
7,766
21,322
Cash flows from investing activities
Acquisitions
(434
)
—
Purchase of property, plant and equipment
(883
)
(938
)
Proceeds from sale of assets held for sale, net of selling costs
—
585
Net cash flows used in investing activities
(1,317
)
(353
)
Cash flows from financing activities
Deferred financing costs
—
(1,336
)
Borrowings on revolving line of credit
8,000
—
Repayments on revolving line of credit
(8,000
)
—
Repayments on term loan
(7,330
)
(1,438
)
Employee stock settlement
(436
)
(487
)
Financing lease payments
—
(805
)
Net cash flows used in financing activities
(7,766
)
(4,066
)
Net (decrease) increase in cash and cash equivalents
(1,317
)
16,903
Cash, cash equivalents and restricted cash equivalents at beginning of period
64,295
44,450
Cash, cash equivalents and restricted cash equivalents at end of period
$
62,978
$
61,353
Supplemental cash flow information
Interest paid
$
5,729
$
4,047
Income taxes paid
$
1,381
$
3,018
Change in unpaid construction in process
$
(120
)
$
295
Exercise of warrants
$
130,337
$
—
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
$
104,282
$
110,757
$
157,238
$
200,932
Aftermarket sales
8,856
7,866
20,208
13,981
Total revenues from contracts with customers
$
113,138
$
118,623
$
177,446
$
214,913
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 no contract assets as of June 30, 2026 and December 31, 2025. The Company may receive cash payments from customers in advance of the Company satisfying performance obligations under its sales contracts resulting in deferred revenue or customer deposits, which are considered contract liabilities. Deferred revenue and customer deposits, reported on separate lines in the Company’s condensed consolidated balance sheets, are classified as either current or long-term liabilities in the condensed consolidated balance sheets based on the timing of when the Company expects to recognize the related revenue. There were no customer deposits as of June 30, 2026 and December 31, 2025. Deferred revenue was $3,046 and $539 as of June 30, 2026 and December 31, 2025, respectively. Deferred revenue as of June 30, 2026 and December 31, 2025 will be recognized as revenue during the 2026 fiscal year. The Company has not experienced material credit losses historically.
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 $81,321 as of June 30, 2026 expected to be recognized over the next 3 to 18 months.
Note 4 – Segment Information
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 forged, cast and fabricated railcar parts and supplies for all railcar types, and provides aftermarket services including safety training, railcar inspections, and preventative maintenance.
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
$
104,282
$
8,856
$
113,138
Cost of sales
101,000
5,967
Segment gross profit
$
3,282
$
2,889
$
6,171
Other segment items (1)
599
946
Segment operating income
$
2,683
$
1,943
$
4,626
Reconciliation of segment operating income to consolidated loss before income taxes:
Unallocated corporate expenses
(8,922
)
Consolidated interest expense
(3,045
)
Loss on change in fair market value of Warrant liability
(24,889
)
Consolidated other expense
(218
)
Consolidated loss before income taxes
$
(32,448
)
Reconciliation of segment gross profit to consolidated loss before income taxes:
$
6,171
Other segment items (1)
1,545
Segment operating income
4,626
Unallocated corporate expenses
(8,922
)
Consolidated interest expense
(3,045
)
Loss on change in fair market value of Warrant liability
(24,889
)
Consolidated other expense
(218
)
Consolidated loss before income taxes
$
(32,448
)
(1)Other segment items in Manufacturing and Aftermarket segments include selling, general and administrative expenses.
Three Months Ended
June 30, 2025
Manufacturing
Aftermarket
Total
Revenues
$
110,757
$
7,866
$
118,623
Cost of sales
95,831
4,971
Segment gross profit
$
14,926
$
2,895
$
17,821
Other segment items (1)
402
510
Segment operating income
$
14,524
$
2,385
$
16,909
Reconciliation of segment operating income to consolidated loss before income taxes:
Unallocated corporate expenses
(9,202
)
Consolidated interest expense
(4,382
)
Loss on change in fair market value of Warrant liability
(47,630
)
Consolidated other income
3,296
Consolidated loss before income taxes
$
(41,009
)
Reconciliation of segment gross profit to consolidated loss before income taxes:
$
17,821
Other segment items (1)
912
Segment operating income
16,909
Unallocated corporate expenses
(9,202
)
Consolidated interest expense
(4,382
)
Loss on change in fair market value of Warrant liability
(47,630
)
Consolidated other income
3,296
Consolidated loss before income taxes
$
(41,009
)
(1)Other segment items in Manufacturing and Aftermarket segments include selling, general and administrative expenses.
11
Six Months Ended
June 30, 2026
Manufacturing
Aftermarket
Total
Revenues
$
157,238
$
20,208
$
177,446
Cost of sales
146,637
13,828
Segment gross profit
$
10,601
$
6,380
$
16,981
Other segment items (1)
963
1,895
Segment operating income
$
9,638
$
4,485
$
14,123
Reconciliation of segment operating income to consolidated income before income taxes:
Unallocated corporate expenses
(19,013
)
Consolidated interest expense
(6,421
)
Gain on change in fair market value of Warrant liability
24,215
Consolidated other expense
(24
)
Consolidated income before income taxes
$
12,880
Reconciliation of segment gross profit to consolidated income before income taxes:
$
16,981
Other segment items (1)
2,858
Segment operating income
14,123
Unallocated corporate expenses
(19,013
)
Consolidated interest expense
(6,421
)
Gain on change in fair market value of Warrant liability
24,215
Consolidated other expense
(24
)
Consolidated income before income taxes
$
12,880
(1)Other segment items in Manufacturing and Aftermarket segments include selling, general and administrative expenses.
12
Six Months Ended
June 30, 2025
Manufacturing
Aftermarket
Total
Revenues
$
200,932
$
13,981
$
214,913
Cost of sales
173,896
8,802
Segment gross profit
$
27,036
$
5,179
$
32,215
Other segment items (1)
759
1,076
Segment operating income
$
26,277
$
4,103
$
30,380
Reconciliation of segment operating income to consolidated income before income taxes:
Unallocated corporate expenses
(18,802
)
Consolidated interest expense
(8,718
)
Gain on change in fair market value of Warrant liability
5,258
Consolidated other income
3,157
Consolidated income before income taxes
$
11,275
Reconciliation of segment gross profit to consolidated income before income taxes:
$
32,215
Other segment items (1)
1,835
Segment operating income
30,380
Unallocated corporate expenses
(18,802
)
Consolidated interest expense
(8,718
)
Gain on change in fair market value of Warrant liability
5,258
Consolidated other income
3,157
Consolidated income before income taxes
$
11,275
(1)Other segment items in Manufacturing and Aftermarket segments include selling, general and administrative expenses.
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
$
1,481
$
1,431
$
2,978
$
2,796
Aftermarket
309
35
617
71
Corporate
55
84
114
179
Consolidated depreciation and amortization
$
1,845
$
1,550
$
3,709
$
3,046
Capital expenditures:
Manufacturing
$
533
$
562
$
532
$
847
Aftermarket
203
-
351
-
Corporate
-
46
-
91
Consolidated capital expenditures
$
736
$
608
$
883
$
938
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. A summary of segment assets is as follows:
June 30,
December 31,
2026
2025
Assets:
Manufacturing
$
128,208
$
141,583
Aftermarket
28,564
27,202
Corporate
63,734
65,943
Total operating assets
220,506
234,728
Consolidated income taxes receivable and deferred income taxes
55,590
55,321
Consolidated assets
$
276,096
$
290,049
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
$
113,138
$
118,623
$
177,446
$
214,913
$
11,050
$
11,809
Mexico
-
-
-
-
61,206
64,318
Total
$
113,138
$
118,623
$
177,446
$
214,913
$
72,256
$
76,127
(a)Revenue is attributed to countries based on the location in which control transfers to the customer.
(b) Long lived assets include property, plant and equipment, net, right-of-use (ROU) assets, and long-lived intangible assets.
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
$
-
$
332
$
-
$
332
Liabilities:
Warrant liability
$
-
$
13,977
$
-
$
13,977
Contingent consideration
$
-
$
-
$
2,020
$
2,020
Recurring Fair Value Measurements
As of December 31, 2025
Level 1
Level 2
Level 3
Total
Assets:
Foreign currency derivative asset
$
-
$
437
$
-
$
437
Liabilities:
Warrant liability
$
-
$
168,529
$
-
$
168,529
Contingent consideration
$
-
$
-
$
2,020
$
2,020
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 $0.01 per share (the “Common Stock”), in an active market, exercise prices ($0.01/share and $3.57/share) and number of shares exercisable, as of June 30, 2026 and December 31, 2025, is a Level 2 measurement.
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
$
281
$
281
Restricted cash to collateralize corporate card program
222
221
Total restricted cash and restricted cash equivalents
$
503
$
502
Note 7 – Inventories
Inventories, net of reserve for excess and obsolete items, consist of the following:
June 30,
December 31,
2026
2025
Raw materials
$
29,523
$
53,282
Work in process
15,198
4,617
Finished railcars
2,843
80
Parts inventory
10,267
10,316
Total inventories, net
$
57,831
$
68,295
Inventory on the Company’s condensed consolidated balance sheets includes reserves of $818 and $950 relating to excess and slow-moving inventory as of June 30, 2026 and December 31, 2025, respectively.
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 $2,087, which was recorded in other income (expense) in the consolidated statements of operations for the year ended December 31, 2025.
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 $2,020 as of the acquisition date and is recorded as a liability that is remeasured at fair value each reporting period. The Company reassessed the fair value of the contingent consideration as of June 30, 2026 and determined there was no change in its fair value. Additional information is included in Note 5 – Fair Value Measurements. During the six months ended June 30, 2026, the Company settled the holdback liability related to the CRC acquisition by paying $434. The final settlement amount was lower than the initially recorded liability, resulting in a $66 measurement period adjustment to the purchase price allocation.
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 $511, consisting of cash consideration paid at closing and contingent consideration of up to $400 based on the achievement of specified revenue targets during the twelve-month period following the acquisition. Due to the timing of the acquisition, the preliminary allocation of the purchase price has not yet been completed.
16
Note 9 – Product Warranties
Warranty terms are based on the negotiated railcar sale, rebody or conversion contract, as applicable. Changes in the warranty reserve for the six months ended June 30, 2026 and 2025, are as follows:
For the Six Months Ended June 30,
2026
2025
Balance at the beginning of the period
$
2,050
$
2,389
Current year provision
86
774
Reductions for payments, costs of repairs and other
(155
)
(1,474
)
Adjustments to prior warranties
8
(24
)
Balance at the end of the period
$
1,989
$
1,665
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
$
104,794
$
112,125
Less term loan deferred financing costs
(4,069
)
(4,883
)
Total debt, net of deferred financing costs
100,725
107,242
Less amounts due within one year
(2,875
)
(9,728
)
Long-term debt, net of current portion
$
97,850
$
97,514
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%.
17
As of June 30, 2026, the Company had $24,468 of availability under the ABL, net of $452reserved 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.
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 23% (the “2020 Warrant”), 5% (the “2021 Warrant”), and 5% (the “2022 Warrant”) of the outstanding Common Stock (after giving effect to such issuance) on a fully-diluted basis at the time the warrants are exercised. The 2020 Warrant, 2021 Warrant, and 2022 Warrant each have a per share exercise price of $0.01 and a term of ten (10) years from date of issuance.
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 22.99% of the Company's Common Stock Deemed Outstanding under the 2020 Warrant and 4.99% of the Company's Common Stock Deemed Outstanding under each of the 2021 Warrant and the 2022 Warrant. As a result of the net exercise, the Company issued 13,619,377 shares of Common Stock and no cash proceeds were received. The Company derecognized the portion of the warrant liability associated with the exercised warrants and recognized the remaining Replacement Warrants (as defined below) at fair value as of June 30, 2026.
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 0.01% of the Company's Common Stock Deemed Outstanding, with terms otherwise substantially identical to the original warrants. The Replacement Warrants are filed as Exhibits 4.1, 4.2 and 4.3 to this Quarterly Report of Form 10-Q.
Following the partial exercise, the Replacement Warrant related to the 2020 Warrant was exercisable for an aggregate of 4,132 shares of Common Stock as of June 30, 2026, compared with 9,614,145 shares issuable under the 2020 Warrant as of December 31, 2025. The Replacement Warrant related to the 2021 Warrant was exercisable for an aggregate of 4,132 shares of Common Stock as of June 30, 2026, compared with 2,090,032 shares issuable under the 2021 Warrant as of December 31, 2025. The Replacement Warrant related to the 2022 Warrant was exercisable for an aggregate of 4,132 shares of Common Stock as of June 30, 2026, compared with 2,090,032 shares issuable under the 2022 Warrant as of December 31, 2025.
The Company also issued a warrant to the Warrantholder in May 2023 to purchase an aggregate of 1,636,313 shares of Common Stock (the “2023 Warrant”). The 2023 Warrant has a per-share exercise price of $3.57 and a term of ten years from the date of issuance. The 2023 Warrant was not exercised or otherwise modified in connection with the June 2026 partial exercise of the 2020 Warrant, the 2021 Warrant and the 2022 Warrant.
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 $13,977 and $168,529 as of June 30, 2026 and December 31, 2025, respectively. Changes in the fair value of the Warrants are reported as a separate line item in the condensed consolidated statements of operations.
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)
$
34
$
(7
)
$
27
Other comprehensive gain before reclassifications:
Unrealized gain on foreign currency derivatives
885
(185
)
700
Amounts reclassified from accumulated other comprehensive income:
(Gain) on foreign currency derivatives reclassified into cost of sales
(657
)
136
(521
)
$
262
$
(56
)
$
206
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)
$
33
$
(14
)
$
19
Other comprehensive loss before reclassifications:
Unrealized gain on commodity swap derivatives
148
(32
)
116
Unrealized gain on foreign currency derivatives
2,144
(668
)
1,476
Amounts reclassified from accumulated other comprehensive income:
(Gain) on foreign currency derivatives reclassified into cost of sales
(104
)
32
(72
)
$
2,221
$
(682
)
$
1,539
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)
$
66
$
(14
)
$
52
Other comprehensive gain before reclassifications:
Unrealized gain on foreign currency derivatives
1,023
(214
)
809
Amounts reclassified from accumulated other comprehensive income:
(Gain) on foreign currency derivatives reclassified into cost of sales
(1,128
)
236
(892
)
$
(39
)
$
8
$
(31
)
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)
$
65
$
(14
)
$
51
Other comprehensive loss before reclassifications:
Unrealized gain on commodity swap derivatives
148
(32
)
116
Unrealized gain on foreign currency derivatives
2,497
(668
)
1,829
Amounts reclassified from accumulated other comprehensive income:
Loss on foreign currency derivatives reclassified into cost of sales
487
32
519
$
3,197
$
(682
)
$
2,515
The components of accumulated other comprehensive income consist of the following:
June 30,
December 31,
2026
2025
Unrecognized pension income, net of tax of $6,223 and $6,237, respectively
$
2,330
$
2,278
Unrealized (loss) gain on foreign currency derivatives, net of tax of ($369) and ($391), respectively
(37
)
46
$
2,293
$
2,324
Note 13 – Stock-Based Compensation
Total stock-based compensation was $991 and $761 for the three months ended June 30, 2026 and 2025, respectively, and $2,072 and $2,701 for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was $1,153 of unearned compensation expense related to restricted stock awards, which will be recognized over the remaining weighted average requisiteservice period of 13 months. As of June 30, 2026, there was $769 of unearned compensation expense related to time-vested stock options, which will be recognized over the remaining requisite service period of 13 months. As of June 30, 2026, there was $1,200 of unearned compensation expense related to performance share units, which will be recognized over the remaining requisite service period of26 months. As of June 30, 2026, there was $1,319 of unearned compensation expense related to restricted stock units, which will be recognized over the remaining requisite service period of19 months.
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
$
121
$
132
$
242
$
264
Expected return on plan assets
(66
)
(67
)
(132
)
(134
)
Amortization of unrecognized net income
34
33
66
65
$
89
$
98
$
176
$
195
The Company made no significant contributions to the Plan for the three and six months ended June 30, 2026 and 2025. The Company made a contribution of $73 during the three months ended June 30, 2026 and we expect to make additional contributions of $542 to the Plan during the remainder of 2026 to meet minimum funding requirements. However, we may elect to adjust the level of contributions based on a number of factors, including performance of pension investments and changes in interest rates.
The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions and employee earnings with discretionary contributions allowed.
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 contracts with terms between one and 12 months, which require the Company to exchange currencies at agreed-upon rates at each settlement date. The counterparties to the contracts consist of a limited number of domestic and international financial institutions. The Company classifies these contract types as cash flow hedges in accordance with ASC 815, Derivatives and Hedging.
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
$
12,462
$
16,736
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
$
332
$
437
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 June 30,
Six Months Ended June 30,
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
$
(657
)
$
(104
)
$
(1,128
)
$
487
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 June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Numerator:
Net (loss) income
$
(30,103
)
$
11,679
$
11,546
$
62,127
Allocation of undistributed earnings to nonvested restricted shares
-
(384
)
(248
)
(2,151
)
Net income available to common stockholders - basic
$
(30,103
)
$
11,295
$
11,298
$
59,976
Undistributed earnings reallocated to nonvested restricted shares
-
18
25
116
Net income available to common stockholders - diluted
$
(30,103
)
$
11,313
$
11,323
$
60,092
Denominator:
Weighted average common shares outstanding
18,481,687
17,999,806
18,401,584
17,927,741
Issuance of Warrants
13,457,625
13,793,940
13,531,908
13,800,162
Weighted average common shares outstanding - basic
31,939,312
31,793,746
31,933,492
31,727,903
Issuance of Fixed Warrants
-
797,192
1,044,070
924,637
Dilutive effect of employee stock options
-
807,392
2,571,692
951,087
Weighted average common shares outstanding - diluted
31,939,312
33,398,330
35,549,254
33,603,627
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, 1,226,271 and 2,191,732 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive. For the six months ended June 30, 2026 and 2025, 1,254,264 and 2,239,389 shares, respectively, were not included in the weighted average common shares outstanding calculations as they were anti-dilutive.
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 $42.00, once the Rights become exercisable, subject to adjustment.
The Rights will initially trade with and will be inseparable from common stock. The Rights will not be exercisable until: i) 10 business days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 15% or more of the Company’s outstanding common stock (or 20% or more in the case of a person or group that is entitled to file, and does file, a Schedule 13G (a “13G Investor”)); or ii) 10 business days after a person or group begins or announces a tender or exchange offer which, if completed, would result in that person or group becoming an Acquiring Person. The Rights will expire on August 5, 2026, unless the Expiration Date is advanced or extended or unless the Rights are earlier redeemed or exchanged by the Company.
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 5% of our Common Stock as of June 30, 2026 and December 31, 2025. Fasemex provides steel fabrication services to the Company. The lessors of the Castaños, Coahuila, Mexico Facility (the “Manufacturing Facility”) are Jesús Gil, Alejandro Gil, and Salvador Gil. Distribuciones Industriales JAS S.A. de C.V. (“DI”) is owned by Alejandro Gil and Salvador Gil and provides material and safety supplies to the Company. Maquinaria y equipo de transporte Jova S.A. de C.V. (“METJ”) is owned by Jorge Gil, a sibling of Jesús Gil, and provides trucking services to the Company. Additionally, Alejandro Gil has joint ownership of an external warehouse in Frontera, Coahuila, Mexico that the Company started leasing on July 1, 2025. Fasemex, DI, METJ, Jesús Gil, Alejandro Gil, Salvador Gil, and Jorge Gil are collectively referred to as the “Gil Family”.
The Company paid $4,437 and $10,036 to the Gil Family during the three and six months ended June 30, 2026, and $6,309 and $10,916 during the three and six months ended June 30, 2025, related to steel fabrication services, rent and security deposit payments for the Manufacturing Facility, material and safety supplies, trucking services, royalty payments and rent of an external warehouse.
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 5% of our Common Stock. On June 9, 2025, Mr. Meyer divested his ownership interest in CSTH, at which point CSTH ceased to be a related party. The Company sold specialty parts in an amount equal to $66 to CSTH during each of three and six months ended June 30, 2025.
Related party asset, included in prepaid expenses and other current assets on the condensed consolidated balance sheets, of $494 as of June 30, 2026, includes security deposits of $494 from the Gil Family. Related party accounts payable, included in other current liabilities on the condensed consolidated balance sheets, of $2,007 as of June 30, 2026 are payable to the Gil Family. Related party asset, included in prepaid expenses and other current assets on the condensed consolidated balance sheets, of $547 as of December 31, 2025 includes security deposits of $547 from the Gil Family. Related party accounts payable, included in other current liabilities on the condensed consolidated balance sheets, of $3,355 as of December 31, 2025 are payable to the Gil Family.
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 7.2% and 128.5% for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate for the three months ended June 30, 2026 is lower than the effective tax rate for the three months ended June 30, 2025 primarily driven by the release of the majority of the valuation allowance in the United States on deferred tax assets in the second quarter of 2025, and the effects of permanent differences, such as non-taxable gains associated with mark-to-market adjustments on stock warrants.
The Company's reported effective tax rate was 10.4% and (451.0)% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate for the six months ended June 30, 2026 differs from the effective tax rate for the six months ended June 30, 2025 due to the release of the majority of the valuation allowance in the United States on deferred tax assets in the second quarter of 2025, and the effects of permanent differences, such as non-taxable gains associated with mark-to-market adjustments on stock warrants.
The effective tax rates for the three and six months ended June 30, 2026 differ from the 21% United States statutory tax rate due to the effects of permanent differences, such as non-taxable gains associated with mark-to-market adjustments on stock warrants.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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:
2026
2025
(In thousands)
Net cash (used in) provided by:
Operating activities
$
7,766
$
21,322
Investing activities
(1,317
)
(353
)
Financing activities
(7,766
)
(4,066
)
Total
$
(1,317
)
$
16,903
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.
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.
FREIGHTCAR AMERICA, INC.
Date: August 3, 2026
By:
/s/ NICHOLAS J. RANDALL
Nicholas J. Randall, President and Chief Executive Officer
(Principal Executive Officer)
Date: August 3, 2026
By:
/s/ MICHAEL A. RIORDAN
Michael A. Riordan, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)
Date: August 3, 2026
By:
/s/ JUAN CARLOS FUENTES SIERRA
Juan Carlos Fuentes Sierra, Corporate Controller and Chief Accounting Officer