Welcome to FreightCar America's Second Quarter 2024 Earnings Conference Call. At this time all participants are in listen-only mode. [Operator Instructions] Please note that this conference is being recorded. An audio replay of the conference call will be available on the company's website within a few hours after this call. I would now like to turn the call over to Chris O'Dea with Riveron Investor Relations. Chris O’Dea: Thank you, and welcome. Joining me today are Nick Randall, President and Chief Executive Officer; Mike Riordan, Chief Financial Officer; and Matt Tonn, Chief Commercial Officer. I'd like to remind everyone that statements made during the conference call relating to the company's expected future performance, future business prospects or 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's Form 10-K for a description of certain business risks, some of which may be outside of control of the company and 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 second quarter of 2024 is posted on the company's website at freightcaramerica.com, along with 8-K, which was filed yesterday after market. With that, let me now turn the call over to Nick for a few opening remarks.

Thank you, Chris. Good morning, everyone, and thank you all for joining us today. As you may recall, over the past five years, we have undergone substantial transformative initiatives to diversify our product offering and deepen our existing customer relationships, all while strategically repositioning our operations at a significantly reduced cost base. Through the first half of the fiscal year, we are showcasing just that, as we reap the benefits from our comprehensive transformation. We are delivering world-class operations and commercial excellence as we meet the needs of our customers' requirements. Additionally, we are further developing our presence as a premier manufacturer of railcars, with a proven runway for growth as we continue to execute on our strong momentum. In terms of our second quarter results, revenues grew 66% over the prior year on deliveries of 1,159 railcars, and we achieved a record adjusted EBITDA of $12.1 million at our new facility. As a reminder, this comes off the heels of a strong first quarter in which we achieved a record 99% growth in revenue and 192% growth in adjusted EBITDA. Through the first half of the year, we have captured historically high levels of orders and inquiries as well as made advancements in expanding our market share in line with our ongoing commitment to driving profitable growth. Industry data confirms that we are growing our market presence in the railcar segments that we operate in, including covered hoppers, which represents the largest product segment of car types in the space. We have also made significant progress in broadening our product offerings with a major multiyear tank car conversion order, which is a vital component of our next phase of growth. Finally, we recently celebrated the milestone of shipping our 10,000th railcar out of our Castanos facility, a remarkable milestone…

Thank you, Nick, and good morning, everyone. We continue to see improved rail service metrics, contributing to an overall healthy industry environment in the second quarter. As Nick mentioned earlier, we are aligned with the industry's forecast of railcar deliveries to be in the range of 40,000 to 42,000 railcars in 2024. Overall, we see a continuation of demand closely tied to replacements and in the range of 40,000 railcars annually for the foreseeable future. For the second quarter 2024, we closed net orders for 2,916 railcars valued at approximately $285 million. The first half of the year has shown robust activity as we experienced the highest level of orders since our transformation in Mexico, along with substantial growth in both our backlog and shipments. As expected, for many freight segments, customers are still taking longer to fully analyze the timing of their new railcar purchases. But overall, we are seeing consistent inquiries as a result of our flexible commercialization strategy. With the strong momentum in the first half of the year, our production line is essentially sold out, and we are positioned well to close out the remainder of the fiscal year within our expected range. Additionally, our portfolio remains a healthy mix of car types ensuring we meet diverse customer needs. We ended the second quarter with a backlog of 3,833 railcars valued at approximately $382 million, representing the second highest level we have seen since 2016. Within our North American addressable market of existing car types, we have realized market share gains during the quarter for orders across gondolas, flat cars and open-top hoppers. These car types serve a diversified customer base, are regularly in demand and critical to industrial and agricultural market segments of our economy. Our improved market share is a testament to our team…

Thanks, Matt, and good morning, everyone. I'll begin with an overview of the second quarter's financial results. We are extremely pleased with our second quarter results as we delivered year-over-year revenue growth, record quarterly profitability and record orders at our Mexico facility. Consolidated revenues for the second quarter of 2024 totaled $147.4 million, with deliveries of 1,159 railcars, compared to $88.6 million on deliveries of 760 railcars in the second quarter of 2023. Gross profit in the second quarter of 2024 was $18.4 million, with a gross margin of 12.5%, compared to gross profit of $13 million and gross margin of 14.6% in the second quarter of last year. Lower gross margin performance as compared to the prior year was primarily driven by the second quarter of 2024 delivering all new cars versus the prior year comparable period, including deliveries of car conversions. Additionally, we saw a sequential improvement of 550 basis points from the first quarter of 2024 as we saw a favorable mix in car types delivery, coupled with our fourth production line running at full capacity for the entire quarter. We expect our freight car gross margin will remain the industry-leading levels for the full year as we continue to realize the operational efficiencies of our facility running at full capacity. SG&A for the second quarter of 2024 totaled $8.5 million, up from $5.9 million in the second quarter of 2023, primarily due to the second quarter of last year having a favorable mark-to-market adjustment on certain stock-based compensation awards. Excluding stock-based compensation, SG&A as a percentage of revenue decreased to 150 basis points from the prior year as we continue to maintain disciplined SG&A spend. As a result of the business model we designed, this creates significant operating leverage to our bottom line as our production…

[Operator Instructions] And our first question from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Yes. So I was curious, when will your inventory numbers begin to reflect the tank car conversion order that's reflected in the backlog? Or maybe ask another way, when will the revenue get recognized from the order?

From the inventory perspective, Mike, I'll let you address that. But on the timing of the order is really tied to our customers' demand. They're looking for delivery of the cars to be completed by the 2029-time frame, which is the mandate -- the federally mandated time frame, we look to start that program up substantially in 2026. Mike, do you want to set a piece?

Yes. So 2026. And as we noted, it's a two-year program. So you'd be modeling that '26 and '27. So you won't see any inventory build in the near term. You won't really see anything of that nature until very early '26.

And then could you just elaborate on the path towards producing new tank cars? I mean do you think you would be ready by 2028?

Well, let me answer that in 2 two steps. One is the market for tank cars is around about 8,000 units a year. We have design approval for -- covers about half of that, it's about 4,000 of the 8,000 addressable market. So we are approved to take receive orders at any time a customer wishes to place them. There's a period of work to be done to configure the plant for it, but that can be aligned with when customers want to place them. But we would expect that simply due to the conversion work in 2026. And then in parallel, be prepared to take on new tank cars after that period.

Okay. And then my final question is, Michael, are you able to provide any details on plans to recapitalize the balance sheet?

Yes. So I'll say that, that is still one of our primary strategic objectives for this year is to complete that this year, which will be very beneficial to our free cash flow generation going forward.

Thank you very much.

[Operator Instructions] At this time, this concludes our question-and-answer session. This also concludes today's conference. Thank you for your participation. You may now disconnect your lines at this time, and have a great day.