RAIL 10-K & 10-Q changes, risk factors and insider trading

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 forged,railcar cast and fabricated railcarreplacement parts and other supplies for all railcar types. Our Aftermarket segment also provides aftermarket services including safety training, railcar inspections, and preventative maintenance.

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, disruptionsrecent changes to United States and foreign trade policies, including the imposition of new tariffs, have created increased geopolitical and macroeconomic uncertainty. Future changes in thegovernmental globaland supplyeconomic chainpolicies maycould impact demand for, and the costs of, certain of our productscost and services. Our costs and thestructure, demand for our products and services could also be impacted by the impositionresults of new tariffs and trade policies.operation. We docontinue notto knowactively at this time what effect the imposition ofmonitor new tariffs andglobal trade policies couldand haveremain focused on ourstrategic business, financial condition and results of operations, as the actual impact of new tariffs is subjectinitiatives to adrive numberoperational of factors including the duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the target countries may take, and any mitigating actions that may become available.efficiencies.

RailcarTotal deliveriesnet totaledrailcar 4,362orders railcars, consisting of 4,252 new railcars and 110 converted and rebodied railcars,received for the year ended December 31, 2024,2025 were 3,254 railcars, consisting of 2,454 new railcars and 800 converted and rebodied railcars, compared to 3,022orders railcarsfor delivered4,245 units in the year ended December 31, 2023,2024, consisting of 2,7072,850 new railcars and 3151,395 converted and rebodied railcars. Our totalTotal backlog of firmunfilled orders for railcars decreased from 2,914 railcars as of December 31, 2023 to 2,797 railcars as of December 31, 2024.2024 to 1,926 railcars as of December 31, 2025. The estimated sales value of the backlog was $267$137 million and $348$267 million, respectively, as of December 31, 20242025 and 2023.2024.

Our consolidated revenues for the year ended December 31, 20242025 were $559.4$501.0 million compared to $358.1$559.4 million for the year ended December 31, 2023.2024. Manufacturing segment revenues for the year ended December 31, 20242025 were $541.2$473.9 million compared to $345.9$541.2 million for the year ended December 31, 2023.2024. The increasedecrease in Manufacturing segment revenues for 20242025 compared to 20232024 reflects ana increasedecrease in the number of railcars delivered from 3,022 railcars in 2023 to 4,362 railcars in 2024.2024 to 4,125 railcars in 2025. Aftermarket segment revenues for the year ended December 31, 20242025 were $18.2$27.1 million compared to $12.2$18.2 million for the year ended December 31, 2023,2024, reflecting higherincreased partsvolume of component sales driven by favorable volume and price mix in 2024. There were no Corporate revenues forduring the yearsyear ended December 31, 2024 and 2023.2025.

Our consolidated gross profit for the year ended December 31, 20242025 was $67.0$73.2 million compared to $41.8$67.0 million for the year ended December 31, 2023.2024. Our consolidatedConsolidated gross margin was 11.98%14.6% for the year ended December 31, 20242025 compared to 11.66%12.0% for the year ended December 31, 2023.2024. Manufacturing segment gross profit for the year ended December 31, 20242025 was $58.4$63.8 million compared to $37.2$58.4 million for the year ended December 31, 2023.2024. The $25.2$6.2 million increase in consolidated gross profit and $21.2$5.4 million increase in Manufacturing segment gross profit is primarily due to thefavorable increaseproduct mix in the number of railcarscars delivered andduring favorablethe product mix.period. Aftermarket segment gross profit for the year ended December 31, 20242025 was $8.6$9.4 million compared to $4.6$8.6 million for the year ended December 31, 2023.2024. The $4.0$0.8 million increase in Aftermarket segment gross profit is primarily due to favorable volume and price mix.volume.

Consolidated selling, general and administrative expenses for the year ended December 31, 20242025 were $32.9$39.3 million compared to $27.5$32.9 million for the year ended December 31, 2023.2024. Consolidated selling, general and administrative expenses for the year ended December 31, 20242025 included increases of $5.5 million in legalprofessional services expenses ofand $2.5$0.5 million,million in stock-based compensation expenses of $1.9 million, insurance expenses of $0.4 million and labor expenses of $0.4 million.expenses. Consolidated selling, general and administrative expenses were 5.88%7.8% and 5.9% of revenue for each of the years ended December 31, 20242025 and December 31, 2023.2024, respectively. Manufacturing segment selling, general and administrative expenses for the year ended December 31, 20242025 were $2.0$1.6 million compared to $2.1$2.0 million for the year ended December 31, 2023.2024. Manufacturing segment selling, general and administrative expenses for the year ended December 31, 20242025 were 0.37%0.3% of revenue compared to 0.61%0.4% of revenue for the year ended December 31, 2023.2024. Aftermarket segment selling, general and administrative expenses for the year ended December 31, 20242025 were $1.5$2.2 million compared to $0.7$1.5 million for the year ended December 31, 2023. Aftermarket segment selling, general and administrative expenses included increases in labor expenses of $0.3 million, primarily due to an increase in headcount during the year, and consulting costs of $0.2 million.2024. Corporate selling, general and administrative expenses were $29.4$35.5 million for the year ended December 31, 20242025 compared to $24.7$29.5 million for the year ended December 31, 2023.2024. Corporate selling, general and administrative expenses for the year ended December 31, 20242025 includedwere primarily driven by the aforementioned increases in legalprofessional services expenses of $2.4 million,and stock-based compensation expenses of $1.9 million and insurance expenses of $0.4 million.compensation.

During the year ended December 31, 2025, we did not record any litigation settlements. During the year ended December 31, 2024, we recorded a pre-tax litigation settlement gain of $3.2 million related to a dispute with a former lessee of our railcars. During the year ended December 31, 2023, we did not record any litigation settlements.

Our income tax benefit was $49.0 million for the year ended December 31, 2025 compared to income tax provision wasof $5.8 million for the year ended December 31, 2024 compared to $1.5 million for the year ended December 31, 2023.2024. The increase in income tax expensebenefit is primarily explainedattributable byto the mixrelease of earningsa in the United States and Mexico, as well as the impactmajority of permanenta andvaluation discreteallowance itemsU.S. inon bothfederal jurisdictions.deferred tax assets. Our effective tax rate for the year ended December 31, 20242025 was (8.34)%450.46% compared to (6.808.34)% for the year ended December 31, 2023.2024.

Net Income (Loss)

As a result of the changes discussed above, consolidated net income was $38.1 million for the year ended December 31, 2025 compared to net loss wasof $75.8 million for the year ended December 31, 2024 compared to $23.6 million for the year ended December 31, 2023.2024. For the year ended December 31, 2024,2025, basic and diluted net income per share were $1.16 and $1.09, respectively, compared to basic and diluted net loss per share wasof $3.12 comparedand to$3.12, $1.18respectively, for the year ended December 31, 2023.2024.

On December 31, 2024, the Company entered into a term loan agreement by and among the Company, FreightCar North America, LLC and certain subsidiaries of FreightCar North America, LLC, the lenders from time to time party thereto, and Blue Torch Finance LLC, as collateral agent and administrative agent in the principal amount of $115.0 million (the “Term Loan”) with a maturity date of December 31, 2028. The Term Loan contains both affirmative and negative covenants, as well as financial covenants, including covenants related to liquidity levelslevels, assessed at any timetime, and quarterly leverage ratios commencing with the first quarter ended March 31, 2025. The Company is in compliance with such covenants as of December 31, 2025. Proceeds from the Term Loan were used to redeem in full the Preferred Stock (as defined below in Note 13 - Mezzanine Equity). The Company incurred $6.6$6.5 million in deferred financing costs that are presented as a reduction of the long-term debt balance 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 rate,”), 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 loansloans, 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 10.40%10.30% as of December 31, 2024.2025.

On February 12, 2025 (the “ABL Effective Date”), the Company entered into a new revolving credit facility by and among the Company, FreightCar North America, LLC, certain subsidiaries of FreightCar North America, LLC, the lenders from time to time party thereto, and Bank of America, N.A., as agent for the lenders in the form of an asset backed credit facilityfacility, in the maximum aggregate principal amount of $35.0 million (the “ABL”), subject to borrowing base requirements and consisting of revolving loans and a sub-facility for letters of credit. The ABL has a term ending on February 12, 2030, provided that if the aggregate outstanding principal amount and related obligations under the Term Loan have not been repaid in full or prior to October 1, 2028, or refinanced with a new maturity date no earlier than May 13, 2030, the term will end on October 2, 2028.

Extensions of credit under the ABL are subject to availability under a borrowing base comprised of various percentages of the value of eligible inventory and accounts receivable, which also serves as collateral for borrowings under the ABL. Borrowing availability was $11.0 million as of the ABL Effective Date. The ABL contains both affirmative and negative covenants, as well as certain financial covenants that are triggered if the availability drops below a certain level. These financial covenants remain in effect as long as the availability stays below that certain level. The Company is in compliance with such covenants as of December 31, 2025. 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 December 31, 2025, the ABL bears interest at 5.5% and the Company had borrowing availability of $25 million, of which $0.5 million was reserved for the movement in mark to market valuation of our foreign currency derivatives and $0.2 million was reserved to collateralize standby letters of credit for an office lease security deposit. The Company incurred $0.9 million in deferred financing costs that are presented as an asset and amortized to interest expense over the term of the ABL.

Our restricted cash, restricted cash equivalents and restricted certificates of deposit balances were $3.9$0.5 million and $0.7$3.9 million as of December 31, 20242025 and 2023,2024, respectively. Restricted deposits of $0.3 million as of each of December 31, 20242025 and 2023, respectively,2024 relate to a customer deposit for purchase of railcars. RestrictedThere were no restricted deposits as of $0.3December 31, 2025 and $0.2 million andof $0.1restricted milliondeposits as of December 31, 2024 andthat 2023, respectively, arewere used to collateralize standby letters of credit with respect to certain performance guarantees. The standby letters of credit outstanding as of December 31, 20242025 are a requirement as long as the performance guarantees are in place. Restricted deposits of $3.3$0.2 million and $0.3$0.1 million as of December 31, 20242025 and 2023,2024, respectively, are used to collateralize the corporate card program. There were no restricted deposits as of December 31, 2025 and $3.3 million of restricted deposits as of December 31, 2024 that were used to collateralize foreign currency derivative contracts.

Benefits under our pension plan are frozen and will not be impacted by increases due to future service and compensation increases. The most significant assumptions used in determining our net periodic benefit costs are the discount rate used on our pension obligations and expected return on pension plan assets. As of December 31, 2024,2025, our benefit obligation under our defined benefit pension plan was $10.4$10.3 million, which exceeded the fair value of plan assets by $1.1$1.3 million. WeA contribution of $7 thousand was made no contributions to our defined benefit pension plan during 2024.2025. WeAs mayof beDecember required31, 2025, the Company expects to make acontributions contributionof approximately $0.7 million to ourits pension plan in 20252026 to meet its minimum funding requirements. During 2023, the Company offered a one-time, lump-sum pay-out option to its terminated vested participants. For further information about our defined benefit pension plan, see Note 15 - Employee Benefit Plans. Funding levels will be affected by future contributions, investment returns on plan assets, growth in plan liabilities and interest rates.

Operating Activities. Our net cash provided by operating activities reflects net income (loss) 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 lead to significant fluctuations in our operating profits and cash from operating activities.

Our net cash provided by operating activities for the year ended December 31, 20242025 was $44.9$34.8 million compared to $4.8$44.9 million for the year ended December 31, 2023.2024. Our net cash provided by operating activities for the year ended December 31, 2025 reflects changes in working capital, including an increase in accounts and contractual payables of $10.8 million. The increase in accounts payable relates to purchases of raw materials on hand as of December 31, 2025 to be used in the production and delivery of railcars in 2025 and 2026. Our net cash provided by operating activities for the year ended December 31, 2024 reflects changes in working capital, including a decrease in inventory of $54.7$54.9 million, offset by a decrease in accounts payable of $38.3 million and increase in accounts receivable of $6.1 million, all of which correlate directly with the increase in deliveries in 2024. Our net cash provided by operating activities for the year ended December 31, 2023 reflects changes in working capital, including an increase in inventory of $61.0 million to meet production needs for the start-up of several new railcar orders, offset by an increase in accounts payable of $39.9 million related to those purchases of inventory.

Investing Activities. Net cash used in investing activities for the year ended December 31, 20242025 was $5.0$9.1 million asand included cash paid in connection with our acquisition of CRC, a resultleading distributor of railcar components, net of cash received of $6.3 million and capital expenditures of $3.4 million related to the enhancement of machinery and equipment on current production lines of the Manufacturing Facility. Net cash used in investing activities for the year ended December 31, 20232024 was $4.4$5.0 million primarily as a result of $12.7 million capital expenditures related to the expansionenhancement of themachinery Manufacturingand Facility,equipment offset by $8.4 million proceeds fromon the salecurrent ofproduction railcars available for lease, net of selling costs.lines.

Financing Activities. Net cash used in financing activities for the year ended December 31, 2025 was $5.8 million, which included repayments on term loan of $2.9 million, deferred financing costs of $1.3 million, principal payments on the finance lease of $1.2 million, and employee stock settlements of $0.5 million. Net cash used in financing activities for the year ended December 31, 2024 was $36.0 million and included proceeds from issuance of the Term Loan of $115.0 million, offset by deferred financing costs of $6.1 million, redemption of preferred shares of $85.4 million, dividends paid of $27.9 million, net repayments on revolving line of credit of $29.4 million, and principal payments on the finance lease of $2.1 million. Net cash provided by financing activities for the year ended December 31, 2023 was $2.2 million and included net repayments on revolving line of credit of $9.5 million, proceeds from issuance of preferred shares of $13.3 million and principal payments on the finance lease of $1.0 million.

Our capital expenditures were $5.0$3.4 million for the year ended December 31, 20242025 and primarily related to the enhancement of machinery and equipment on current production lines at the Manufacturing Facility. Our capital expenditures were $12.7$5.0 million for the year ended December 31, 2023,2024, a decrease year over year primarily due to the completiondeferral of thecertain Manufacturingprojects Facility’sto expansion in 2023.2026. We anticipate capital expenditures during 20252026 to be approximately $5.0$7.0 million to $6.0$10.0 million.

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Significant estimates include useful lives of long-lived assets, warranty accruals, pension benefit assumptions, evaluation of property,long-lived plantassets and equipmentright-of-use for impairmentassets and the valuation of deferred taxes. Actual results could differ from those estimates.

We historically provided pension and retiree welfare benefits to certain salaried and hourly employees upon their retirement. Benefits under our pension plan are now frozen and will not be impacted by increases due to future service.service and compensation expense. The most significant assumptions used in determining our net periodic benefit costs are the discount rate used on our pension and post-retirement welfare obligations and expected return on pension plan assets.

At the end of each year, we determine the discount rate to be used to calculate the present value of our pension plan liability. The discount rate is an estimate of the current interest rate at which our pension liabilities could be effectively settled at the end of the year. In estimating this rate, we look to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. As of December 31, 2024,2025, we determined this rate on our pension plan to be 5.67%,5.46%, ana increasedecrease of 0.66%0.21% from the 5.01%5.67% rate used as of December 31, 2023.2024. A change of one hundred basis points in the discount rates used during the year ended December 31, 20242025 would have the following effect:

AsDuring ofthe year ended December 31, 2024 and 2023,2025, we concludedreleased that,the based on evaluationmajority of the positivevaluation allowance in the United States on federal and negative evidence, primarily our history of operating losses, it is not more likely than not that we will realize the benefit of ourstate deferred tax assets. As of December 31, 2024,2025, we had deferred tax assets of $83.7$78.2 million for which there was a valuation allowance of $67.1$13.7 million and we had total deferred tax liabilities of $15.5$11.5 million.

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.

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 forged, cast and fabricated railcar parts and supplies for all railcar types.

Total net railcar orders received for the threesix months ended MarchJune 31,30, 2026 were 7093,550 units, consisting of 5093,150 new railcars and 200400 converted and rebodied railcars, compared to orders for 1,2502,476 units, consisting of 1,2501,776 new railcars and 0700 converted and rebodied railcars, for the threesix months ended MarchJune 31,30, 2025. Total backlog of unfilled orders was 2,0583,972 units as of MarchJune 31,30, 2026, compared to 1,926 railcars as of December 31, 2025. The estimated sales value of the backlog was $156$344 million and $137 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The decreaseincrease in the number of net railcar orders received for the threesix months ended MarchJune 31,30, 2026 compared to the prior year period isrepresents athe reflectioncontinued growth of industrythe orderCompany’s cadence.commercial footprint.

Three Months Ended MarchJune 31,30, 2026 compared to Three Months Ended MarchJune 31,30, 2025

Our consolidated revenues for the three months ended MarchJune 31,30, 2026 were $64.3$113.1 million, compared to $96.3$118.6 million for the three months ended MarchJune 31,30, 2025. Manufacturing segment revenues for the three months ended MarchJune 31,30, 2026 were $53.0$104.3 million, compared to $90.2$110.8 million for the corresponding prior year period. The $37.2$6.5 million decrease in Manufacturing segment revenues was primarily driven by aan decreaseunfavorable product mix in the volume of railcar units delivered from 710 railcars during the three months ended March 31, 2025, to 577 railcars during the three months ended March 31, 2026 and a lower average sales price in the mix of cars delivered in the current period. Aftermarket segment revenues for the three months ended MarchJune 31,30, 2026 were $11.4$8.9 million, compared to $6.1$7.9 million for the three months ended MarchJune 31,30, 2025, primarily reflecting increasedrevenues volumegenerated ofby componentCarly salesRailcar duringComponents, acquired in December 2025, which expanded the threeCompany's monthsaftermarket endedparts Marchdistribution 31, 2026.business.

Our consolidated gross profit was $10.8$6.2 million for the three months ended MarchJune 31,30, 2026, compared to $14.4$17.8 million for the three months ended MarchJune 31,30, 2025. Consolidated gross margin for the three months ended MarchJune 31,30, 2026 and 2025 was 16.8%5.5% and 14.9%,15.0%, respectively. Manufacturing segment gross profit was $7.3$3.3 million for the three months ended MarchJune 31,30, 2026, compared to $12.1$14.9 million for the three months ended MarchJune 31,30, 2025. Manufacturing segment gross margin for the three months ended MarchJune 31,30, 2026 and 2025, was 13.8%3.2% and 13.4%, respectively. The $3.6$11.6 million decrease and 1.9%9.5% increasedecrease in consolidated gross profit and gross margin, respectively, driven by the $4.8$11.6 million decrease and 0.4%10.2% increasedecreases in Manufacturing segment gross profit and gross margin, respectively,respectively reflectresulted lowerfrom salesan volumeunfavorable withproduct amix favorablein pricethe mix.cars delivered in the period. Aftermarket segment gross profit was $2.9 million for theeach of three months ended MarchJune 31,30, 2026 was $3.5 million, compared to $2.3 million for the three months ended March 31,and 2025. The $1.2 million increase in Aftermarket segment is driven by favorable volume.

Consolidated selling, general and administrative expenses were $11.4 million for the three months ended March 31, 2026, compared to $10.5 million for the three months ended MarchJune 31,30, 2026, compared to $10.1 million for the three months ended June 30, 2025. The $0.9$0.4 million increase in consolidated selling, general and administrative expenses was primarily due to a $0.4 million increase in finance expenses and a $1.3$0.5 million increase in legal expenses, offset by a $0.9 million decrease in stock-based compensationcosts during the three months ended MarchJune 31,30, 2026. Manufacturing segment selling, general and administrative expenses were $0.4$0.6 million for the three months ended MarchJune 31,30, 2026, compared to $0.4 million for the three months ended MarchJune 31,30, 2025. Manufacturing segment selling, general and administrative expenses for each of the three months ended MarchJune 31,30, 2026 and 2025, were 0.8%0.6% and 0.4% of revenue.revenue, respectively. Aftermarket segment selling, general and administrative expenses were $0.9 million for the three months ended MarchJune 31,30, 2026, compared to $0.6$0.5 million during the three months ended MarchJune 31,30, 2025. Corporate selling, general and administrative expenses were $10.1$8.9 million for the three months ended MarchJune 31,30, 2026, compared to $9.6$9.2 million for the three months ended MarchJune 31,30, 2025, primarily driven by the aforementioned increasesincrease in finance and legal expenses and the corresponding reduction in stock based compensationcosts during the three months ended MarchJune 31,30, 2026.

Our gain on change in fair market value of Warrant liability was $49.1$24.2 million for the threesix months ended MarchJune 31,30, 2026, compared to $52.9$5.3 million for the threesix months ended MarchJune 31,30, 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 sharesimplied underlyingwarrant the outstanding warrants.shares.

Other Income (Expense) Income

Other incomeexpense was $0.2$24.0 millionthousand for the threesix months ended MarchJune 31,30, 2026, compared to other expenseincome of $0.1$3.2 million for the threesix months ended MarchJune 31,30, 2025. The increasedecrease 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 favorable$0.1 changemillion in unrealized gains and lossesloss on foreignsale currency.of assets held for sale.

Income TaxesTax Provision (Benefit)

Our income tax provision was $3.7$1.3 million for the threesix months ended MarchJune 31,30, 2026, compared to our income tax provisionbenefit of $1.8$50.9 million for the threesix months ended MarchJune 31,30, 2025. The income tax provisionbenefit isprimarily duereflects tothe changesrelease of the majority of the valuation allowance in the mixUnited ofStates incomeon amongfederal jurisdictions with different statutorydeferred tax ratesassets andduring the impactsix ofmonths permanentended items.June 30, 2025.

Our primary sources of liquidity are our cash and cash equivalent balancesequivalents 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 MarchJune 31,30, 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 MarchJune 31,30, 2026.

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 MarchJune 31,30, 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 MarchJune 31,30, 2026, the ABL bears interest at 5.5%.

As of MarchJune 31,30, 2026, the Company had $31,253$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.

The following table summarizes our cash flow activities for the threesix months ended MarchJune 31,30, 2026 and 2025:

Operating Activities. Our net cash usedprovided inby 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 usedprovided inby operating activities for the threesix months ended MarchJune 31,30, 2026 was $4.3$7.8 million compared to $12.8$21.3 million provided by operating activities for the threesix months ended MarchJune 31,30, 2025. Our net cash usedprovided inby operating activities for the threesix months ended MarchJune 31,30, 2026 reflects changes in working capital, including a decrease in inventory of $10.3 million and an increase in inventories of $10.2 million, a decrease in accounts and contractual payables of $3.5 million, and an increase in income taxes payable of $1.4 million, partially offset by an increase in customer deposits of $5.3$8.3 million. Our net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2025 reflects changes in working capital, including an increaseincreases in accounts payable of $18.6$41.2 million,million and an increase in customer deposits of $17.6 million, offset by increases in inventory of $6.6$32.8 million and accounts receivable of $5.9$3.7 millionmillion. and aThe decrease in otherinventory assetsrelates to inventory on hand at December 31, 2025 used in production of railcars delivered during the period, and liabilitiesthe increase in accounts payable relates to purchases of $9.8raw million.materials used to support production during the six months ended June 30, 2026.

Investing Activities. Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $0.1$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.Facility and $0.4 million payment of holdback liability in connection with the CRC acquisition. Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2025 was $0.3$0.4 million and consisted of capital expenditures of $0.9 million related to the enhancement ofadditional machinery and equipment on current production lines of the Manufacturing Facility.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 threesix months ended MarchJune 31,30, 2026 was $7.0$7.8 million which included borrowing and repayment on revolving line of credit of $8.0 million, repayment on term loan of $6.6$7.3 million, and employee stock settlements of $0.4 million. Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2025 was $2.8$4.1 million which included deferred financing costs of $1.3 million, repaymentrepayments on term loan of $0.7$1.4 million, employee stock settlements of $0.5 million, and principal payments on the finance lease of $0.3$0.8 million.

Our capital expenditures were $0.1$0.9 million infor the threesix months ended MarchJune 31,30, 2026,2026 compared to $0.3 million in the three months ended March 31,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 onused currentin production lines at the Manufacturing Facility,manufacturing, as well as investment in new machinery and equipment related to production of tank cars.