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Welcome to FreightCar America's First Quarter 2025 Earnings Conference Call. At this time, all participants' line are in a listen-only mode. For those of you participating on the conference call, there will be an opportunity for your questions at the end of today's prepared comments. Please note, 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.

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 this conference call related 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 the control of the company that may cause actual results to materially differ from those expressed in the forward-looking statements. We expressly disclaim any duty to provide updates to our forward-looking statements, whether as a result of new information, future events, or otherwise. During today's call, there will also be a discussion of some items that do not conform to U.S. Generally Accepted Accounting Principles or GAAP. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the earnings release issued yesterday afternoon. Our earnings release for the first quarter of 2025 is posted on the company's website at freightcaramerica.com along with our 8-K, which was filed pre-market this morning. With that, I'll turn it over to Nick for his few opening remarks.

Thank you, Chris. Good morning, everyone, and thank you all for joining us today. I'm very pleased to share another quarter of exceptional performance for FreightCar America, driven by robust railcar orders, continued market share gains as the fastest-growing railcar manufacturer in the industry, and significantly improved profitability with strong margin expansion. As we anticipated, our first quarter results reflect planned lower railcar production as we dedicated a portion of our manufacturing capacity to deliver large custom fabrications. This effort further showcases our operational flexibility and ability to manufacture large-scale complex fabrications that are tailored to the unique needs of our customers. Despite fewer deliveries during the quarter, we achieved strong profitability and met our expectations. In short, we executed exactly as planned and remained on track to achieve our full year goals for 2025. We saw significant margin improvements during the quarter. Our gross margin expanded to 14.9%, up 780 basis points year-over-year, nearly doubling from the same period last year. This margin strength clearly demonstrates the disciplined execution of our manufacturing presence. The improved margins translated directly to the bottom-line with adjusted EBITDA of $7.3 million, exceeding last year despite lower revenue and deliveries. These results underscore our team's commitment to profitable growth and operational efficiency. We have consistently emphasized profitable execution, and our Q1 results reflect this commitment. Our commercial pipeline remains robust. We booked 1,250 new railcar orders by approximately $141 million in the first quarter, marking a strong start to the year. These orders drove our backlog to 3,337 railcars totaling $318 million, providing excellent visibility well into 2025. Importantly, FreightCar America was the fastest-growing railcar manufacturer in North America according to published ARCI data, expanding our addressable market share from 8% to 27% over the last 12 months. Despite lower industry-wide orders, more customers continue to choose us, validating our product quality, reliability and value-added solutions. Our strategic advantages underpin this success. Operating from a purpose-built facility, we maintain an agile manufacturing platform that quickly responds to customers' needs. This vertically integrated campus enables rapid adjustments and seamless customization of product. Strategically positioned near the US border, our facility reduces supply chain delays and transit times, effectively minimizing industry bottlenecks. Additionally, our alignment with USMCA guidelines insulates our operations from current tariff uncertainties, all while providing us with a distinct competitive edge through enhanced responsiveness, shorter lead times and operational adaptability. This unique blend of 120-year legacy as a pure-play railcar manufacturer with a start-up agility continues to drive our rapid growth and market share gains. Turning to the industry environment. We remain cautiously optimistic about the overall outlook for railcar equipment demand over the next 24 months. Fundamental market drivers such as consistent rail traffic levels and ongoing railcar replacement cycles continue to be healthy and supportive, while the timing of any orders might shift due to customer preferences or logistical considerations. Looking ahead, our commercial pipeline remains very active. Customer inquiries continue at a strong pace, and our discussions for additional railcar orders are ongoing. We anticipate industry-wide deliveries will pick up momentum throughout the remainder of the year, and our robust backlog positions us exceptionally well to meet this growing demand. With this context, we reaffirm our full year 2025 guidance. Our Q1 performance and positive trends give us confidence in achieving our targets. We continue to expect full year deliveries of between 4,500 to 4,900 railcars, generating revenue of $530 million to $595 million. Our adjusted EBITDA remains targeted between $43 million and $49 million. Notably, production deliveries will ramp up significantly in the second half of this year, supported by sequential quarterly growth as we convert backlog into sales. Our Mexico facility can produce over 5,000 railcars annually, and our proven team can process and processes position us well to deliver these results. With that, I will now turn the call over to Matt to provide further insights on the market dynamics.

Thank you, Nick. I'm pleased to share that FreightCar America achieved its strongest quarterly market share performance in over 15 years, securing orders for 1,250 railcars valued at approximately $141 million. This represents 25% of all new railcars ordered in the quarter and 36% within our addressable market. These exceptional results clearly demonstrate that our agile manufacturing capabilities and rapid responsiveness to shifting customer needs continue to resonate strongly in the marketplace. We concluded the first quarter with a robust backlog of 3,337 units valued at approximately $318 million, marking a near 20% sequential increase from year-end. Total industry orders over the trailing 12 months came in around 24,000 units, roughly 15,000 units below historical replacement levels. This shortfall in order activity has created pent-up demand, which we anticipate will materialize beginning in the second half of the year, providing a meaningful tailwind as the fundamentals of railcar demand remains strong and steady. Despite the slower industry order environment early in the year, our trailing 12-month market share has expanded to 27% within our addressable market and 16% of the overall market. This clearly illustrates our ability to gain market share even in the challenging conditions, positioning us favorably as order volumes normalize back toward historical replacement rates. Our ability to win is driven by the strength of our broad and differentiated product portfolio and pure-play manufacturing capabilities. The versatility of our products, combined with our flexible manufacturing platform consistently enabled us to meet diverse customer demands. Our proven ability to convert customer inquiries into firm orders, highlights our strategic market position, customer relationships and growing reputation for responsiveness and reliability. Long-term industry demand remains healthy, supported by steady annual replacement cycles anticipated to range between 35,000 and 40,000 units. Given these positive market fundamentals, we are confident that our versatile operations and our strategic capabilities position us well in the market. I'll now turn the call over to Mike for comments on our financial performance. Mike?

Thanks, Matt, and good morning, everyone. I'd like to begin by sharing a few first quarter highlights. Consolidated revenues for the first quarter of 2025, totaled $96.3 million with deliveries of 710 railcars, compared to $161.1 million on deliveries of 1,223 railcars in the first quarter of 2024. This was a result of lower deliveries in the quarter that we anticipated due to dedicating a portion of manufacturing capacity to deliver large custom fabrication. Additionally, the prior year period presented a challenging comparison due to a timing benefit associated with railcar deliveries, delayed by the US, Mexico border closure in late December 2023, which subsequently shifted revenue recognition into early January 2024. Gross profit in the first quarter of 2025 was $14.4 million with a gross margin of 14.9%, compared to gross profit of $11.4 million and gross margin of 7.1% in the first quarter of last year. Higher gross margin performance was driven primarily by a favorable product mix and improved production efficiencies. SG&A for the first quarter of 2025, totaled $10.5 million, up from $7.5 million in the first quarter of 2024. Excluding stock-based compensation, SG&A as a percentage of revenue increased approximately 47 basis points. In the first quarter of 2025, we achieved adjusted EBITDA of $7.3 million, compared to $6.1 million in the first quarter of 2024, driven primarily by favorable product mix and operational efficiencies. Adjusted net income for the first quarter of 2025 was $1.6 million or $0.05 per diluted share, compared to adjusted net income of $1.4 million or a loss of $0.10 per share in the first quarter of last year. During the quarter, we had a $52.9 million non-cash adjustment on our warrant liability. As a reminder, the warrant liability adjustment accounted for an adjusted net income is a non-cash item with no effect on shares outstanding or earnings per share calculations, reflecting only the valuation change of the warrant holder’s investment. This quarter, we generated $12.8 million in operating cash flow, marking our fourth consecutive quarter of positive cash flow from operations. Notably, this is a $38.1 million swing from the first quarter of 2024, and we used $25.3 million of cash for operations. Additionally, our adjusted free cash flow for the first quarter of 2025 was approximately $12.5 million, a $43 million improvement compared to the first quarter of 2024, and we consumed $30.5 million in adjusted free cash. This quarter's robust cash generation was driven by our strong commercial and operational pillars, as well as our improved capital structure. As a result, we ended the quarter with cash holdings of $54.1 million and no outstanding borrowings on our revolving credit facility. Capital expenditures for the first quarter totaled $0.3 million. For the full year 2025, we continue to expect capital expenditures in the range of $5 million to $6 million, including approximately $1 million for our tank car retrofit program. As we consistently generate positive cash flow, we remain committed to our disciplined capital allocation priorities, which include reducing leverage to our normalized range of 1x to 2.5x and further strengthening our financial position. Supported by strong momentum and positive cash flow generation, we are well positioned to invest in future growth opportunities and access lower-cost financing, while maintaining confidence in our full year outlook. With that, we will now open the line for Q&A.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mark Reichman with Noble Capital Markets Please proceed with your question.

Thank you. I just had 2 questions. The first is, would you just elaborate on which segments of your product suite are driving sales growth? And then which products is the company picking up market share?

Hi Mark, it's Nick. I'll answer that one and then Matt can fill in some additional details. So, when you think about the segments, current product portfolio, we're seeing orders in all the segments and the products that we offer. So we've got cover office. We've got open top office, we've got Milligan, Agon. We're seeing a reasonably nice mix across all product types in those. And we don't really spread the segments and the products any further than that outside. So, I think that's what you're asking is, did we see the orders on any given product type, especially or was it across the broad. It was really a nice healthy mix, which allows us to utilize multiple VS lines for our product, and you think about our planning process. Matt, anything I missed on that?

I think you got it really well, Nick..

Hopefully that answers your question, Mark.

Sure. And then the second question is, what are your considerations for putting a fifth production line into service?

What a question? I'll answer that one. So we've always talked about intentions to have ramped up 5,000 unit capacity in our facility. And we've always talked about customer demand increased, then we have a fifth line under roof that is we could turn on in under 90 days, but probably less than $1 million of CapEx. So pretty quickly, we could turn it on and that would probably add another 1,000 to 1,200 unit capacity. So really, we'll be looking for a trigger that we see a sustained customer demand over, let's say, 5,200 a year that would justify a commissioning that fifth line. It's built. The roof is -- the building is built, the space is there under roof, but we wouldn't fully commission it until we saw those triggers on market demand.

Well, here is the basis for my question. In the past, you've always talked about that you probably would not do it, unless the industry moved past replacement cycle. And that if you were to enter the tank car market, which you plan to do that you might squeeze out lower margin products for that productive capacity. And here we are in the first quarter, and we've seen that you used productive capacity for after higher-margin, aftermarket parts versus railcars. So it just seems to me that if you're going to get into tank cars that perhaps watching the replacement cycle is kind of the wrong signal that I might expect a fifth line to be added sooner than later, maybe even ahead of the tank car entering the tank car market, so you don't have to push out any other products for that -- so you don't have products competing for that productive capacity. So is that the right way to look at it? Or are you still kind of pegged to the industry numbers?

I think it's aligned with the right way looking at incomplete. So let me just add some more color to it. So when I answered the first question, it was purely simply on what would the trigger be on pure railcar demand? And if we just took that in isolation, then that's where the first answer comes due, it would be sustained demand for us over, let's say, 5,200 units a year, would allow us to turn that commission that fifth line for additional railcar capacity, et cetera, et cetera. As we go into tank cars in future years, then that tipping point is with additional product portfolio, additional products in our product portfolio, that tipping point becomes arguably more ways of reaching that tipping point, which tank cars could trigger that fifth line. But the last thing you talked about is non-railcar or new car products. So that could be conversion work, which doesn't typically get reported through as a new railcar product in orders, but it does in deliveries. So it could be conversion work. It could be adjacent manufacturing like these large subassemblies and large fabrications that we shipped in Q1, if they were sustainable. Typically, the nature of those is they are highly commissioned for a given product. So predictability is a little bit off. So -- but any of those could trigger that fifth line and that fifth line may be used the space for manufacturing that's not particularly pure railcars. So that will be an option as well. We keep all those as an option. But my answer to the question was really about the pure railcar trigger would be about 5,200 new units. But if -- of course, if customers would like a large number of conversions. That's an option, a large number of ancillary products, that's an option. And typically, because that building is already under roof and that it's a relatively low volume of CapEx to commission it and relatively low proportion of time as in less than 90 days. That's always something that's available to us should the customer demand on any of that product or portfolio or adjacencies trigger it, and we would do that accordingly.

That’s great. Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Brendan McCarthy with Sidoti. Please proceed with your question.

Great. Good morning, everyone. Thanks for taking my questions there. Wanted to start off on industry order flow. It looks like you had a very strong first quarter at about 25% share. We've seen commentary from other railcar manufacturers kind of highlighting the hesitancy from customers that's kind of flowing through to order conversions. Just kind of wondering if you can differentiate what you're seeing in your order flow versus maybe the industry more broadly?

Yes, I'll take that, Brendan. And then if Matt has anything to add, he can add onto. So I'll step back to begin with the -- the drivers that drive the overall rail industries are still pretty consistent -- the railroads utilizations, the railroad consumptions, et cetera. So those however macro drivers are still pretty resilient, which then gets down to the replacement cycle that we talk about, typically 40,000 units a year. I think we've been experiencing that there's some transitional timing of which quarter those orders get placed in as opposed to we're not really seeing a significant overall drop from that 40,000 and timing from quarter-to-quarter, one year may be 38,000 the following year, maybe 42,000. But we still believe that if you took the next 24 months, the average -- the replacement rates will still be about 40,000 plus or minus 5%, which would be consistent with where they've been. When you drill that down to the product portfolio we have on different products, we're seeing some pretty resilience. So on our Open Top Hoppers, we believe we're number one in that product portfolio of categories with our Versaflood product. That's a consistent customer demand for that, which is great for us. Now we've recently last year talked about putting a line on Covered Hoppers, which has seen great results. And they are typically 40% of the market, so there's a large demand for those. So they are probably not quite 40%, more like 25% of the overall market. But we see a large demand for those. So it s a bit product side, but our overall experience is that our pipeline is strong. Customers are still wanting to talk to us about orders in the pipeline. We've got a great value proposition, I believe, and that's what's creating this our ability to grow our market share regardless of whether the broader market softens quarter-on-quarter or not. We've got a good outlook for the rest of the year, which is why we are reaffirming our guidance. And we've got a healthy -- what I would consider a healthy pipeline. So hopefully, that answers your question, Brendan, if not, just feel free to refine it.

No, that's great, thanks Nick. I appreciate the color. So just to clarify, have you seen order conversion rates slow? Or I guess, how are your conversations with customers ultimately going through the first five months of the year?

Q1 order intake was our highest proportion in say for 15 years, I think, Matt, was -- so I think that answers that question. So it was a strong order intake quarter for us. You know, we've always talked about the process of working with customers on orders is anything from 18 months to three-year process from first concept of -- there's some sort of need, whether we are a mining operation or agricultural operation or you name it. And then they get from a need of replacement of product to design. So that whole gestation period is usually a year or more. And then once you get to the final designs and the sort of trying to win the bid, that's the bit that sort of we record as our orders on in Q1. So we have good visibility on all of our -- all those steps in our pipeline. There has been some nervous of converting the pipeline into order placement, which is -- was noises behind us, but we've I think we've crossed that bridge so much in Q1. But hopefully, that gives you some insight. We report orders as in orders booked, but there's a lot of pre-work that goes behind that. That is that gestation of the project from concept through to winning an order, and we're still seeing a healthy pipeline there.

That makes sense. And at the industry level, is it fair to say you still expect industry deliveries to total somewhere between $35,000 and $40,000 for full year 2025?

Yes. I mean, I think last year, the most forecast was sitting around 36% in the industry ended up 42%. That's what 2024 out of that. I don't think 2025 will be as high as 2024 at the 42,000 units shift. I think -- but somewhere between that range of probably 34% to 40% is probably accurate. And then I would expect any softening of deliveries in 2025 would probably roll over into 2026. So the average will probably be out around that 30,000 to 40,000 units shipped delivered

Got it. That's helpful. And can you provide any insight on what you're looking for, for quarterly delivery cadence for the rest of this year?

Hey, Brendan, it's Mike. Yeah. Q2, we'll see a step-up from Q1, albeit it won't be, I'd say, a significant step-up as we changed from the large custom fabrications and have a number of changeovers happening in Q2. Then when you get to Q3 and the back half, which we've kind of talked about before, will be much more back half heavy. Q3 and Q4 will really step up to get you to the guidance. But Q1 to Q2, you will see an uptick in Q2, but not dramatic uptick, just given the number of changeovers we have for the orders on the books. Hopefully, that helps a bit.

Yes, that's helpful. Thanks, Mike. And Nick, I know you mentioned there was a nice mix across all product types driving revenue growth this quarter. But when you look at gross margins, was there a specific railcar type that really -- I know you mentioned there was a favorable product mix that kind of drove the gross margin increase. Are you able to provide color on what specific railcar types you're referring to?

I'll ask Mike to break that down for us, if you can.

Yeah. So Brendan, when you look sequentially, our gross margins went down just slightly from Q4 to Q1. When you look year-over-year, it is a pretty dramatic different. And that's largely driven by the product mix from last year. And I can say from when we talked on the Q4 call last year in one product we were making back then were box cars, which is notoriously in the industry, a pretty low-margin car falling out of our backlog. So that's really what's driving that Q1 2024 margin rate to look low.

Understood. And one more question for me just on SG&A. It looks like a nice sort of large increase there. And I think you mentioned there was a legal expense in that number. Can you provide additional color on that legal expense?

Not recalling that piece. SG&A was just a little high in Q1 as we ramped up some of our spending in Q1, and it's really just timing. For the full year, we expect SG&A to be pretty much in line with what you've seen last year, especially as SG&A as a percentage of revenue. just heavier in Q1 from a timing perspective, but you'll see that number fall off in Q2 and then be at a normal rate Q2, Q3, Q4.

Great. Thanks everybody. Congrats on the quarter. That's all for me.

Thanks Brendan.

Thanks Brendan.

Thank you. Our next question comes from the line of Aaron Reed with Northcoast Research. Please proceed with your question.

Hi Mike. Hi, Nick. Thanks for taking my call here. Just wanted to follow-up on and figure out in terms of the new orders that you're able to pick up. Can you give a little more color around what types of cars that might be or the margin profile on it, just so we can get an idea of what next year is starting to look like as well to since we're knocking on the door being halfway through this year?

Yeah. I'll do the product types that we're seeing, and then if any questions on margin that we haven't already answered. We'll try to where those. So the product center, we typically talked about how we like to keep -- we have the ability to build any product on any line. But from a productivity perspective, we want to try and keep light products on the same line, if that makes sense to avoid unnecessary changeovers. So as I mentioned on our Q1 order intake, we've seen product that falls on all of our lines. So that's a different product across that spectrum. In a nice mix that we got significant looks of orders that go on each of our production lines. So that's -- and if you think about our product portfolio, it's everything in the railcar business, which currently don't have auto racks or tanks of shipping this year, tank cars to the shipping this year, but tank cars in future years for sure. But this year, we're seeing products being ordered for where we are receiving the orders for all the products we have in our product portfolio in those four lines. So it's a nice mix from a supply chain operational perspective that keeps all those lines fully utilized. From a margin perspective, I think Mike answered it while we look at some of the margins from prior years. There's a notoriously industry box cars are not the highest particular margins. We don't expect to have any box cars in this year so far. We don't have any enough, pipeline at the moment. So I think that answer is really the -- what we've communicated consistently on our margin, the increase is the, I guess, the not inclusion of box cars. It's just the healthy benefit in our pipeline. But hopefully that answers your question, Aaron.

Yeah. No, that's perfect. Another question was around you're going to be spending money to bring that additional line online here, so then you're going to be able to start working on the tank car. Do you have an idea of like when that first tank car, might roll off line just even a ballpark idea?

So let me just break that into some clarifying points. So we have a couple of things we've mentioned. We've mentioned that we have a fifth base line, that's a fifth manufacturing line. So that's independent of whether we do tanks. It may be used for tank cars, but it's independent. It doesn't need to be to tank. So that's the conversation I have it, more earlier, that fifth line will be triggered by any demand. That's one thing. The second one is we have a tank car conversion program, which we booked last year, which starts shipments start sometime through the first half of 2026 on that. And we are -- this year, we'll be spending CapEx to have all that up and ready and running from into revenue in late first half, second half of 2026. So that's the tank car retrofit program we talked about. And then we've also talked historically about our intention to move into new tank cars and that would be a separate conversation on there's some CapEx and some preparations to do for that. That won't be in 2025. We are working to work on land and orders probably for deliveries in the out years -- future years after 2026. So those three separate themes, a fifth manufacturing line is not necessarily related to tank cars that could be any trigger on demand, would put that in place. That would take less than $1 million or less than 90 days to configure and be production-ready. So that's one item. The second one is the tank car retrofit program, which we've won. It's a contract. We are going full steam ahead of that. That will start shipping call it, roughly this time next year, 12 months from now, sometime in 2026, runs through about 18 months. And then the third at theme is new tank cars. We have tank car approved designs by the AAR, and we will use the tank car retrofit program to launches into that new tank car space as a new car provider. Hopefully, that clarifies those three things we have.

Yes, absolutely. And one last follow-up question to that, and I think part of it as I phrased it wrong or misunderstood. So that fifth line that you're going to be bringing operational. Is that because you have a specific need based on the orders that are coming in? Or is that preemptive in anticipation of orders down the road, I guess, is really what I meant to ask.

So currently, we don't have a communication or committed plan to turn that fifth line on Mark's question earlier was what would be the trigger points to one or two commission it. So with the guidance we've put for 2025 in that guidance, the assumption is we will do all our we'll deliver that guidance without utilizing that fifth line. I think Mark's question was what would be the trigger points or ticker points that would drive the utilize -- the turning on of that fixed line. But currently in our guidance for this year, you don't have it. If customer demand rapidly changes and captures in a positive surprise, we can revisit that and we address that, but it's not in our current guidance for 2025.

Okay. Apologies. Thank you much. Makes sense.

Thank you. Our next question comes again from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Thank you. Just a couple of follow-ups. And you may have answered this and I may have just missed it. But in terms of that fifth line, you mentioned properly that, that can be used for more than just tank cars. And that the cost would be about what did you say, like a little over $1 million, what would the cost be to make that line ready for the production of tank cars?

I'm going to break down to two separate things, if I can, Mark. So there's the fifth line to make it exactly the same as any of our existing four lines is less than $1 million and less than 90 days. So that's one thing. That would replicate any one of the four lines we've got now. Then there's a separate step that if you wanted to add tank car manufacturing to our facility, you wouldn't have to do it on that new line. You could choose any line you want and there's a series of it, fixtures and additional capital equipment to procure, install, et cetera. And we would trigger that with a tank car order. Those two things are not connected. They fit line for general rail manufacturing railcar manufacturing or as we've demonstrated in Q1, applications, et cetera, can be done in less than today's million dollars [ph]. Separate to that, for our tank car manufacturing program, there would be some additional investments to support that. And it's not -- it doesn't happen in the fifth line, it can be on any line, but they will be independent to each other.

And how much would it be? And how much time does it take?

Hi Mark, this is Mike. At this point, we're not going to comment specifically on that CapEx spend and timeline. As we move closer to entering the tank car market, I will definitely provide the detail on the CapEx growth that would be needed for that as well as the timeline. But right now, we're not prepared to provide that guidance.

Okay. Okay. Understandable. And then just the last question is when I'm just looking at our model and I'm looking at gross margin as a percentage of revenue back in 2022, I think it was 7.1%; 2023, 11.7%; 2024, 12%; and you saw gross margin expand from the first through the fourth quarter of 2024 and here we are at 14.9% in the first quarter. So, I guess what I'm just kind of wondering, have we kind of hit a new band or range for gross margin. I mean, would you continue -- I guess, maybe first quarter might be a little high. But in terms of kind of a normalized gross margin, what are your thoughts on that? And how much does products mix figure into that? And have you kind of settled into kind of a normalized product mix? Or will we see continued kind of fluctuations quarter-to-quarter or year-to-year in product mix? Kind of a long question, but hopefully it makes sense.

Hey Mark, this is Mike. Yes, I'll take that one. So, you're right. We've seen gross margin expansion annually each year the past several years. I'd say if you look at our guidance and kind of work back, you'll see we are anticipating gross margin expansion again in 2025. In 2024, we closed around 12%. So, we'd expect that to go up in 2025. Product mix definitely plays in from a quarter-to-quarter perspective. But when you look over 12 months, it will tend to normalize itself. We had a pretty healthy net across product types in 2024. I will say, as I mentioned earlier, one of the answers, box cars was in Q1, which was a weight down. Hence, you'd expect naturally a step-up -- this is going to be the first full year of running all four lines at full capacity. So we're going to be continuing to look rational efficiencies and ways to gain margin expansion as we move forward. So we'll always have that focus on that. Product mix wise, again, I will caution, quarter-to-quarter, you can see fluctuations, but over a 12-month stretch, it tends to normalize -- and the 12-month stretch last year absent Q1 is a pretty good indication of where we can be if product mix stays at that nine, 10-month average from 2024 and 2025.

Okay. Great. That's very helpful. Thank you very much.

You’re welcome.

Welcome.

Thank you. I am not showing any further questions at this time. I would now like to turn the call back over to Nick Randall for any further remarks.

Thank you. I just like to finish some with some comments. So Q1, 2025 marks another quarter of disciplined execution and continued momentum, reflected in robust railcar orders, significant market share gains and substantial margin expansion. Strong financial performance highlighted by gross margin expansion to 14.9%. Adjusted EBITDA growth despite lower revenue underscores our commitment to profitable growth. Enhanced operational advantages, including agile manufacturing and commercial execution, position FreightCar America uniquely within the industry. And with our current backlog of $318 million in our robust inquiry pipeline, 2025 is set to deliver sequential growth and significant cash flow generation marking another strong financial year. And with that, my thanks to everyone