CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 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. 24 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. 25 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. 26 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. 27 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. 28 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.