FreightCar America, Inc. Revenue Disclosure

Revenue Recognition

The Company generally recognizes revenue at a point in time as it satisfies a performance obligation by transferring control over a product or service to a customer. Revenue is measured at the transaction price, which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer.

Due to the nature of its operations, the Company is subject to significant concentration of risks related to business with a few customers. Sales to the Company’s top three customers accounted for 26%, 20% and 13%, respectively, of revenues for the year ended December 31, 2025, all of which relate to the Manufacturing segment. Sales to the Company’s top three customers accounted for 13%, 9% and 9%, respectively, of revenues for the year ended December 31, 2024, all of which relate to the Manufacturing segment. Our railcar sales to customers outside the United States were $14,358 and $9,722 in 2025 and 2024, respectively. As of December 31, 2025, 32% of the accounts receivable balance of $12,443 reported on the consolidated balance sheet was receivable from one customer, and 15% and 11% were receivable from a second and third customer, respectively. As of December 31, 2024, 39% of the accounts receivable balance of $12,506 reported on the consolidated balance sheet was receivable from one customer, and 25% and 10% were receivable from a second and third customer, respectively.

Railcar Sales

Performance obligations are typically completed and revenue is recognized for the sale of new and rebuilt railcars when the finished railcar is transferred to a specified railroad connection point. In certain sales contracts, revenue is recognized when a certificate of acceptance has been issued by the customer and control has been transferred to the customer. At that time, the customer directs the use of, and obtains substantially all of the remaining benefits from, the asset. When a railcar sales contract contains multiple performance obligations, the Company allocates the transaction price to the performance obligations based on the relative stand-alone selling price of the performance obligation determined at the inception of the contract based on an observable market price, expected cost plus margin or market price of similar items. The Company treats shipping costs that occur after control is transferred as fulfillment costs. Accordingly, gross revenue is recognized, and shipping cost is accrued, when control transfers to the customer. Payment terms align with standard commercial practices. The Company does not provide discounts or rebates in the normal course of business.

As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as an expense when incurred since the amortization period of the asset that the Company otherwise would have recognized is generally one year or less.

Aftermarket Sales

The Company sells forged, cast and fabricated railcar parts and supplies for all railcar types, and provides aftermarket services including safety training, railcar inspections, and preventative maintenance. Performance obligations are satisfied, and the Company recognizes revenue, as applicable, when parts and supplies are shipped to customers, and when services are performed.

Leasing Revenue

The Company recognizes operating lease revenue on railcars available for lease on a straight-line basis over the contract term. The Company recognizes revenue from the sale of railcars available for lease on a net basis as Gain (Loss) on sale of railcars available for lease since the sale represents the disposal of a long-term operating asset.

Contract Balances and Accounts Receivable

Contract assets represent the Company’s rights to consideration for performance obligations that have been satisfied but for which the terms of the contract do not permit billing at the reporting date. The Company had no contract assets as of December 31, 2025 and 2024. The Company may receive cash payments from customers in advance of the Company satisfying performance obligations under its sales contracts resulting in deferred revenue or customer deposits, which are considered contract liabilities. Deferred revenue and customer deposits are classified as either current or long-term in the consolidated balance sheet based on the timing of when the Company expects to recognize the related revenue. Deferred revenue included in current liabilities in the Company’s consolidated balance sheets as of December 31, 2025, 2024 and 2023, was $539, $8,556 and $5,686, respectively. During the years ended December 31, 2025 and 2024, the Company recognized $8,556 and $5,686 in revenue that was included in contract liabilities as of December 31, 2024 and 2023, respectively.

Accounts receivable represent sales of products to customers in the normal course of business. Accounts receivable are recognized net of an allowance for credit losses. Accounts receivable, net of allowance for credit losses of $18, was $6,408 as of January 1, 2024. The Company has not experienced significant historical credit losses.

Performance Obligations