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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2020 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000-51237

 

FREIGHTCAR AMERICA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

25-1837219

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

125 South Wacker Drive, Suite 1500

Chicago, Illinois

60606

(Address of principal executive offices)

(Zip Code)

 

(800) 458-2235

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, par value $0.01 per share

RAIL

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

YES NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

YES NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o

 

Accelerated filer

x

Non-accelerated filer

o

 

Smaller reporting company

x

 

Emerging growth company

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES   NO   

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

As of October 27, 2020, there were 15,534,829 shares of the registrant’s common stock outstanding.

 

 


FREIGHTCAR AMERICA, INC.

 

INDEX TO FORM 10-Q

 

Item
Number

Page
Number

PART I – FINANCIAL INFORMATION

1.

Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited) as of
September 30, 2020 and December 31, 201
9

3

Condensed Consolidated Statements of Operations (Unaudited) for the
Three and Nine Months Ended September 30, 2020 and 201
9

4

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the
Three and Nine Months Ended September 30, 2020 and 201
9

5

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the
Three and Nine Months Ended September 30, 2020 and 201
9

6

Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 2020 and 201
9

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

4.

Controls and Procedures

34

PART II – OTHER INFORMATION

1.

Legal Proceedings

35

2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

3.

Defaults Upon Senior Securities

35

4.

Mine Safety Disclosures

35

5.

Other Information

35

6.

Exhibits

35

 

Signatures

36


2


PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements.

FreightCar America, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

September 30, 2020

December 31, 2019

Assets

(in thousands, except for share and per share data)

Current assets

Cash, cash equivalents and restricted cash equivalents

$

32,757 

$

66,257 

Restricted certificates of deposit

182 

3,769 

Accounts receivable, net of allowance for doubtful accounts of $1,063 and $91, respectively

10,293 

6,991 

Inventories, net

60,186

25,092 

Assets held for sale

10,383

-

Income tax receivable

109 

535 

Other current assets

4,737 

7,035 

Total current assets

118,647

109,679 

Property, plant and equipment, net

19,443

38,564 

Railcars available for lease, net

38,139 

38,900 

Right of use asset

34,059 

56,507 

Other long-term assets

817 

1,552 

Total assets

$

211,105

$

245,202 

Liabilities and Stockholders’ Equity

Current liabilities

Accounts and contractual payables

$

20,606 

$

11,713 

Accrued payroll and other employee costs

4,258 

1,389 

Reserve for workers' compensation

3,475 

3,210 

Accrued warranty

7,508 

8,388 

Customer deposits

29,775 

5,123 

Deferred income state and local incentives, current

2,219 

2,219 

Lease liability, current

15,102 

14,960 

Current portion of long-term debt

15,825 

-

Other current liabilities

4,750 

2,428 

Total current liabilities

103,518 

49,430 

Long-term debt, net of current portion

4,375 

10,200 

Accrued pension costs

5,754 

6,510 

Deferred income state and local incentives, long-term

3,058 

4,722 

Lease liability, long-term

44,548 

53,766 

Other long-term liabilities

3,446 

3,420 

Total liabilities

164,699 

128,048 

Stockholders’ equity

Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each designated as Series A voting and Series B non-voting, 0 shares issued and outstanding at September 30, 2020 and December 31, 2019)

-

-

Common stock, $0.01 par value, 50,000,000 shares authorized, 13,604,172 and 12,731,678 shares issued at September 30, 2020 and December 31, 2019, respectively

136 

127 

Additional paid in capital

83,657 

83,027 

Treasury stock, at cost, 326,327 and 44,855 shares at September 30, 2020 and December 31, 2019, respectively

(1,341)

(989)

Accumulated other comprehensive loss

(10,359)

(10,780)

(Accumulated deficit) Retained earnings

(24,236)

45,824 

Total FreightCar America stockholders' equity

47,857

117,209 

Noncontrolling interest in JV

(1,451)

(55)

Total stockholders' equity

46,406

117,154 

Total liabilities and stockholders’ equity

$

211,105

$

245,202 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3


FreightCar America, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

(In thousands, except for share and per share data)

Revenues

$

25,202

$

40,651

$

47,857

$

185,020

Cost of sales

29,281

46,061

66,883

191,255

Gross loss

(4,079)

(5,410)

(19,026)

(6,235)

Selling, general and administrative expenses

7,158

7,772

21,105

30,791

Loss on sale of railcars available for lease

-

42

-

5,238

Restructuring and impairment charges

30,103

23,032

31,250

24,351

Operating loss

(41,340)

(36,256)

(71,381)

(66,615)

Interest expense and deferred financing costs

(208)

(223)

(671)

(374)

Other income

160

363

518

765

Loss before income taxes

(41,388)

(36,116)

(71,534)

(66,224)

Income tax benefit

(75)

(387)

(78)

(576)

Net loss

(41,313)

(35,729)

(71,456)

(65,648)

Less: Net loss attributable to noncontrolling interest in JV

(991)

-

(1,396)

-

Net loss attributable to FreightCar America

$

(40,322)

$

(35,729)

$

(70,060)

$

(65,648)

Net loss per common share attributable to FreightCar America- basic and diluted

$

(3.03)

$

(2.83)

$

(5.30)

$

(5.20)

Weighted average common shares outstanding – basic and diluted

12,426,872

12,359,478

12,399,687

12,349,670

See Notes to Condensed Consolidated Financial Statements (Unaudited).

4


FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

(In thousands)

(In thousands)

Net loss

$

(41,313)

$

(35,729)

$

(71,456)

$

(65,648)

Other comprehensive income net of tax:

Pension and postretirement liability adjustments, net of tax

140

44

421

131

Other comprehensive income

140

44

421

131

Comprehensive loss

$

(41,173)

$

(35,685)

$

(71,035)

$

(65,517)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

5


FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands, except for share data)

For the three months ended September 30,

FreightCar America Shareholders

Accumulated

Additional

Other

Total

Common Stock

Paid In

Treasury Stock

Comprehensive

Retained

Noncontrolling

Stockholders'

Shares

Amount

Capital

Shares

Amount

Loss

Earnings

Interest in JV

Equity

Balance, June 30, 2019

12,731,678 

$         127 

$           83,435 

(102,951)

$       (2,348)

$              (8,101)

$             91,088 

$                        - 

$         164,201 

Cumulative effective of adoption of ASC 842

-

-

-

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

(35,729)

-

(35,729)

Other comprehensive income

-

-

-

-

-

44 

-

-

44 

Restricted stock awards

-

-

(1,365)

59,846 

1,365 

-

-

-

-

Employee stock settlement

-

-

-

-

-

-

-

-

-

Forfeiture of restricted stock awards

-

-

-

-

-

-

-

-

-

Stock-based compensation recognized

-

-

480 

-

-

-

-

-

480 

Balance, September 30, 2019

12,731,678 

$         127 

$           82,550 

(43,105)

$          (983)

$              (8,057)

$             55,359 

$                        - 

$         128,996 

Balance, June 30, 2020

13,604,172 

$         136 

$           83,318 

(285,011)

$       (1,281)

$            (10,499)

$             16,086 

$                 (460)

$           87,300 

Net loss

-

-

-

-

-

-

(40,322)

(991)

(41,313)

Other comprehensive income

-

-

-

-

-

140 

-

-

140 

Restricted stock awards

-

-

-

-

-

-

-

-

-

Employee stock settlement

-

-

-

-

-

-

-

-

-

Forfeiture of restricted stock awards

-

-

60 

(41,316)

(60)

-

-

-

-

Stock-based compensation recognized

-

-

279 

-

-

-

-

-

279 

Balance, September 30, 2020

13,604,172 

$         136 

$           83,657 

(326,327)

$       (1,341)

$            (10,359)

$           (24,236)

$              (1,451)

$           46,406 

See Notes to Condensed Consolidated Financial Statements (Unaudited).


6


FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands, except for share data)

For the nine months ended September 30,

FreightCar America Shareholders

Accumulated

Additional

Other

Total

Common Stock

Paid In

Treasury Stock

Comprehensive

Retained

Noncontrolling

Stockholders'

Shares

Amount

Capital

Shares

Amount

Loss

Earnings

Interest in JV

Equity

Balance, December 31, 2018

12,731,678 

$         127 

$           90,593 

(272,030)

$       (9,721)

$              (8,188)

$           120,799 

$                        - 

$         193,610 

Cumulative effective of adoption of ASC 842

-

-

-

-

-

-

208 

-

208 

Net loss

-

-

-

-

-

-

(65,648)

-

(65,648)

Other comprehensive income

-

-

-

-

-

131 

-

-

131 

Restricted stock awards

-

-

(9,171)

293,309 

9,171 

-

-

-

-

Employee stock settlement

-

-

-

(7,404)

(59)

-

-

-

(59)

Forfeiture of restricted stock awards

-

-

374 

(56,980)

(374)

-

-

-

-

Stock-based compensation recognized

-

-

754 

-

-

-

-

-

754 

Balance, September 30, 2019

12,731,678 

$         127 

$           82,550 

(43,105)

$          (983)

$              (8,057)

$             55,359 

$                        - 

$         128,996 

Balance, December 31, 2019

12,731,678 

$         127 

$           83,027 

(44,855)

$          (989)

$            (10,780)

$             45,824 

$                   (55)

$         117,154 

Net loss

-

-

-

-

-

-

(70,060)

(1,396)

(71,456)

Other comprehensive income

-

-

-

-

-

421 

-

-

421 

Restricted stock awards

872,494 

9 

(9)

-

-

-

-

-

-

Employee stock settlement

-

-

-

(5,717)

(9)

-

-

-

(9)

Forfeiture of restricted stock awards

-

-

343 

(275,755)

(343)

-

-

-

-

Stock-based compensation recognized

-

-

296 

-

-

-

-

-

296 

Balance, September 30, 2020

13,604,172 

$         136 

$           83,657 

(326,327)

$       (1,341)

$            (10,359)

$           (24,236)

$              (1,451)

$           46,406 

See Notes to Condensed Consolidated Financial Statements (Unaudited).


7


FreightCar America, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

2020

2019

Cash flows from operating activities

(in thousands)

Net loss

$

(71,456)

$

(65,648)

Adjustments to reconcile net loss to net cash flows used in operating activities:

Non-cash restructuring and impairment charges

26,868

24,351

Depreciation and amortization

7,954

9,487

Change in inventory reserve

6,206

(1,501)

Amortization expense - right-of-use leased assets

4,910

8,168

Recognition of deferred income from state and local incentives

(1,665)

(1,665)

Loss on sale of railcars available for lease