FreightCar America, Inc. Reports Third Quarter 2020 Results
November 09 2020 - 7:30PM
FreightCar America, Inc. (NASDAQ: RAIL) today reported results for
the third quarter ended September 30, 2020.
Business
Highlights
- Third quarter revenue of $25.2 million on deliveries of 163
railcars
- Third quarter net loss attributed to Freight Car America. Inc.
(“FCA”) of $40.3 million, or $3.03 per share, including $30.1
million, or $2.26 per share, of restructuring and impairment
charges, $26.6 million of which is non-cash
- Total cash, cash equivalents, restricted cash equivalents,
marketable securities and restricted certificates of deposit of
$32.9 million as of September 30, 2020
- Backlog on September 30, 2020 totaled 1,776 railcars, including
100 railcars ordered during the quarter, with an aggregate value of
approximately $195 million
- Finalized early termination of the lease at Cherokee, Alabama
(“Shoals”) manufacturing facility effective February 28, 2021
- Now owns 100% of its new Castaños, Mexico manufacturing
operation (“Castaños”), where all future railcar manufacturing is
expected to be based by February 2021
- Obtained new asset-backed credit facility to support the
business and repositioning
- Entered into new $40 million secured term loan agreement with a
global investment management firm (“Lender”), with funding subject
to stockholder approval, to strengthen balance sheet and drive
future growth strategy
- Began shipping cars from Castaños, Mexico facility in early
November and received several small orders for the new facility
post quarter-end
- Second half 2020 delivery outlook narrowed to range between 750
and 850 railcars
“During the third quarter, FreightCar America
made substantial progress towards the final steps of its business
transformation. We completed the acquisition of the remaining
portion of the Castaños joint venture, successfully started
production, achieved our Association of American Railroads (“AAR”)
plant certifications, and are starting to ship to customers this
week. By moving all production to Mexico by early 2021, we have
reset our cost-base and are multiple steps closer to reaching our
goal to become the highest quality and lowest cost producer in the
industry,” said Jim Meyer, President and Chief Executive Officer of
FreightCar America. “Our former joint venture partners are among
the best in the industry and we have solidified them as part of the
team including an operational leadership role and as stockholders
with board representation.”
Meyer continued, “Our industry remains in a
cyclical downturn, which was intensified by the pandemic.
Accelerating our repositioning effort to the finish line now
greatly improves our ability to outlast the pandemic and then
re-emerge in a position of strength. Our new breakeven is less than
2,000 railcars per year, and the Castaños factory is quickly
scalable once we see positive industry trends. To support the
accelerated finish and new business structure, we have obtained a
new asset-backed credit facility, and we will have a new $40
million secured term loan following successful completion of the
related stockholder vote. This term loan is vital to backstop the
business during the elongated industry downcycle, support the final
few steps of the transformation, and fund future working capital
and growth investment needs.”
Meyer concluded, “Our team at the Shoals factory
remains focused on completing our customer commitments at that
facility before we close the plant in February 2021. Given our
progress to date, we are narrowing our previous forecast for second
half deliveries to range between 750 and 850 railcars. Finally, our
business repositioning and transition to Castaños are being
extremely well received by our customers and we anticipate no lost
time as we complete the move. We look forward completing our
repositioning and believe it will allow us to drive both higher
levels growth and profitability as our industry enters its next
upcycle.”
Third Quarter
Results
- Consolidated revenues were $25.2
million in the third quarter of 2020, compared to $17.5 million in
the second quarter of 2020 and $40.7 million in the third quarter
of 2019. The Company delivered 163 railcars in the third quarter of
2020, compared to 100 in the second quarter of 2020 and 467
railcars in the third quarter of 2019.
- The Company had a backlog totaling
1,776 railcars at September 30, 2020, valued at approximately $195
million.
- Consolidated operating loss for the
third quarter of 2020 was $41.3 million, compared to an operating
loss of $36.3 million for the third quarter of 2019. Net loss
attributable to FreightCar America, Inc. (“FCA”) in the third
quarter of 2020 was $40.3 million, or $3.03 per diluted share,
compared to a net loss attributable to FCA of $35.7 million, or
$2.83 per diluted share, in the third quarter of 2019. Both
consolidated operating loss and net loss attributable to FCA
included restructuring and impairment charges of $30.1 million in
the third quarter of 2020 and $23.0 million in the third quarter of
2019.
- Inventories increased to $60.2
million, from $25.1 million as of December 31, 2019, to support
expected deliveries in the second half of 2020.
- Total cash, cash equivalents,
restricted cash equivalents, marketable securities and restricted
certificates of deposit were $32.9 million at the end of the third
quarter, compared to $70.0 million as of December 31, 2019.
Third Quarter 2020 Conference Call &
Webcast Information
The Company will host a conference call and live
webcast on Tuesday, November 10, 2020 at 11:00 a.m. (Eastern
Standard Time) to discuss its third quarter 2020 financial results.
Investors, analysts, and members of the media interested in
listening to the live presentation are encouraged to join a webcast
of the call, available on the Company’s website at:
Event URL:
http://public.viavid.com/index.php?id=142262
Interested parties may also participate in the
call by dialing 877-407-0789 or 201-689-8562 and should use
confirmation number 13712647. Please dial in approximately 10
to 15 minutes prior to the start time of the call to ensure your
participation. An audio replay of the conference call will be
available beginning at 2:00 p.m. (Eastern Standard Time) on
November 10, 2020 until 11:59 p.m. (Eastern Standard Time) on
November 24, 2020. To access the replay, please dial
844-512-2921 or 412-317-6671. The replay pass code is
13712647. An audio replay of the call will be available on
the Company’s website within two days following the earnings
call.
About FreightCar America
FreightCar America, Inc. is a diversified
manufacturer of railroad freight cars, that also supplies railcar
parts and leases freight cars through its FreightCar America
Leasing Company subsidiaries. FreightCar America designs and builds
high-quality railcars, including open top hopper cars, covered
hopper cars, intermodal and non-intermodal flat cars, mill gondola
cars, coil steel cars, boxcars, coal cars, and also specializes in
the conversion of railcars for repurposed use. It is headquartered
in Chicago, Illinois and has facilities in the following locations:
Cherokee, Alabama; Castaños, Mexico; Johnstown, Pennsylvania; and
Shanghai, People’s Republic of China. More information about
FreightCar America is available on its website at
www.freightcaramerica.com.
Forward-Looking Statements
This press release may contain statements
relating to our expected financial performance and/or future
business prospects, events and plans that are “forward-looking
statements” as defined under the Private Securities Litigation
Reform Act of 1995. Forward-looking statements represent our
estimates and assumptions only as of the date of this press
release. Our actual results may differ materially from the results
described in or anticipated by our forward-looking statements due
to certain risks and uncertainties. These potential risks and
uncertainties include, among other things: risks relating to the
potential financial and operational impacts of the COVID-19
pandemic; the risk that our stockholders may not approve the
issuance of the common stock underlying the warrant or that the
term loan might not be funded; the Shoals facility, including the
facility not meeting internal assumptions or expectations and
unforeseen liabilities from Navistar; the cyclical nature of our
business; adverse economic and market conditions; fluctuating costs
of raw materials, including steel and aluminum, and 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 by our customers; and other
competitive factors. We expressly disclaim any duty to provide
updates to any forward-looking statements made in this press
release, whether as a result of new information, future events or
otherwise.
Important Information
This material may be deemed to be solicitation
material in respect of the special meeting to be held on November
24, 2020. In connection with the special meeting, the Company has
filed a definitive proxy statement with the United States
Securities and Exchange Commission (the “SEC”). BEFORE MAKING ANY
VOTING OR INVESTMENT DECISIONS, INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT THE SPECIAL MEETING. The definitive proxy statement has been
mailed to stockholders who are entitled to vote at the special
meeting. Stockholders will also be able to obtain a copy of the
definitive proxy statement free of charge by directing a request to
the Company’s Vice President Finance, Chief Financial Officer,
Treasurer and Corporate Secretary. In addition, the definitive
proxy statement is available free of charge at the SEC’s
website, www.sec.gov.
INVESTOR & MEDIA CONTACT |
Joe Caminiti or Elizabeth Steckel |
TELEPHONE |
312-445-2870 |
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 |
|
- |
|
|
|
- |
|
Common stock |
|
136 |
|
|
|
127 |
|
Additional paid in capital |
|
83,657 |
|
|
|
83,027 |
|
Treasury stock, at cost |
|
(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 |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FreightCar America, Inc.
Segment Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
$ |
22,589 |
|
|
$ |
37,868 |
|
|
$ |
40,658 |
|
|
$ |
176,280 |
|
Corporate
and Other |
|
2,613 |
|
|
|
2,783 |
|
|
|
7,199 |
|
|
|
8,740 |
|
Consolidated revenues |
$ |
25,202 |
|
|
$ |
40,651 |
|
|
$ |
47,857 |
|
|
$ |
185,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
$ |
(36,786 |
) |
|
$ |
(30,788 |
) |
|
$ |
(56,934 |
) |
|
$ |
(43,444 |
) |
Corporate
and Other |
|
(4,554 |
) |
|
|
(5,468 |
) |
|
|
(14,447 |
) |
|
|
(23,171 |
) |
Consolidated operating loss |
|
(41,340 |
) |
|
|
(36,256 |
) |
|
|
(71,381 |
) |
|
|
(66,615 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
- |
|
|
|
5,131 |
|
Stock-based compensation recognized |
|
|
296 |
|
|
|
754 |
|
Other non-cash items, net |
|
|
277 |
|
|
|
(209 |
) |
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
|
|
Accounts receivable |
|
|
(3,302 |
) |
|
|
9,483 |
|
Inventories |
|
|
(41,300 |
) |
|
|
10,407 |
|
Other assets |
|
|
2,340 |
|
|
|
(1,706 |
) |
Accounts and contractual payables |
|
|
9,062 |
|
|
|
(11,206 |
) |
Accrued payroll and employee benefits |
|
|
3,011 |
|
|
|
1,254 |
|
Income taxes receivable/payable |
|
|
909 |
|
|
|
(289 |
) |
Accrued warranty |
|
|
(880 |
) |
|
|
(1,643 |
) |
Lease liability |
|
|
(9,110 |
) |
|
|
(13,210 |
) |
Customer deposits |
|
|
24,652 |
|
|
|
(1,719 |
) |
Other liabilities |
|
|
2,489 |
|
|
|
4,625 |
|
Accrued pension costs and accrued postretirement benefits |
|
|
(242 |
) |
|
|
(417 |
) |
Net cash flows used in operating activities |
|
|
(38,981 |
) |
|
|
(25,553 |
) |
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of
restricted certificates of deposit |
|
|
(4,037 |
) |
|
|
(1,416 |
) |
Maturity of
restricted certificates of deposit |
|
|
7,624 |
|
|
|
5,862 |
|
Purchase of
securities held to maturity |
|
|
- |
|
|
|
(1,986 |
) |
Proceeds
from maturity of securities |
|
|
- |
|
|
|
20,025 |
|
Purchase of
property, plant and equipment |
|
|
(8,267 |
) |
|
|
(3,292 |
) |
Proceeds
from sale of property, plant and equipment and railcars available
for lease |
|
|
170 |
|
|
|
11,519 |
|
Net cash flows (used in) provided by investing activities |
|
|
(4,510 |
) |
|
|
30,712 |
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of long-term debt |
|
|
10,000 |
|
|
|
10,200 |
|
Employee
stock settlement |
|
|
(9 |
) |
|
|
(59 |
) |
Deferred
financing costs |
|
|
- |
|
|
|
(929 |
) |
Net cash flows provided by financing activities |
|
|
9,991 |
|
|
|
9,212 |
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
|
|
(33,500 |
) |
|
|
14,371 |
|
Cash, cash
equivalents and restricted cash equivalents at beginning of
period |
|
|
66,257 |
|
|
|
45,070 |
|
Cash, cash
equivalents and restricted cash equivalents at end of period |
|
$ |
32,757 |
|
|
$ |
59,441 |
|
FreightCar America (NASDAQ:RAIL)
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From Mar 2024 to Apr 2024
FreightCar America (NASDAQ:RAIL)
Historical Stock Chart
From Apr 2023 to Apr 2024