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CST: 23/05/2019 03:58:02   

FreightCar America, Inc. Reports Fourth Quarter and Full Year 2018 Results

85 Days ago

Company is focused on completing “Back to Basics” in 2019 and announces annual delivery estimates, material cost savings guidance and next step towards its long term manufacturing footprint

CHICAGO, Feb. 26, 2019 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the fourth quarter ended December 31, 2018.

Business Highlights

  • Fourth quarter revenue of $87.8 million on deliveries of 1,047 units
  • Fourth quarter net loss of $25.7 million, or $2.06 per diluted share, which includes a non-cash provision of $18.2 million, or $1.48 per share, for a valuation allowance against deferred tax assets
  • Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $68.0 million at December 31, 2018, essentially unchanged from the prior quarter
  • Year-end backlog totaling 1,699 railcars at an aggregate value of approximately $160 million
  • Full-year 2019 delivery outlook forecasted to range between 2,500 and 3,500 railcars
  • ‘Back to Basics’ operational improvement strategy benefitted fourth quarter results with over $3,000 per car savings compared to the fourth quarter of 2017 and is expected to deliver additional material cost savings of between $2,000 and $3,000 per railcar, on a run-rate basis, excluding commodity price movements, by the end of 2019

"In 2018, we put in motion our ‘Back to Basics’ transformation initiative designed to position FreightCar America for a strong future,” said Jim Meyer, President and Chief Executive Officer of FreightCar America. "During the year, we took full control of our largest facility, invested in our workforce including the addition of a significant number of critical new hires, and made solid progress in removing costs from our business. We realized a net reduction in our cost of goods sold of more than $3,000 per railcar. This amount would likely have been much greater if not for the high number of changeovers and shorter production runs, which prevented us from capturing the gains we are making in labor efficiencies.”

Meyer concluded, “As we move forward in 2019, the final phase of ‘Back to Basics’ will focus on: 1) continuing to remove material and labor costs from our business, 2) strengthening our product portfolio, and 3) optimizing our manufacturing footprint. Lower costs and a broader product portfolio are key to capturing a greater share of available business and growing our backlog to healthier levels. As it relates to our manufacturing footprint, we are pleased to announce we have finalized an agreement to shrink both the square footage and rent payment at our leased Shoals facility, up to 40% each. This will go into effect in January 2022, per the amended lease terms. We remain confident in our ‘Back to Basics’ initiatives and we expect at the end of this year to have a much more competitive cost base, a meaningfully broader product offering, and all of the building blocks in place for our long term footprint."

Fourth Quarter Results

  • Consolidated revenues were $87.8 million in the fourth quarter of 2018 compared to $79.2 million in the same quarter of 2017. The Company delivered 1,047 railcars in the fourth quarter of 2018, which included 827 new railcars and 220 rebuilt railcars. This compares to 977 railcars delivered in the fourth quarter of 2017, which included 855 new railcars, 47 rebuilt railcars, and 75 leased railcars.
  • The Company had a diversified backlog totaling 1,699 railcars at December 31, 2018, valued at approximately $160 million.
  • Consolidated operating loss for the fourth quarter of 2018 was $11.3 million compared to an operating loss of $13.4 million for the fourth quarter of 2017.
  • The income tax provision of $14.8 million recorded in the fourth quarter of 2018 included a $18.2 million valuation allowance against our deferred tax assets as a result of recent annual operating losses.
  • Net loss in the fourth quarter of 2018 was $25.7 million, or $2.06 per diluted share, inclusive of the $1.48 per diluted share impact of the valuation allowance against our deferred tax assets, compared to a net loss of $11.1 million, or $0.90 per diluted share, in the fourth quarter of 2017. 

Full Year 2018 Results

  • Consolidated revenues for the fiscal year ended December 31, 2018 were $316.5 million compared to $409.5 million for the fiscal year ended December 31, 2017.
  • The Company delivered 4,214 railcars in 2018, which included 2,584 new railcars, 1,205 rebuilt railcars and 425 leased railcars. This compares to 4,427 railcars delivered in 2017, which included 4,305 new railcars, 47 rebuilt railcars and 75 leased railcars.
  • Consolidated operating loss for 2018 was $32.1 million compared to consolidated operating loss of $31.8 million in 2017.
  • Net loss in 2018 was $40.6 million, or $3.26 per diluted share, inclusive of the $1.48 per diluted share impact of the valuation allowance against our deferred tax assets, compared to a net loss of $22.6 million, or $1.82 per diluted share, in 2017.
  • Cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $68.0 million as of December 31, 2018, compared to $136.4 million as of December 31, 2017. The decrease in cash was primarily driven by Company-funded deliveries of leased railcars into its lease fleet, higher accounts receivable due to deliveries placed near the end of 2018 and elevated inventory levels due to production delays experienced during the fourth quarter of 2018 for certain railcar builds. 

Fourth Quarter 2018 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Wednesday, February 27, 2019 at 11:00 a.m. (Eastern Standard Time) to discuss the Company’s fourth quarter 2018 financial results. To participate in the conference call, please dial (800) 230-1085, Confirmation Number 464318.  Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call. The live audio-only webcast can be accessed at:

        Event URL: https://im.csgsystems.com/cgi-bin/conf   
        Cast Conference ID#: 464318

If you need technical assistance, call the toll-free AT&T Conference Casting Support Help Line at (888) 793-6118. Please note that the webcast is listen-only and webcast participants will not be able to participate in the question and answer portion of the conference call.  An audio replay of the conference call will be available beginning at 1:00 p.m. (Eastern Standard Time) on February 27, 2019 until 11:59 p.m. (Eastern Daylight Time) on March 27, 2019.  To access the replay, please dial (800) 475-6701.  The replay pass code is 464318.  An audio replay of the call will be available on the Company’s website within two days following the earnings call.

About FreightCar America, Inc.

FreightCar America, Inc. manufactures a wide range of railroad freight cars, supplies railcar parts and leases freight cars through its JAIX Leasing Company subsidiary. FreightCar America designs and builds high-quality railcars, including coal cars, bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and boxcars. It is headquartered in Chicago, Illinois and has facilities in the following locations: Cherokee, Alabama; Grand Island, Nebraska; Johnstown, Pennsylvania; Roanoke, Virginia; 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 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.


 
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
  December 31, December 31,
    2018     2017  
  (In thousands)
Assets    
Current assets    
Cash, cash equivalents and restricted cash equivalents $     45,070   $     87,788  
Restricted certificates of deposit     4,952       5,720  
Marketable securities     18,019       42,917  
Accounts receivable, net     18,218       7,581  
Inventories, net     64,562       45,292  
Inventory on lease      -       5,550  
Other current assets     5,012       5,099  
Total current assets     155,833       199,947  
     
Property, plant and equipment, net     45,317       38,253  
Railcars available for lease, net     64,755       23,434  
Goodwill     21,521       21,521  
Deferred income taxes, net     -       9,446  
Other long-term assets     2,311       3,303  
Total assets $     289,737   $     295,904  
     

Liabilities and Stockholders’ Equity
   
Current liabilities    
Accounts and contractual payables $     34,749   $     23,329  
Accrued payroll and other employee costs     1,639       1,809  
Reserve for workers’ compensation     3,344       3,394  
Accrued warranty     9,309       8,062  
Customer deposits     3,000       362  
Deferred income state and local incentives, current     2,219       2,219  
Deferred rent, current     6,466       178  
Other current liabilities     1,324       964  
Total current liabilities     62,050        40,317  
Accrued pension costs     5,841       5,763  
Accrued postretirement benefits, less current portion     4,975       5,556  
Deferred income state and local incentives, long-term     6,941       9,161  
Deferred rent, long-term     15,519       2,988  
Accrued taxes and other long-term liabilities     801       387  
Total liabilities     96,127       64,172  
     
Stockholders’ equity    
Preferred stock     —       —  
Common stock     127       127  
Additional paid in capital     90,593       90,347  
Treasury stock, at cost     (9,721 )     (12,555 )
Accumulated other comprehensive loss     (8,188 )     (7,567 )
Retained earnings     120,799       161,380  
Total stockholders’ equity     193,610       231,732  
Total liabilities and stockholders’ equity $     289,737   $     295,904  
             


 
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
      2018     2017       2018     2017  
    (In thousands, except for share and per share data)
             
Revenues   $   87,835   $  79,241     $   316,519   $   409,474  
Cost of sales       91,867       83,374         320,146       406,478  
Gross (loss) profit       (4,032 )     (4,133 )       (3,627 )     2,996  
Selling, general and administrative expenses       7,222        9,301         29,051       32,987  
Gain on sale of facility       —       —         (573 )     —  
Restructuring and impairment charges       —         7         —       1,792  
Operating loss       (11,254 )     (13,441 )       (32,105 )     (31,783 )
             
Interest expense and deferred financing costs       (70 )     (64 )       (155 )     (163 )
Other income       427        320         1,848       539  
Loss before income taxes       (10,897 )     (13,185 )       (30,412 )     (31,407 )
Income tax provision (benefit)       14,772       (2,047 )       10,169       (8,845 )
Net loss   $   (25,669 ) $   (11,138 )   $    (40,581 ) $   (22,562 )
             
Net loss per common share – basic   $   (2.06 ) $   (0.90 )   $   (3.26 ) $   (1.82 )
             
Net loss per common share – diluted   $   (2.06 ) $   (0.90 )   $   (3.26 ) $    (1.82 )
             
Weighted average common shares outstanding -            
basic       12,325,876       12,294,597         12,318,861       12,285,566  
             
Weighted average common shares outstanding -            
diluted       12,325,876       12,294,597         12,318,861       12,285,566  
             
Dividends declared per common share   $   —   $   —     $   —   $   0.27  
             


 
FreightCar America, Inc.
Segment Data
(Unaudited)
 
    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
      2018     2017       2018     2017  
    (In thousands)   (In thousands)
Revenues:            
Manufacturing   $   84,208   $   76,832     $   302,154   $   400,481  
Corporate and Other       3,627       2,409         14,365       8,993  
Consolidated revenues   $   87,835   $   79,241      $   316,519   $   409,474  
             
Operating loss:            
Manufacturing   $   (6,541 ) $    (6,547 )   $   (14,556 ) $   (6,998 )
Corporate and Other       (4,713 )     (6,894 )       (17,549 )      (24,785 )
Consolidated operating loss   $   (11,254 ) $   (13,441 )   $   (32,105 ) $   (31,783 )
                             


 
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
  Twelve Months Ended
December 31,
    2018     2017  
  (In thousands)
Cash flows from operating activities    
Net loss $   (40,581 ) $   (22,562 )
Adjustments to reconcile net loss to net cash
flows (used in) provided by operating activities:
     
Net proceeds from Shoals transaction     2,655       —  
Depreciation and amortization     12,017       9,366  
Recognition of deferred income from state and local incentives     (2,220 )     (2,219 )
Gain on sale of facility     (573 )      —  
Deferred income taxes     9,969       (6,424 )
Stock-based compensation recognized     3,198       1,162  
Other non-cash items, net     269       1,957  
Changes in operating assets and liabilities, net of acquisitions:    
Accounts receivable     (10,637 )     16,216  
Inventories      (16,311 )        50,639  
Other assets     1,728        (3,248 )
Accounts and contractual payables      10,693       (11,170 )
Accrued payroll and employee benefits     (165 )     (1,305 )
Income taxes receivable/payable     657        9,623  
Accrued warranty     1,247       (262 )
Other liabilities     (2,461 )     (754 )
Accrued pension costs and accrued postretirement benefits     (1,129 )     (678 )
Net cash flows (used in) provided by operating activities     (31,644 )     40,341  
     
Cash flows from investing activities    
     
Purchase of restricted certificates of deposit     (8,312 )     (9,966 )
Maturity of restricted certificates of deposit      9,080       6,856  
Purchase of securities held to maturity     (111,356 )     (85,821 )
Proceeds from maturity of securities       136,716       43,080  
Cost of railcars available for lease     (37,347 )      —  
Purchases of property, plant and equipment       (2,185 )     (967 )
Proceeds from sale of property, plant and equipment and railcars available for lease       2,458       119  
State and local incentives received      —       1,410  
Net cash flows used in investing activities       (10,946 )     (45,289 )
     
Cash flows from financing activities    
     
Employee stock settlement      (118 )     (23 )
Cash dividends paid to stockholders      —       (3,351 )
Deferred financing costs     (10 )     —  
Net cash flows used in financing activities       (128 )     (3,374 )
     
Net decrease in cash and cash equivalents $     (42,718 ) $    (8,322 )
Cash, cash equivalents and restricted cash equivalents at beginning of period $     87,788   $   96,110  
Cash, cash equivalents and restricted cash equivalents at end of period $    45,070   $   87,788  
     


 

INVESTOR & MEDIA CONTACT Matthew S. Kohnke
TELEPHONE (800) 458-2235

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