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CST: 16/11/2019 21:38:40   

FreightCar America, Inc. Reports Second Quarter 2019 Results

108 Days ago

Company reports positive gross margin; ‘Back to Basics’ strategy remains solidly on track with new product launches, cost reductions, and footprint consolidation

CHICAGO, July 31, 2019 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the second quarter ended June 30, 2019.

Business Highlights

  • Second quarter revenue of $73.7 million on deliveries of 729 units
  • Second quarter net loss of $15.9 million, or $1.26 per diluted share, which includes $10.5 million of one-time items in the period
  • Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $71.5 million at June 30, 2019, an increase of $2.8 million as compared to the first quarter of 2019
  • Backlog as of June 30, 2019 totaled 1,121 railcars with an aggregate value of approximately $96 million
  • Subsequent to the end of the second quarter, the Company received additional orders for 1,050 railcars
  • On July 22nd the Company announced its intention to close its Roanoke, Virginia manufacturing facility. The announcement is part of the Company’s long-term strategy to streamline its fixed cost base and is expected to yield $5.0 million in annual savings.
  • Company adjusts 2019 delivery guidance to between 2,200 and 2,500 railcars and maintains material cost savings guidance of between $2,000 and $3,000 per railcar, on a run-rate basis, excluding commodity price movements, by the end of 2019

"I am pleased to report we recorded our first positive gross margin since the second quarter of 2018, despite the ongoing softness across our industry. This demonstrates the solid progress we have made against our ‘Back to Basics’ initiatives designed to produce the right products, with the right footprint, and on the right cost structure,” said Jim Meyer, President and Chief Executive Officer of FreightCar America. "Subsequent to the end of the second quarter, we announced our plans to close our Roanoke facility. When this action is complete, we expect to save approximately $5.0 million per year. Coupled with our new lease agreement at our Shoals facility, the closure of the Roanoke facility represents a transformational step in our ‘Back to Basics’ strategy to address our fixed costs and historically underutilized footprint. Similarly, we completed several actions that improved the flexibility of our balance sheet going forward.”

Meyer concluded, “Just after the quarter end, we received orders for 1,050 railcars. These orders demonstrate that our improving portfolio and operations will resonate with customers. We are making significant progress in focusing our product portfolio, tailoring our footprint, and we have proven our ability to maintain a clean balance sheet. We believe we have the right strategy in place and are confident that FreightCar will be in a substantially better position to compete as we enter 2020.”

Second Quarter Results

  • Consolidated revenues were $73.7 million in the second quarter of 2019 compared to $66.7 million in the same quarter of 2018. The Company delivered 729 railcars in the second quarter of 2019, which included 478 new railcars and 251 rebuilds. This compares to 1,185 railcars delivered in the second quarter of 2018, which included 368 new railcars, 514 rebuilt railcars, and 303 leased railcars.

  • Net loss in the second quarter of 2019 was $15.9 million, or $1.26 per diluted share, compared to net loss of $2.3 million, or $0.19 per diluted share, in the second quarter of 2018. This quarter’s net loss included a $5.2 million charge from the loss on sale of 195 railcars previously held in the leasing fleet, $1.3 million in restructuring costs related to the Roanoke facility closure process, and a $4.0 million net settlement charge as the Company resolved a dispute relating to a prior-year product claim.

  • Cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $71.5 million as of June 30, 2019, compared to $68.0 million at December 31, 2018.  During the second quarter, the Company sold 195 railcars previously held in the leasing fleet for $11.4 million.

Second Quarter 2019 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Thursday, August 1, 2019 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s second quarter 2019 financial results. To participate in the conference call, please dial (800) 230-1092, Confirmation Number 470143.  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/confCast
Conference ID#: 470143

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 Daylight Time) on August 1, 2019 until 11:59 p.m. (Eastern Daylight Time) on September 1, 2019.  To access the replay, please dial (800) 475-6701.  The replay pass code is 470143.  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 FreightCar America Leasing Company subsidiaries. FreightCar America designs and builds high-quality railcars, including bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, boxcars and coal cars. 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)

  June 30, 2019 December 31, 2018
Assets (in thousands)  
Current assets    
Cash, cash equivalents and restricted cash equivalents $   69,859   $   45,070  
Restricted certificates of deposit     1,668       4,952  
Marketable securities     -       18,019  
Accounts receivable, net     12,880       18,218  
Inventories, net     61,788       64,562  
Other current assets     7,318       5,012  
Total current assets     153,513       155,833  
     
Property, plant and equipment, net     40,396       45,317  
Railcars available for lease, net     47,359       64,755  
Right of use asset     71,714       -  
Goodwill     21,521       21,521  
Other long-term assets     3,135       2,311  
     
Total assets $   337,638   $   289,737  
     
Liabilities and Stockholders’ Equity    
Current liabilities    
Accounts and contractual payables $   30,141   $   34,749  
Accrued payroll and other employee costs     2,549       1,639  
Reserve for workers' compensation     3,659       3,344  
Accrued warranty     7,793       9,309  
Customer deposits     1,281       3,000  
Deferred income state and local incentives, current     2,219       2,219  
Deferred rent, current     -       6,466  
Lease liability, current     16,991       -  
Other current liabilities   4,757       1,324  
Total current liabilities     69,390       62,050  
Long-term debt     10,200       -  
Accrued pension costs     5,663       5,841  
Accrued postretirement benefits, less current portion     4,800       4,975  
Deferred income state and local incentives, long-term     5,832       6,941  
Deferred rent, long-term     -       15,519  
Lease liability, long-term     73,076       -  
Accrued taxes and other long-term liabilities     4,476       801  
Total liabilities     173,437       96,127  
     
Stockholders’ equity    
Preferred stock     -       -  
Common stock     127       127  
Additional paid in capital     83,435       90,593  
Treasury stock, at cost     (2,348 )     (9,721 )
Accumulated other comprehensive loss     (8,101 )     (8,188 )
Retained earnings     91,088       120,799  
Total stockholders' equity     164,201       193,610  
Total liabilities and stockholders’ equity $   337,638   $   289,737  


FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

      Three Months Ended       Six Months Ended
  June 30,   June 30,
  2019     2018     2019       2018  
                         
  (In thousands, except for share and per share data)
                       
Revenues $ 73,661     $ 66,743     $ 144,369     $ 149,716  
Cost of sales   67,637       61,904       145,194       145,473  
Gross profit (loss)   6,024       4,839       (825 )     4,243  
Selling, general and administrative expenses   15,352       8,385       23,019       16,381  
Loss on sale of railcars available for lease   5,196       -       5,196       -  
Restructuring and impairment charges   1,319       -       1,319       -  
Operating loss   (15,843 )     (3,546 )     (30,359 )     (12,138 )
Interest expense and deferred financing costs   (115 )     (27 )     (151 )     (59 )
Other income   83       588       402       969  
Loss before income taxes   (15,875 )     (2,985 )     (30,108 )     (11,228 )
Income tax provision (benefit)   12       (649 )     (189 )     (2,488 )
Net loss $ (15,887 )   $ (2,336 )   $ (29,919 )   $ (8,740 )
                       
Net loss per common share  – basic $ (1.26 )   $ (0.19 )   $ (2.37 )   $ (0.70 )
                       
Net loss per common share  – diluted $ (1.26 )   $ (0.19 )   $ (2.37 )   $ (0.70 )
                       
Weighted average common shares outstanding  – basic   12,352,271       12,317,546       12,344,684       12,311,810  
                       
Weighted average common shares outstanding  – diluted   12,352,271       12,317,546       12,344,684       12,311,810  
                       
Dividends declared per common share $ -     $ -     $ -     $ -  


FreightCar America, Inc.
Segment Data
(Unaudited)

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
      2019       2018         2019       2018  
    (In thousands)     (In thousands)  
Revenues:                  
Manufacturing   $   70,817     $   63,051       $   138,412     $   142,784  
Corporate and Other       2,844         3,692           5,957         6,932  
  Consolidated Revenues   $   73,661     $   66,743       $   144,369     $   149,716  
                   
Operating (Loss) Income:                  
Manufacturing   $   (3,019 )   $    1,708       $   (12,656 )   $   (2,108 )
Corporate and Other       (12,824 )       (5,254 )         (17,703 )       (10,030 )
  Consolidated Operating (Loss) Income   $   (15,843 )   $   (3,546 )     $   (30,359 )   $   (12,138 )


FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

  Six Months Ended
 June 30,
    2019     2018  
  (in thousands)
Cash flows from operating activities    
     
Net loss $   (29,919 ) $   (8,740 )
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Net proceeds from Shoals transaction   -     2,655  
Depreciation and amortization   6,471     5,448  
Amortization expense - right-of-use leased assets   5,662     -  
Recognition of deferred income from state and local incentives   (1,109 )   (1,110 )
Loss on sale of railcars available for lease   5,196     38  
Deferred income taxes   -     (2,671 )
Stock-based compensation recognized   274     1,751  
Other non-cash items, net   969     (211 )
Changes in operating assets and liabilities, net of acquisitions:  
Accounts receivable   5,338     (18,084 )
Inventories   3,214     (11,593 )
Inventories on lease   -     (32,228 )
Other assets   (2,307 )   (1,697 )
Accounts and contractual payables   (4,890 )   14,619  
Accrued payroll and employee benefits   910     895  
Income taxes receivable/payable   (197 )   684  
Accrued warranty   (1,516 )   1,176  
Lease liability   (9,091 )   -  
Other liabilities   6,108     1,402  
Accrued pension costs and accrued postretirement benefits   (266 )   (736 )
Net cash flows used in operating activities   (15,153 )   (48,402 )
     
Cash flows from investing activities    
     
Purchase of restricted certificates of deposit   (1,117 )   (4,400 )
Maturity of restricted certificates of deposit   4,400     4,668  
Purchase of securities held to maturity   (1,986 )   (79,105 )
Proceeds from maturity of securities   20,025     66,008  
Cost of railcars available for lease   -     (1,419 )
Purchase of property, plant and equipment   (2,034 )   (476 )
Proceeds from sale of property, plant and equipment and railcars available for lease   11,442     600  
Net cash flows provided by (used in) investing activities   30,730     (14,124 )
     
Cash flows from financing activities    
     
Proceeds from line of credit borrowings   10,200     -  
Employee stock settlement   (59 )   (118 )
Deferred financing costs   (929 )   -  
Net cash flows provided by (used in) financing activities   9,212     (118 )
     
Net increase (decrease) in cash and cash equivalents   24,789     (62,644 )
Cash, cash equivalents and restricted cash equivalents at beginning of period   45,070     87,788  
Cash, cash equivalents and restricted cash equivalents at end of period $   69,859   $   25,144  


INVESTOR & MEDIA CONTACT Christopher J. Eppel
TELEPHONE (800) 458-2235

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