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FreightCar America, Inc. Reports Second Quarter 2020 Results

Freightcar America, Inc.
·11 min read

Provides second half fiscal 2020 outlook to deliver 750 to 1,000 railcars

Announces start of production at the Castaños, Mexico joint venture plant

CHICAGO, Aug. 10, 2020 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the second quarter ended June 30, 2020.

Business Highlights

  • Second quarter revenue of $17.5 million on deliveries of 100 railcars

  • Second quarter net loss of $12.8 million, or $0.97 per share

  • Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $52.4 million as of June 30, 2020

  • Second quarter backlog totaled 1,839 railcars, with an aggregate value of approximately $207 million

  • Started production at Castaños, Mexico joint venture facility in July

  • Second half 2020 delivery outlook forecasted to range between 750 and 1,000 railcars

  • Company continues to prioritize employee and community safety, and is strictly adhering to pre-established health and safety protocols including those necessary in response to the global pandemic

“During the second quarter, FreightCar America restarted two of the four production lines in Shoals, and managed through the disruption brought on by the global COVID-19 pandemic. I am very proud of how our team responded, as we focused equally on health, safety and meeting customer expectations,” said Jim Meyer, President and Chief Executive Officer of FreightCar America. “In addition to these important undertakings, we continued to move forward with our vision to become the highest quality and lowest cost producer. In July, we started production at the new joint venture plant in Castaños, Mexico along with preparation for the certification process. We were able to hire an extremely experienced workforce and are happy to welcome them to the team.”

Meyer added, “The pandemic-related disruption further contributed to a difficult demand environment across our industry, which was already in the midst of a cyclical downtown. This further challenged both railcar orders and production scheduling during the second quarter. Of note, we had one additional week of operational downtime in our Shoals facility in the quarter as we halted production to protect the health and safety of our workforce. And while the recovery pattern remains opaque, we are encouraged by the recent improvement in order inquiries for car types that we are well suited to build.”

Meyer concluded, “Our overall production ramped well through July, giving us confidence in our forecast for second half deliveries to range between 750 and 1,000 railcars. As we look forward, we remain equally focused on preserving our liquidity while also continuing to build the foundation for our future. We believe we are taking the right steps to navigate both the cyclical downturn and pandemic, while repositioning FreightCar America for future success.”

Second Quarter Results

  • Consolidated revenues were $17.5 million in the second quarter of 2020, compared to $5.2 million in the first quarter of 2020 and $73.6 million in the second quarter of 2019. The Company delivered 100 railcars in the second quarter of 2020, compared to 11 in the first quarter of 2020 and 729 railcars in the second quarter of 2019.

  • The Company had a backlog totaling 1,839 railcars on June 30, 2020, valued at approximately $207 million.

  • Consolidated operating loss for the second quarter of 2020 was $12.9 million, compared to an operating loss of $15.8 million for the second quarter of 2019.

  • Net loss attributable to FreightCar America, Inc. (“FCA”) in the second quarter of 2020 was $12.8 million, or $0.97 per diluted share, compared to a net loss attributable to FCA of $15.9 million, or $1.26 per diluted share, in the second quarter of 2019.

Second Quarter 2020 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Tuesday, August 11, 2020 at 11:00 a.m. (Eastern Daylight Time) to discuss its second 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=141184

Interested parties may also participate in the call by dialing 877-407-0789 or 201-689-8562 and should use confirmation number 13708161. 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 Daylight Time) on August 11, 2020 until 11:59 p.m. (Eastern Daylight Time) on August 25, 2020. To access the replay, please dial 844-512-2921 or 412-317-6671. The replay pass code is 13708161. 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 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, 2020

December 31, 2019

Assets

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

Current assets

Cash, cash equivalents and restricted cash equivalents

$

48,540

$

66,257

Restricted certificates of deposit

3,855

3,769

Accounts receivable, net

6,789

6,991

Inventories, net

47,116

25,092

Income tax receivable

1,027

535

Other current assets

14,265

7,035

Total current assets

121,592

109,679

Property, plant and equipment, net

39,469

38,564

Railcars available for lease, net

38,393

38,900

Right of use asset

53,442

56,507

Other long-term assets

888

1,552

Total assets

$

253,784

$

245,202

Liabilities and Stockholders’ Equity

Current liabilities

Accounts and contractual payables

$

18,054

$

11,713

Accrued payroll and other employee costs

306

1,389

Reserve for workers' compensation

3,344

3,210

Accrued warranty

7,903

8,388

Customer deposits

33,012

5,123

Deferred income state and local incentives, current

2,219

2,219

Lease liability, current

15,063

14,960

Current portion of long-term debt

13,950

-

Other current liabilities

5,626

2,428

Total current liabilities

99,477

49,430

Long-term debt, net of current portion

6,250

10,200

Accrued pension costs

6,006

6,510

Deferred income state and local incentives, long-term

3,612

4,722

Lease liability, long-term

48,306

53,766

Other long-term liabilities

2,833

3,420

Total liabilities

166,484

128,048

Stockholders’ equity

Preferred stock

-

-

Common stock

136

127

Additional paid in capital

83,318

83,027

Treasury stock, at cost

(1,281

)

(989

)

Accumulated other comprehensive loss

(10,499

)

(10,780

)

Retained earnings

16,086

45,824

Total FreightCar America stockholders' equity

87,760

117,209

Noncontrolling interest in JV

(460

)

(55

)

Total stockholders' equity

87,300

117,154

Total liabilities and stockholders’ equity

$

253,784

$

245,202

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

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

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

Revenues

$

17,458

$

73,661

$

22,655

$

144,369

Cost of sales

23,602

67,637

37,602

145,194

Gross (loss) profit

(6,144

)

6,024

(14,947

)

(825

)

Selling, general and administrative expenses

6,537

15,352

13,947

23,019

Loss on sale of railcars available for lease

-

5,196

-

5,196

Restructuring and impairment charges

267

1,319

1,147

1,319

Operating loss

(12,948

)

(15,843

)

(30,041

)

(30,359

)

Interest expense and deferred financing costs

(167

)

(115

)

(463

)

(151

)

Other income

134

83

358

402

Loss before income taxes

(12,981

)

(15,875

)

(30,146

)

(30,108

)

Income tax (benefit) provision

(1

)

12

(3

)

(189

)

Net loss

(12,980

)

(15,887

)

(30,143

)

(29,919

)

Less: Net loss attributable to noncontrolling interest in JV

(189

)

-

(405

)

-

Net loss attributable to FreightCar America

$

(12,791

)

$

(15,887

)

$

(29,738

)

$

(29,919

)

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

$

(0.97

)

$

(1.26

)

$

(2.26

)

$

(2.37

)

Weighted average common shares outstanding – basic and diluted

12,405,011

12,352,271

12,385,946

12,344,684

FreightCar America, Inc.
Segment Data
(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Revenues:

Manufacturing

$

15,129

$

70,817

$

18,069

$

138,412

Corporate and Other

2,329

2,844

4,586

5,957

Consolidated revenues

$

17,458

$

73,661

$

22,655

$

144,369

Operating loss:

Manufacturing

$

(8,348

)

$

(3,019

)

$

(20,148

)

$

(12,656

)

Corporate and Other

(4,600

)

(12,824

)

(9,893

)

(17,703

)

Consolidated operating loss

(12,948

)

(15,843

)

(30,041

)

(30,359

)


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

Six Months Ended June 30,

2020

2019

Cash flows from operating activities

(in thousands)

Net loss

$

(30,143

)

$

(29,919

)

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

Non-cash restructuring and impairment charges

352

1,319

Depreciation and amortization

5,884

6,471

Change in inventory reserve

5,052

(440

)

Amortization expense - right-of-use leased assets

3,065

5,662

Recognition of deferred income from state and local incentives

(1,110

)

(1,109

)

Loss on sale of railcars available for lease

-

5,196

Stock-based compensation recognized

17

274

Other non-cash items, net

153

90

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

202

5,338

Inventories

(27,076

)

3,214

Other assets

(7,188

)

(2,307

)

Accounts and contractual payables

6,456

(4,890

)

Accrued payroll and employee benefits

(941

)

910

Income taxes receivable/payable

(13

)

(197

)

Accrued warranty

(485

)

(1,516

)

Lease liability

(5,391

)

(9,091

)

Customer deposits

27,889

(1,719

)

Other liabilities

2,625

7,827

Accrued pension costs and accrued postretirement benefits

(131

)

(266

)

Net cash flows used in operating activities

(20,783

)

(15,153

)

Cash flows from investing activities

Purchase of restricted certificates of deposit

(3,855

)

(1,117

)

Maturity of restricted certificates of deposit

3,769

4,400

Purchase of securities held to maturity

-

(1,986

)

Proceeds from maturity of securities

-

20,025

Purchase of property, plant and equipment

(7,009

)

(2,034

)

Proceeds from sale of property, plant and equipment and railcars available for lease

170

11,442

Net cash flows (used in) provided by investing activities

(6,925

)

30,730

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

(17,717

)

24,789

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

$

48,540

$

69,859


INVESTOR & MEDIA CONTACT

Joe Caminiti or Elizabeth Steckel

TELEPHONE

312-445-2870