FreightCar America, Inc. Reports Third Quarter 2019 Results
Company expects to finish its 24-month ‘Back to Basics’ initiative at year-end with more than $5,000 savings in material cost per average railcar on a run-rate basis, $12 million in future cash savings from fixed cost reductions, and four key new or redesigned products. Focus now shifts to completing the Company’s recently announced joint venture plant in Mexico and weathering industry headwinds.
CHICAGO, Oct. 30, 2019 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the third quarter ended September 30, 2019.
Business Highlights
- Third quarter revenue of $40.7 million on deliveries of 467 units
- Third quarter net loss of $35.7 million, or $2.83 per diluted share, which includes a non-cash goodwill impairment charge of $21.5 million, or $1.74 per share
- Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $59.9 million at September 30, 2019
- Backlog as of September 30, 2019 totaled 1,704 railcars with an aggregate value of approximately $188 million
- Company reaffirmed 2019 delivery guidance of between 2,200 and 2,500 railcars
- During the quarter, the Company announced the formation of a joint venture with Fabricaciones y Servicios de México, S.A. de C.V. (“Fasemex”) to manufacture railcars in Castaños, Mexico
- The Company also announced during the quarter the closure of its Roanoke, Virginia manufacturing facility which, when combined with the new lease agreement for its Shoals facility, is expected to result in $12 million per year in future cash savings
- The Company also reaffirmed material cost savings guidance of between $2,000 and $3,000 per railcar, on a run-rate basis which, when combined with savings achieved in 2018, yields more than $5,000 per railcar, excluding commodity price movements
“We are pleased with the foundational improvements achieved over the prior 24 months and our ability to more successfully compete than in the recent past,” said Jim Meyer, President and Chief Executive Office of FreightCar America. “At the same time, continued industry headwinds have delayed the impact of our improvements and our potential to demonstrate results, as indicated by our third quarter performance. Nevertheless, we remain committed to completing our new product plans and to the recently announced new footprint in Mexico. When the new plant is finished, FreightCar America will have the most modern railcar plants in both the U.S. and Mexico.”
Third Quarter Results
- Consolidated revenues were $40.7 million in the third quarter of 2019 compared to $79.0 million in the same quarter of 2018. The Company delivered 467 railcars in the third quarter of 2019, which included 255 new railcars and 212 rebuilds. This compares to 888 railcars delivered in the third quarter of 2018, which included 498 new railcars and 390 rebuilt railcars.
- Consolidated operating loss for the third quarter of 2019 was $36.3 million, compared to an operating loss of $8.7 million for the third quarter of 2018.
- The Company recorded a $21.5 million impairment charge after completing its annual review of goodwill and intangible assets. The charge is related to the decline of the Company’s common stock price, the Company’s most recent financial results and the current condition of the freight car market.
- Net loss in the third quarter of 2019 was $35.7 million, or $2.83 per diluted share, compared to net loss of $6.2 million, or $0.50 per diluted share, in the third quarter of 2018.
- Cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $59.9 million as of September 30, 2019, compared to $68.0 million at December 31, 2018.
Third Quarter 2019 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Thursday, October 31, 2019 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s third quarter 2019 financial results. To participate in the conference call, please dial (800) 230-1093, Confirmation Number 473325. 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#: 473325
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 October 31, 2019 until 11:59 p.m. (Eastern Standard Time) on December 1, 2019. To access the replay, please dial (800) 475-6701. The replay pass code is 473325. 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. 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)
| September 30, 2019 |
December 31, 2018 |
||||||
| Assets | (in thousands) | ||||||
| Current assets | |||||||
| Cash, cash equivalents and restricted cash equivalents | $ | 59,441 | $ | 45,070 | |||
| Restricted certificates of deposit | 506 | 4,952 | |||||
| Marketable securities | - | 18,019 | |||||
| Accounts receivable, net | 8,735 | 18,218 | |||||
| Inventories, net | 55,656 | 64,562 | |||||
| Other current assets | 7,672 | 5,012 | |||||
| Total current assets | 132,010 | 155,833 | |||||
| Property, plant and equipment, net | 38,912 | 45,317 | |||||
| Railcars available for lease, net | 47,051 | 64,755 | |||||
| Right of use asset | 69,208 | - | |||||
| Goodwill | - | 21,521 | |||||
| Other long-term assets | 2,106 | 2,311 | |||||
| Total assets | $ | 289,287 | $ | 289,737 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities | |||||||
| Accounts and contractual payables | $ | 23,994 | $ | 34,749 | |||
| Accrued payroll and other employee costs | 4,211 | 1,639 | |||||
| Reserve for workers' compensation | 3,816 | 3,344 | |||||
| Accrued warranty | 7,666 | 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 | 17,144 | - | |||||
| Other current liabilities | 1,402 | 1,324 | |||||
| Total current liabilities | 61,733 | 62,050 | |||||
| Long-term debt | 10,200 | - | |||||
| Accrued pension costs | 5,574 | 5,841 | |||||
| Accrued postretirement benefits, less current portion | 4,694 | 4,975 | |||||
| Deferred income state and local incentives, long-term | 5,277 | 6,941 | |||||
| Deferred rent, long-term | - | 15,519 | |||||
| Lease liability, long-term | 68,804 | - | |||||
| Other long-term liabilities | 4,009 | 801 | |||||
| Total liabilities | 160,291 | 96,127 | |||||
| Stockholders’ equity | |||||||
| Preferred stock | - | - | |||||
| Common stock | 127 | 127 | |||||
| Additional paid in capital | 82,550 | 90,593 | |||||
| Treasury stock, at cost | (983 | ) | (9,721 | ) | |||
| Accumulated other comprehensive loss | (8,057 | ) | (8,188 | ) | |||
| Retained earnings | 55,359 | 120,799 | |||||
| Total stockholders' equity | 128,996 | 193,610 | |||||
| Total liabilities and stockholders’ equity | $ | 289,287 | $ | 289,737 | |||
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended |
Nine Months Ended |
||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (In thousands, except for share and per share data) | |||||||||||||||
| Revenues | $ | 40,651 | $ | 78,968 | $ | 185,020 | $ | 228,684 | |||||||
| Cost of sales | 46,061 | 82,806 | 191,255 | 228,279 | |||||||||||
| Gross profit (loss) | (5,410 | ) | (3,838 | ) | (6,235 | ) | 405 | ||||||||
| Selling, general and administrative expenses | 7,772 | 5,448 | 30,791 | 21,829 | |||||||||||
| Loss on sale of railcars available for lease | 42 | - | 5,238 | - | |||||||||||
| Gain on sale of facility | - | (573 | ) | - | (573 | ) | |||||||||
| Restructuring and impairment charges | 23,032 | - | 24,351 | - | |||||||||||
| Operating loss | (36,256 | ) | (8,713 | ) | (66,615 | ) | (20,851 | ) | |||||||
| Interest expense and deferred financing costs | (223 | ) | (26 | ) | (374 | ) | (85 | ) | |||||||
| Other income | 363 | 452 | 765 | 1,421 | |||||||||||
| Loss before income taxes | (36,116 | ) | (8,287 | ) | (66,224 | ) | (19,515 | ) | |||||||
| Income tax provision (benefit) | (387 | ) | (2,115 | ) | (576 | ) | (4,603 | ) | |||||||
| Net loss | $ | (35,729 | ) | $ | (6,172 | ) | $ | (65,648 | ) | $ | (14,912 | ) | |||
| Net loss per common share – basic | $ | (2.83 | ) | $ | (0.50 | ) | $ | (5.20 | ) | $ | (1.20 | ) | |||
| Net loss per common share – diluted | $ | (2.83 | ) | $ | (0.50 | ) | $ | (5.20 | ) | $ | (1.20 | ) | |||
| Weighted average common shares outstanding – basic | 12,359,478 | 12,325,718 | 12,349,670 | 12,316,497 | |||||||||||
| Weighted average common shares outstanding – diluted | 12,359,478 | 12,325,718 | 12,349,670 | 12,316,497 | |||||||||||
| Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||
FreightCar America, Inc.
Segment Data
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Manufacturing | $ | 37,868 | $ | 75,162 | $ | 176,280 | $ | 217,946 | |||||||||||||
| Corporate and Other | 2,783 | 3,806 | 8,740 | 10,738 | |||||||||||||||||
| Consolidated Revenues | $ | 40,651 | $ | 78,968 | $ | 185,020 | $ | 228,684 | |||||||||||||
| Operating Loss: | |||||||||||||||||||||
| Manufacturing | $ | (30,788 | ) | $ | (5,906 | ) | $ | (43,444 | ) | $ | (8,014 | ) | |||||||||
| Corporate and Other | (5,468 | ) | (2,807 | ) | (23,171 | ) | (12,837 | ) | |||||||||||||
| Consolidated Operating Loss | $ | (36,256 | ) | $ | (8,713 | ) | $ | (66,615 | ) | $ | (20,851 | ) | |||||||||
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
Nine Months Ended September 30, |
||||||
| 2019 | 2018 | |||||
| Cash flows from operating activities | (in thousands) | |||||
| Net loss | $ | (65,648 | ) | $ | (14,912 | ) |
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||
| Restructuring and impairment charges | 24,351 | - | ||||
| Net proceeds from Shoals transaction | - | 2,655 | ||||
| Depreciation and amortization | 9,487 | 8,341 | ||||
| Amortization expense - right-of-use leased assets | 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 | - | ||||
| Deferred income taxes | (346 | ) | (4,840 | ) | ||
| Stock-based compensation recognized | 754 | 2,511 | ||||
| Other non-cash items, net | (1,364 | ) | (260 | ) | ||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||
| Accounts receivable | 9,483 | (31,305 | ) | |||
| Inventories | 10,407 | (14,465 | ) | |||
| Inventories on lease | - | (32,228 | ) | |||
| Other assets | (1,706 | ) | 406 | |||
| Accounts and contractual payables | (11,206 | ) | 18,159 | |||
| Accrued payroll and employee benefits | 1,254 | (449 | ) | |||
| Income taxes receivable/payable | (289 | ) | 814 | |||
| Accrued warranty | (1,643 | ) | 1,464 | |||
| Lease liability | (13,210 | ) | - | |||
| Other liabilities | 2,906 | (604 | ) | |||
| Accrued pension costs and accrued postretirement benefits | (417 | ) | (1,003 | ) | ||
| Net cash flows used in operating activities | (25,553 | ) | (67,381 | ) | ||
| Cash flows from investing activities | ||||||
| Purchase of restricted certificates of deposit | (1,416 | ) | (4,952 | ) | ||
| Maturity of restricted certificates of deposit | 5,862 | 5,220 | ||||
| Purchase of securities held to maturity | (1,986 | ) | (101,356 | ) | ||
| Proceeds from maturity of securities | 20,025 | 117,442 | ||||
| Cost of railcars available for lease | - | (5,119 | ) | |||
| Purchase of property, plant and equipment | (3,292 | ) | (1,107 | ) | ||
| Proceeds from sale of property, plant and equipment and railcars available for lease | 11,519 | 2,458 | ||||
| Net cash flows provided by investing activities | 30,712 | 12,586 | ||||
| Cash flows from financing activities | ||||||
| Proceeds from line of credit borrowings | 10,200 | - | ||||
| Employee stock settlement | (59 | ) | (117 | ) | ||
| Deferred financing costs | (929 | ) | - | |||
| Net cash flows provided by (used in) financing activities | 9,212 | (117 | ) | |||
| Net increase (decrease) in cash and cash equivalents | 14,371 | (54,912 | ) | |||
| 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 | $ | 59,441 | $ | 32,876 | ||
| INVESTOR & MEDIA CONTACT | Christopher J. Eppel |
| TELEPHONE | (800) 458-2235 |
