FreightCar America, Inc. Reports Fourth Quarter and Full Year 2019 Results

Thursday, 27. February 2020 02:06

‘Back to Basics’ transformational strategy has repositioned the business to compete profitably when we enter the next upturn in the cycle

Finished the year with $70 million in cash, cash equivalents, marketable securities, and restricted certificates of deposit

CHICAGO, Feb. 26, 2020 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the fourth quarter ended December 31, 2019.

Business Highlights

  • Fourth quarter revenue of $44.9 million on deliveries of 439 units
  • Fourth quarter net loss of $9.5 million, or $0.75 per diluted share, which includes the impact of asset sales and certain restructuring items
  • Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $70.0 million at December 31, 2019
  • Year-end backlog totaled 1,650 railcars with an aggregate value of approximately $206 million
  • Subsequent to year end, the Company received additional orders for 300 railcars
  • Full-year 2020 delivery outlook forecasted to range between 2,000 and 2,500 railcars
  • ‘Back to Basics’ benefitted fourth quarter results with over $2,000 per railcar of material cost savings in 2019 on a run-rate basis, which, when combined with savings achieved in 2018, yielded more than $5,000 of savings per railcar, excluding commodity price movements
  • Company expects its Castaños, Mexico facility to be in production by the end of 2020

“2019 was a year of significant progress for FreightCar as we continued to aggressively transform the business and reposition it to compete profitably in the future,” said Jim Meyer, President and Chief Executive Officer of FreightCar America. “While industry conditions remained challenged, we focused on maintaining our internal momentum by executing against the last few steps of our ‘Back to Basics’ strategy. This included strong performance against our goals to remove over $5,000 per car in material costs over the last two years. It also included significant work to revamp our product portfolio to better align with customer needs. Lastly, we took important steps to optimize our manufacturing footprint through further domestic consolidation and a new partnership to expand into Mexico. The latter will allow us to increase the competitiveness of our portfolio. When complete, our footprint will include the industry’s newest production facilities in both the U.S. and Mexico. As importantly, we completed this hard work while maintaining a solid and supportive balance sheet, despite the significant downcycle in our markets. All of our efforts in 2018 and 2019 have laid the framework for FreightCar to succeed in the next market cycle.”

Fourth Quarter Results

  • Consolidated revenues were $44.9 million in the fourth quarter of 2019 compared to $87.8 million in the same quarter of 2018. The Company delivered 439 railcars in the fourth quarter of 2019, which included 354 new railcars and 85 rebuilds. This compares to 1,047 railcars delivered in the fourth quarter of 2018, which included 827 new railcars and 220 rebuilt railcars.

  • The Company had a backlog totaling 1,650 railcars at December 31, 2019, valued at approximately $206 million.

  • Consolidated operating loss for the fourth quarter of 2019 was $9.0 million, compared to an operating loss of $11.3 million for the fourth quarter of 2018. This quarter’s operating loss included a $2.0 million charge from the loss on a sale of 100 railcars previously held in the leasing fleet, a $6.6 million non-cash gain related to the termination of a postretirement benefit plan and a net $2.0 million restructuring gain largely attributed to a $2.4 million non-cash gain on our Roanoke, VA facility related to the termination of the lease.

  • Net loss in the fourth quarter of 2019 was $9.5 million, or $0.75 per diluted share, compared to net loss of $25.7 million, or $2.06 per diluted share, in the fourth quarter of 2018.

Full Year 2019 Results

  • Consolidated revenues for the fiscal year ended December 31, 2019 were $230.0 million compared to $316.5 million for the fiscal year ended December 31, 2018.

  • The Company delivered 2,276 railcars in 2019, which included 1,728 new railcars and 548 rebuilt railcars. This compares to 4,214 railcars delivered in 2018, which included 2,584 new railcars, 1,205 rebuilt railcars and 425 leased railcars.

  • Consolidated operating loss for 2019 was $75.6 million, which included a net $22.4 million relating to impairment and restructuring charges, $7.3 million in charges from the loss on sale of railcars previously held in the leasing fleet, and a $6.6 million non-cash gain related to the termination of a postretirement benefit plan. This compared to consolidated operating loss of $32.1 million in 2018, which included a $0.6 million gain on sale of our Danville, IL facility.

  • 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 2019 was $75.2 million, or $5.95 per diluted share, compared to a net loss of $40.6 million, or $3.26 per diluted share, in 2018.

  • Cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $70.0 million as of December 31, 2019, compared to $68.0 million as of December 31, 2018. The slight increase in cash was primarily driven by lower inventory levels and the monetization of railcars in our lease fleet, largely offset by negative results from operations. 

Fourth Quarter 2019 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Thursday, February 27, 2020 at 11:00 a.m. (Eastern Standard Time) to discuss the Company’s fourth quarter 2019 financial results. To participate in the conference call, please dial (844) 291-5491, Confirmation Number 3826331.  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://attglobal.webcasts.com/viewer/event.jsp?ei=1285861&tp_key=1fddfc2c7d

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 2:00 p.m. (Eastern Standard Time) on February 27, 2020 until 11:59 p.m. (Eastern Daylight Time) on March 27, 2020.  To access the replay, please dial (866) 207-1041 or (402) 970-0847.  The replay pass code is 8502743.  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)

 December 31,
 2019
 December 31,
2018
    
Assets(in thousands)
Current assets   
Cash, cash equivalents and restricted cash equivalents$66,257  $45,070 
Restricted certificates of deposit 3,769   4,952 
Marketable securities -   18,019 
Accounts receivable, net 6,991   18,218 
Inventories, net 25,092   64,562 
Other current assets 7,570   5,012 
Total current assets 109,679   155,833 
    
Property, plant and equipment, net 38,564   45,317 
Railcars available for lease, net 38,900   64,755 
Right of use asset 56,507   - 
Goodwill -   21,521 
Other long-term assets 1,552   2,311 
    
Total assets$245,202  $289,737 
    
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts and contractual payables$11,713  $34,749 
Accrued payroll and other employee costs 1,389   1,639 
Reserve for workers' compensation 3,210   3,344 
Accrued warranty 8,388   9,309 
Customer deposits 5,123   3,000 
Deferred income state and local incentives, current 2,219   2,219 
Deferred rent, current -   6,466 
Lease liability, current 14,960   - 
Other current liabilities 2,428   1,324 
Total current liabilities 49,430   62,050 
Long-term debt 10,200   - 
Accrued pension costs 6,510   5,841 
Accrued postretirement benefits, less current portion 420   4,975 
Deferred income state and local incentives, long-term 4,722   6,941 
Deferred rent, long-term -   15,519 
Lease liability, long-term 53,766   - 
Other long-term liabilities 3,000   801 
    
Total liabilities 128,048   96,127 
Stockholders’ equity   
Preferred stock -   - 
Common stock 127   127 
Additional paid in capital 83,027   90,593 
Treasury stock, at cost (989)  (9,721)
Accumulated other comprehensive loss (10,780)  (8,188)
Retained earnings 45,824   120,799 
    
Total FreightCar America stockholders' equity 117,209   193,610 
Noncontrolling interest in JV (55)  - 
Total stockholders' equity 117,154   193,610 
Total liabilities and stockholders’ equity$245,202  $289,737 
        

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

  Three Months Ended
 Twelve Months Ended
  December 31,
 December 31,
         
  2019
 2018
 2019 2018
         
         
  (In thousands, except for share and per share data)
                 
Revenues $44,938  $87,835  $229,958  $316,519 
Cost of sales  53,003   91,867   244,258   320,146 
Gross loss  (8,065)  (4,032)  (14,300)  (3,627)
Selling, general and administrative expenses  7,511   7,222   38,302   29,051 
Loss on sale of railcars available for lease  2,028   -   7,266   - 
Gain on sale of facility  -   -   -   (573)
Gain on termination of postretirement benefit plan  (6,637)  -   (6,637)  - 
Restructuring and impairment charges  (1,980)  -   22,371   - 
Operating loss  (8,987)  (11,254)  (75,602)  (32,105)
Interest expense and deferred financing costs  (235)  (70)  (609)  (155)
Other income  93   427   858   1,848 
Loss before income taxes  (9,129)  (10,897)  (75,353)  (30,412)
Income tax (benefit) provision  461   14,772   (115)  10,169 
Net loss  (9,590)  (25,669)  (75,238)  (40,581)
Less Net loss attributable to noncontrolling interest in JV  (55)  -   (55)  - 
                 
Net loss attributable to FreightCar America $(9,535) $(25,669) $(75,183) $(40,581)
                 
Net loss per common share attributable to FreightCar America- basic $(0.75) $(2.06) $(5.95) $(3.26)
         
Net loss per common share attributable to FreightCar America- diluted $(0.75) $(2.06) $(5.95) $(3.26)
         
Weighted average common shares outstanding - basic  12,359,478   12,325,876   12,352,142   12,318,861 
         
Weighted average common shares outstanding - diluted  12,359,478   12,325,876   12,352,142   12,318,861 
         
Dividends declared per common share $-  $-  $-  $- 
                 

FreightCar America, Inc.
Segment Data
(Unaudited)

  Three Months Ended
 Twelve Months Ended
  December 31, 
 December 31,
  2019
 2018
 2019 2018
  (In thousands)
 (In thousands)
Revenues:                
Manufacturing $42,784  $84,208  $219,064  $302,154 
Corporate and Other  2,154   3,627   10,894   14,365 
Consolidated Revenues $44,938  $87,835  $229,958  $316,519 
                 
Operating (Loss) Income:                
Manufacturing $(10,057) $(6,541) $(53,501) $(14,556)
Corporate and Other  1,070   (4,713)  (22,101)  (17,549)
Consolidated Operating (Loss) Income $(8,987) $(11,254) $(75,602) $(32,105)
                 

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

 Twelve Months Ended
 December 31,
 2019
 2018
 (in thousands)
Cash flows from operating activities       
Net loss$(75,238) $(40,581)
Adjustments to reconcile net loss to net cash flows used in operating activities:       
Restructuring and impairment charges 22,367   - 
Net proceeds from Shoals transaction -   2,655 
Depreciation and amortization 12,438   12,017 
Amortization expense - right-of-use leased assets 10,485   - 
Recognition of deferred income from state and local incentives (2,219)  (2,220)
Loss on sale of railcars available for lease 7,197   - 
Gain on termination of postretirement benefit plan (6,637)  - 
Deferred income taxes 176   9,969 
Stock-based compensation recognized 1,225   3,198 
Other non-cash items, net (975)  (304)
Changes in operating assets and liabilities, net of acquisitions:       
Accounts receivable 11,227   (10,637)
Inventories 40,649   (16,311)
Other assets (2,127)  1,728 
Accounts and contractual payables (23,957)  10,693 
Accrued payroll and employee benefits (1,368)  (165)
Income taxes receivable/payable 155   657 
Accrued warranty (921)  1,247 
Lease liability (17,602)  - 
Other liabilities 6,201   (2,461)
Accrued pension costs and accrued postretirement benefits (55)  (1,129)
Net cash flows used in operating activities (18,979)  (31,644)
      
Cash flows from investing activities     
Purchase of restricted certificates of deposit (4,981)  (8,312)
Maturity of restricted certificates of deposit 6,164   9,080 
Purchase of securities held to maturity (1,986)  (111,356)
Proceeds from maturity of securities 20,025   136,716 
Cost of railcars available for lease -   (37,347)
Purchase of property, plant and equipment (5,573)  (2,185)
Proceeds from sale of property, plant and equipment and railcars available for lease 17,305   2,458 
Net cash flows provided by (used in) investing activities 30,954   (10,946)
      
Cash flows from financing activities     
Proceeds from line of credit borrowings 10,200   - 
Employee stock settlement (59)  (118)
Deferred financing costs (929)  (10)
Net cash flows provided by (used in) financing activities 9,212   (128)
      
Net increase (decrease) in cash and cash equivalents 21,187   (42,718)
Cash, cash equivalents and restricted cash equivalents at beginning of year 45,070   87,788 
Cash, cash equivalents and restricted cash equivalents at end of year$66,257  $45,070 


INVESTOR & MEDIA CONTACTJosh Littman or Chris Hodges
TELEPHONE312-445-2870

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