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FreightCar America, Inc. Reports Second Quarter 2018 Results

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CHICAGO, Aug. 01, 2018 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ:RAIL) today reported results for the second quarter ended June 30, 2018.

Financial Highlights

  • Second quarter revenue of $66.7 million on deliveries of 1,185 units
  • Second quarter net loss of $2.3 million, or $0.19 per diluted share
  • Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of $86.9 million at June 30, 2018, which reflects a total investment of $37.8 million in railcars built for the Company's JAIX leasing arm
  • Backlog now totals 2,319 railcars with an aggregate value of approximately $190 million
  • Completed all integration work associated with the acquisition of Navistar's rail operations at Shoals facility
  • Entered into a definitive agreement to sell the Danville, IL production facility for $2.2 million
  • On track to deliver original "Back to Basics" cost reduction goal early and now targeting to exit the year with a per car total cost reduction of $4,000 to $5,000
  • Full-year 2018 delivery outlook raised to range between 4,250 and 4,500 railcars

"The second quarter marks another step in the right direction for FreightCar America," said Jim Meyer, President and Chief Executive Officer of FreightCar America. "Our marketplace remains extremely challenging with continued pressures on pricing, and our backlog includes several smaller production runs. However, we have made meaningful progress on our ‘Back to Basics' operational improvement strategy and those efforts positively impacted our quarterly results. We are ahead of schedule on our previously announced plan to reduce our cost of goods sold by $3,000 to $4,000 per railcar by year end. As a result, we are now increasing our goal to exit the year on a run rate of $4,000 to $5,000 in savings per railcar."

Meyer concluded, "Despite soft industry dynamics, our railcar deliveries of 1,185 units showed improvement to both year-over-year and sequential period deliveries. Our quarterly order total of 1,450 railcars is down slightly compared to the second quarter of 2017 but increased compared to the first quarter of 2018. All 1,450 of the railcar orders received were for new railcars. Because of this, we are raising our full-year railcar delivery outlook range slightly from 4,000 to 4,300 railcars to 4,250 to 4,500 railcars for fiscal year 2018."

Second Quarter Results

  • Consolidated revenues were $66.7 million in the second quarter of 2018 compared to $118.7 million in the same quarter of 2017. The Company delivered 1,185 railcars in the second quarter of 2018, which included 368 new railcars, 514 rebuilt railcars and 303 leased railcars. This compares to 1,096 railcars delivered in the second quarter of 2017, all of which were new railcars.
  • The Company had a diversified backlog totaling 2,319 railcars at June 30, 2018, valued at approximately $190 million.
  • Consolidated operating loss for the second quarter of 2018 was $3.5 million compared to an operating loss of $1.0 million for the second quarter of 2017.
  • Net loss in the second quarter of 2018 was $2.3 million, or $0.19 per diluted share, compared to a net loss of $0.4 million, or $0.04 per diluted share, in the second quarter of 2017. 
  • Cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $86.9 million as of June 30, 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 short-term lease fleet and an increase in accounts receivable.  

Second Quarter 2018 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Thursday, August 2, 2018 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company's second quarter 2018 financial results. To participate in the conference call, please dial (800) 288-8960, Confirmation Number 452079.  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#: 452079

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 2, 2018 until 11:59 p.m. (Eastern Daylight Time) on September 2, 2018.  To access the replay, please dial (800) 475-6701.  The replay pass code is 452079.  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; Danville, Illinois; 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 the additional risk factors described in our filings with the Securities and Exchange Commission. 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, December 31,
    2018     2017  
  (In thousands)
Assets    
Current assets    
Cash, cash equivalents and restricted cash equivalents $     25,144   $     87,788  
Restricted certificates of deposit     5,452       5,720  
Marketable securities      56,353       42,917  
Accounts receivable, net     25,665       7,581  
Inventories, net     60,393       45,292  
Inventory on lease     37,778       5,550  
Other current assets     7,649       5,099  
Total current assets     218,434       199,947  
     
Property, plant and equipment, net     50,277       38,253  
  Railcars available for lease, net      24,384       23,434  
Goodwill     21,521       21,521  
Deferred income taxes, net     12,097       9,446  
Other long-term assets     3,160       3,303  
Total assets $     329,873   $     295,904  
     

Liabilities and Stockholders' Equity
   
Current liabilities    
Accounts and contractual payables $     38,600   $     23,329  
Accrued payroll and other employee costs     2,704       1,809  
Reserve for workers' compensation     3,575       3,394  
Accrued warranty     9,238       8,062  
Customer deposits     3,362       362  
Deferred income state and local incentives, current     2,219       2,219  
Deferred rent, current     6,466       178  
Other current liabilities     1,348       964  
Total current liabilities     67,512        40,317  
Accrued pension costs     5,197       5,763  
Accrued postretirement benefits, less current portion     5,314       5,556  
Deferred income state and local incentives, long-term     8,051       9,161  
Deferred rent, long-term     18,703       2,988  
Accrued taxes and other long-term liabilities     399       387  
Total liabilities     105,176       64,172  
     
Stockholders' equity    
Preferred stock     —         —  
Common stock     127       127  
Additional paid in capital     89,110       90,347  
Treasury stock, at cost     (9,685 )     (12,555 )
Accumulated other comprehensive loss     (7,495 )     (7,567 )
Retained earnings     152,640       161,380  
Total stockholders' equity     224,697       231,732  
Total liabilities and stockholders' equity $     329,873   $     295,904  
 


 
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
      2018     2017       2018     2017  
    (In thousands, except for share and per share data)
             
Revenues   $   66,743   $  118,672     $   149,716   $   258,208  
Cost of sales       61,904       113,428         145,473       243,158  
Gross profit       4,839       5,244         4,243       15,050  
Selling, general and administrative expenses       8,385       5,922         16,381       12,952  
Restructuring and impairment charges        —       369          —       1,726  
  Operating (loss) income       (3,546 )     (1,047 )       (12,138 )     372  
             
Interest expense and deferred financing costs       (27 )     (30 )       (59 )     (72 )
Other income (expense)       588        184         969       (115 )
(Loss) income before income taxes       (2,985 )     (893 )       (11,228 )     185   
Income tax (benefit) provision       (649 )     (445 )       (2,488 )     (5 )
Net (loss) income       (2,336 ) $   (448 )       (8,740 )     190   
             
Net (loss) income per common share – basic   $    (0.19  ) $   (0.04 )   $   (0.70 ) $   0.02  
             
Net (loss) income per common share – diluted   $    (0.19 ) $   (0.04 )   $   (0.70 ) $   0.02  
             
Weighted average common shares outstanding -            
basic       12,317,546        12,283,746         12,311,810       12,276,689  
             
Weighted average common shares outstanding -            
diluted        12,317,546       12,283,746         12,311,810       12,276,689  
             
Dividends declared per common share   $    —   $  0.09     $   —   $   0.18  
             


 
FreightCar America, Inc.
Segment Data
(Unaudited)
 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
      2018     2017       2018     2017  
    (In thousands)   (In thousands)
Revenues:            
Manufacturing   $    63,051   $   116,067     $   142,784   $   253,807  
Corporate and Other       3,692       2,605         6,932       4,401  
   Consolidated revenues   $   66,743   $   118,672      $   149,716   $   258,208  
             
Operating (loss) income:            
Manufacturing   $    1,708   $   2,328      $    (2,108 ) $   9,577  
Corporate and Other        (5,254 )     (3,375 )        (10,030 )     (9,205 )
   Consolidated operating (loss) income   $  (3,546 ) $   (1,047 )   $    (12,138 ) $   372  
 


 
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
  Six Months Ended
June 30,
    2018     2017  
  (In thousands)
Cash flows from operating activities    
Net (loss) income $    (8,740 ) $    190  
Adjustments to reconcile net (loss) income to net cash
flows (used in) provided by operating activities: 
     
Net proceeds from Shoals transaction     2,655       —  
Depreciation and amortization     5,448       4,672  
Recognition of deferred income from state and local incentives     (1,110 )     (1,109 )
Gain on sale of railcars available for lease      38       —  
Deferred income taxes     (2,671 )     (862 )
Stock-based compensation recognized     1,751       371  
Other non-cash items, net     (211 )     548  
Changes in operating assets and liabilities, net of acquisitions:    
  Accounts receivable     (18,084 )     8,364  
Inventories     (11,593 )       23,388  
Inventory on lease     (32,228 )     —  
Other assets     (1,697 )      141  
Accounts and contractual payables     14,619       (5,772 )
Accrued payroll and employee benefits     895       (1,255 )
Income taxes receivable/payable      684       12,712  
Accrued warranty      1,176       (351 )
Other liabilities      1,402       (243 )
Accrued pension costs and accrued postretirement benefits     (736 )     (61 )
Net cash flows (used in) provided by operating activities      (48,402 )      40,733  
     
Cash flows from investing activities    
     
Purchase of restricted certificates of deposit      (4,400 )      (4,668 )
Maturity of restricted certificates of deposit      4,668       2,084  
Purchase of securities held to maturity      (79,105 )     (33,915 )
Proceeds from maturity of securities       66,008       3,000  
Cost of railcars available for lease     (1,419 )     —  
Purchases of property, plant and equipment       (476 )     (445 )
Proceeds from sale of property, plant and equipment and railcars available for lease       600       119  
State and local incentives received       —       1,410  
Net cash flows used in investing activities       (14,124 )     (32,415 )
     
Cash flows from financing activities    
     
Employee stock settlement     (118 )     (14 )
Cash dividends paid to stockholders      —       (2,235 )
Net cash flows used in financing activities     (118 )     (2,249 )
     
Net (decrease) increase in cash and cash equivalents $     (62,644 ) $   6,069  
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 $    25,144   $   102,179  
     


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

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