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FreightCar America, Inc. Reports Second Quarter 2022 Results

·14-min read
FreightCar America, Inc.
FreightCar America, Inc.

Second quarter 2022 revenue up 52% year-over-year and gross margin of 11.6%

Company raises revenue and delivery outlook for fiscal year 2022

CHICAGO, Aug. 08, 2022 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) (“FCA” or the “Company”), a diversified manufacturer of railroad freight cars, today reported results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Revenues of $56.8 million, up 52.0% year-over-year, on deliveries of 468 railcars

  • Gross margin of 11.6% with gross profit of $6.6 million and manufacturing operating income of $4.9 million

  • Net income of $14.5 million, or $0.58 per share

  • Adjusted EBITDA of $2.3 million

  • Quarter-end backlog totaled 2,972 railcars with an aggregate value of approximately $320 million

  • 2022 revenue outlook raised to between $340 million and $360 million and delivery outlook raised to between 3,000 and 3,200 railcars

Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “FreightCar America reported solid results in the second quarter, recording positive Adjusted EBITDA on just 468 railcars due to planned line changeovers which temporarily curtailed production. The changeovers went smoothly and according to plan, and these results demonstrate our ability to generate superior margins even while producing far fewer units and against the continuing backdrop of high steel costs. For the balance of the year, we expect to produce upwards of 2,000 railcars.”

Meyer continued, “Our work to expand the Castaños facility continues, and we believe that we are well on our way to building a world class manufacturing footprint in Northern Mexico with equal focus on product flexibility, quality, and low cost. At the same time, our commercial team remains focused on growing our business in a margin-accretive manner.”

Second Quarter 2022 Results

  • Consolidated revenues were $56.8 million in the second quarter of 2022, compared to $37.4 million in the second quarter of 2021. The Company delivered 468 railcars in the second quarter of 2022, compared to 313 railcars in the second quarter of 2021.

  • Net income in the second quarter of 2022 was $14.5 million, or $0.58 per share, compared to net loss of ($4.2) million, or ($0.24) per share, in the second quarter of 2021. Net income/loss for the current and prior periods included non-operating items that impacted results, including:

    • $18.7 million non-cash gain related to the change in fair market value of warrant liability and a $2.8 million non-cash gain for stock-based compensation in the second quarter of 2022. In the second quarter of 2021, there was a non-cash gain of $3.5 million related to the change in fair market value of warrant liability.

  • Adjusted EBITDA for the second quarter of 2022 was $2.3 million, compared to Adjusted EBITDA loss of ($3.1) million for the second quarter of 2021.

Fiscal Year 2022 Outlook

  • The Company has raised its outlook for fiscal year 2022 as follows:

Fiscal Year 2022

Revenue

Between $340 million and $360 million

Railcar Deliveries

Between 3,000 and 3,200 railcars

Mike Riordan, Chief Financial Officer, added, “We executed on our strategic and financial objectives in the second quarter, and while our production year-to-date was largely in line with our internal expectations, we are expecting a significant uptick in units delivered for the balance of fiscal 2022. Due to stronger levels of order activity, and a robust backlog, we are raising our previously stated 2022 outlook.”

Second Quarter 2022 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Tuesday, August 9, 2022 at 11:00 a.m. (Eastern Time) to discuss its second quarter 2022 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 at:

Event URL: https://viavid.webcasts.com/starthere.jsp?ei=1558577&tp_key=e146d97490

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. Interested parties may also participate in the call by dialing (877) 407-0789 or (201) 689-8562 and entering the passcode 13731238. Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call.

An audio replay of the conference call will be available beginning at 2:00 p.m. (Eastern Time) on August 9, 2022, until 12:00 a.m. (Eastern Time) on Wednesday August 23, 2022. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13731238. An archived version of the webcast will also be available on the Company’s website.

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 and coal cars, and also specializes in the conversion of railcars for repurposed use. FreightCar America is headquartered in Chicago, Illinois and has facilities in the following locations: 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 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.

INVESTOR & MEDIA CONTACT

Lisa Fortuna or Stephen Poe

E-MAIL

RAIL@alpha-ir.com

TELEPHONE

312-445-2870

FreightCar America, Inc.

Condensed Consolidated Balance Sheets
(Unaudited)

 

 

June 30,
2022

 

 

December 31,
2021

 

 

 

 

 

Assets

 

(in thousands)

 

Current assets

 

 

 

 

 

 

Cash, cash equivalents and restricted cash equivalents

 

$

21,531

 

 

$

26,240

 

Accounts receivable, net

 

 

23,488

 

 

 

9,571

 

VAT receivable

 

 

13,307

 

 

 

31,136

 

Inventories, net

 

 

75,845

 

 

 

56,012

 

Related party asset

 

 

5,121

 

 

 

8,680

 

Prepaid expenses

 

 

11,188

 

 

 

5,087

 

Total current assets

 

 

150,480

 

 

 

136,726

 

Property, plant and equipment, net

 

 

19,284

 

 

 

18,236

 

Railcars available for lease, net

 

 

19,852

 

 

 

20,160

 

Right of use asset

 

 

16,033

 

 

 

16,669

 

Other long-term assets

 

 

6,705

 

 

 

8,873

 

Total assets

 

$

212,354

 

 

$

200,664

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts and contractual payables

 

$

46,767

 

 

$

41,185

 

Related party accounts payable

 

 

5,454

 

 

 

8,870

 

Accrued payroll and other employee costs

 

 

1,883

 

 

 

2,912

 

Reserve for workers' compensation

 

 

1,271

 

 

 

1,563

 

Accrued warranty

 

 

4,788

 

 

 

2,533

 

Customer deposits

 

 

18,706

 

 

 

3,300

 

Deferred income state and local incentives, current

 

 

 

 

 

1,291

 

Lease liability, current

 

 

1,623

 

 

 

1,955

 

Other current liabilities

 

 

5,626

 

 

 

5,711

 

Total current liabilities

 

 

86,118

 

 

 

69,320

 

Long-term debt, net of current portion

 

 

81,960

 

 

 

79,484

 

Warrant liability

 

 

34,498

 

 

 

32,514

 

Accrued pension costs

 

 

 

 

 

35

 

Deferred income state and local incentives, long-term

 

 

 

 

 

1,216

 

Lease liability, long-term

 

 

15,995

 

 

 

16,617

 

Other long-term liabilities

 

 

3,934

 

 

 

3,134

 

Total liabilities

 

 

222,505

 

 

 

202,320

 

Stockholders’ deficit

 

 

 

 

 

 

Preferred stock

 

-

 

 

-

 

Common stock

 

 

198

 

 

 

190

 

Additional paid-in capital

 

 

86,380

 

 

 

83,742

 

Accumulated other comprehensive loss

 

 

(5,355

)

 

 

(5,522

)

Accumulated deficit

 

 

(91,374

)

 

 

(80,066

)

Total stockholders' deficit

 

 

(10,151

)

 

 

(1,656

)

Total liabilities and stockholders’ deficit

 

$

212,354

 

 

$

200,664

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

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

 

 

 

 

 

Revenues

 

$

56,786

 

 

$

37,354

 

 

$

150,022

 

 

$

69,724

 

Cost of sales

 

 

50,197

 

 

 

35,357

 

 

 

133,375

 

 

 

66,411

 

Gross profit

 

 

6,589

 

 

 

1,997

 

 

 

16,647

 

 

 

3,313

 

Selling, general and administrative expenses

 

 

4,053

 

 

 

6,294

 

 

 

14,766

 

 

 

15,445

 

Restructuring and impairment charges

 

 

 

 

 

(120

)

 

 

 

 

 

6,530

 

Operating income (loss)

 

 

2,536

 

 

 

(4,177

)

 

 

1,881

 

 

 

(18,662

)

Interest expense

 

 

(5,757

)

 

 

(3,212

)

 

 

(11,462

)

 

 

(5,714

)

Gain (loss) on change in fair market value of warrant liability

 

 

18,746

 

 

 

3,452

 

 

 

(1,984

)

 

 

(18,676

)

Other income

 

 

661

 

 

 

230

 

 

 

2,157

 

 

 

345

 

Income (loss) before income taxes

 

 

16,186

 

 

 

(3,707

)

 

 

(9,408

)

 

 

(42,707

)

Income tax provision

 

 

1,647

 

 

 

504

 

 

 

1,900

 

 

 

636

 

Net income (loss)

 

$

14,539

 

 

$

(4,211

)

 

$

(11,308

)

 

$

(43,343

)

Net income (loss) per common share- basic

 

$

0.58

 

 

$

(0.24

)

 

$

(0.47

)

 

$

(2.19

)

Net income (loss) per common share - diluted

 

$

0.58

 

 

$

(0.24

)

 

$

(0.47

)

 

$

(2.19

)

Weighted average common shares outstanding – basic

 

 

24,499,784

 

 

 

20,160,410

 

 

 

23,994,327

 

 

 

20,084,199

 

Weighted average common shares outstanding – diluted

 

 

24,499,784

 

 

 

20,160,410

 

 

 

23,994,327

 

 

 

20,084,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FreightCar America, Inc.
Segment Data
(Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing

 

$

53,606

 

 

$

35,158

 

 

$

143,731

 

 

$

65,177

 

Corporate and Other

 

 

3,180

 

 

 

2,196

 

 

 

6,291

 

 

 

4,547

 

Consolidated revenues

 

$

56,786

 

 

$

37,354

 

 

$

150,022

 

 

$

69,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing

 

$

4,900

 

 

$

237

 

 

$

13,416

 

 

$

(5,781

)

Corporate and Other

 

 

(2,364

)

 

 

(4,414

)

 

 

(11,535

)

 

 

(12,881

)

Consolidated operating income (loss)

 

$

2,536

 

 

$

(4,177

)

 

$

1,881

 

 

$

(18,662

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

 

 

Cash flows from operating activities

 

(in thousands)

 

 

 

 

 

Net loss

 

$

(11,308

)

 

$

(43,343

)

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

 

 

 

 

 

 

Restructuring and impairment charges

 

 

 

 

 

6,530

 

Depreciation and amortization

 

 

2,060

 

 

 

2,196

 

Non-cash lease expense on right-of-use assets

 

 

636

 

 

 

887

 

Recognition of deferred income from state and local incentives

 

 

(2,507

)

 

 

(1,110

)

Loss on change in fair market value for warrant liability

 

 

1,984

 

 

 

18,676

 

Stock-based compensation recognized

 

 

1,490

 

 

 

2,961

 

Non-cash interest expense

 

 

7,472

 

 

 

1,981

 

Other non-cash items, net

 

 

 

 

 

96

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

(13,917

)

 

 

916

 

VAT receivable

 

 

16,940

 

 

 

(16,814

)

Inventories

 

 

(16,926

)

 

 

(6,814

)

Other assets

 

 

(7,281

)

 

 

(6,263

)

Related party asset, net

 

 

143

 

 

 

(2,769

)

Accounts and contractual payables

 

 

3,525

 

 

 

10,633

 

Accrued payroll and employee benefits

 

 

(1,028

)

 

 

(802

)

Income taxes payable

 

 

1,036

 

 

 

(360

)

Accrued warranty

 

 

2,255

 

 

 

(2,366

)

Lease liability

 

 

(954

)

 

 

(1,180

)

Customer deposits

 

 

15,406

 

 

 

 

Other liabilities

 

 

(1,527

)

 

 

(6,749

)

Accrued pension costs and accrued postretirement benefits

 

 

105

 

 

 

(415

)

Net cash flows used in operating activities

 

 

(2,396

)

 

 

(44,109

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Maturity of restricted certificates of deposit

 

 

 

 

 

182

 

Purchase of property, plant and equipment

 

 

(2,808

)

 

 

(1,433

)

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

 

 

 

 

 

433

 

Net cash flows used in investing activities

 

 

(2,808

)

 

 

(818

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

16,000

 

Deferred financing costs

 

 

 

 

 

(480

)

Borrowings on revolving line of credit

 

 

49,282

 

 

 

7,220

 

Repayments on revolving line of credit

 

 

(48,770

)

 

 

(11,068

)

Employee stock settlement

 

 

(13

)

 

 

(7

)

Payment for stock appreciation rights exercised

 

 

(4

)

 

 

(55

)

Net cash flows provided by financing activities

 

 

495

 

 

 

11,610

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(4,709

)

 

 

(33,317

)

Cash, cash equivalents and restricted cash equivalents at beginning of period

 

 

26,240

 

 

 

54,047

 

Cash, cash equivalents and restricted cash equivalents at end of period

 

$

21,531

 

 

$

20,730

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

Interest paid

 

$

3,990

 

 

$

2,813

 

Income tax refunds received, net of payments

 

$

 

 

$

5

 

Non-cash transactions

 

 

 

 

 

 

Change in unpaid construction in process

 

$

(8

)

 

$

530

 

Accrued PIK interest paid through issuance of PIK Note

 

$

722

 

 

$

553

 

Issuance of warrants

 

$

8,560

 

 

$

 

Issuance of equity fee

 

$

2,000

 

 

$

 

 

 

 

 

 

 

 

FreightCar America, Inc.
Reconciliation of income before taxes to EBITDA(1) and Adjusted EBITDA(2)
(Unaudited)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2022

 

 

2021

 

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

$

16,186

 

$

(3,707

)

 

 

$

(9,408

)

$

(42,707

)

Depreciation & Amortization

 

1,036

 

 

999

 

 

 

 

2,060

 

 

2,196

 

Interest Expense, net

 

5,757

 

 

3,212

 

 

 

 

11,462

 

 

5,714

 

EBITDA

 

22,979

 

 

504

 

 

 

 

4,114

 

 

(34,797

)

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Warrant(a)

 

(18,746

)

 

(3,452

)

 

 

 

1,984

 

 

18,676

 

Restructuring and impairment charges(b)

 

-

 

 

(120

)

 

 

 

-

 

 

6,530

 

Alabama Grant Amortization(c)

 

-

 

 

(555

)

 

 

 

(1,857

)

 

(1,110

)

Transaction Costs(d)

 

-

 

 

296

 

 

 

 

-

 

 

296

 

Consulting Costs(e)

 

412

 

 

-

 

 

 

 

762

 

 

-

 

Corporate Realignment(f)

 

1,075

 

 

-

 

 

 

 

1,260

 

 

-

 

Legal Reserve(g)

 

-

 

 

-

 

 

 

 

-

 

 

500

 

Plant Transition Costs(h)

 

-

 

 

140

 

 

 

 

-

 

 

2,386

 

Stock Based Compensation

 

(2,754

)

 

299

 

 

 

 

1,490

 

 

2,961

 

Other, net

 

(661

)

 

(230

)

 

 

 

(2,157

)

 

(345

)

Adjusted EBITDA

$

2,305

 

$

(3,118

)

 

 

$

5,596

 

$

(4,903

)

(1) EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall performance of the company’s business. EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similar titled measures reported by other companies.

(2) Adjusted EBITDA represents EBITDA before the following charges:

a)   This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability.
b)   The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities.
c)   The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss).
d)   The Company incurred certain costs during 2021 for nonrecurring professional services associated with its financing arrangements.
e)   The Company incurred certain non-recurring consulting costs during the fourth quarter of 2021 and first quarter of 2022.
f)   The Company incurred certain non-recurring corporate realignment costs in the first quarter of 2022.
g)   During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute.
h)   During 2020, the Company implemented a program to shift production originally planned for its U.S. plants to its Castaños facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaños facility.

We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.