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FreightCar America, Inc. Reports Third Quarter 2022 Results
Source: Nasdaq GlobeNewswire / 07 Nov 2022 16:15:01 America/New_York
Third quarter 2022 revenue up 47% year-over-year
Company reaffirms revenue and delivery outlook for fiscal year 2022
CHICAGO, Nov. 07, 2022 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) or (the “Company”), a diversified manufacturer of railroad freight cars, today reported results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
- Revenues of $85.7 million, up 47.1% year-over-year, with deliveries of 783 railcars, up 55% year-over-year
- Gross margin of 5.3% with gross profit of $4.6 million, compared to gross margin of 2.6% with gross profit of $1.5 million in the third quarter of 2021
- Manufacturing operating income of $3.1 million, compared to $163 thousand in the third quarter of 2021
- Net loss of ($17.8) million, or ($0.69) per share and adjusted net loss of ($5.4) million, or ($0.21) per share, accounting for primarily non-cash items including an $8.1 million pre-tax pension settlement loss
- Adjusted EBITDA of $1.6 million, compared to Adjusted EBITDA loss of ($3.5) million in the third quarter of 2021
- Quarter-end backlog totaled 2,529 railcars with an aggregate value of approximately $276 million
- 2022 revenue outlook reaffirmed at between $340 million and $360 million and deliveries of between 3,000 and 3,200 railcars
Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “FreightCar America delivered another quarter of strong top-line growth while also producing another record number of railcars at the Castaños facility. That said, our financial results were muted by the combined impacts of delivering lower margin orders accepted at the bottom of the cycle and elevated freight costs. We expect margins to strengthen starting in the fourth quarter as these orders are completed.”
Meyer continued, “While there is much more work to accomplish, we continued to make solid progress on our strategic and performance initiatives in Castaños. The new fabrication shop started operating in the third quarter and our expanded wheel mounting and axle machining facility achieved AAR certification just after the close of the quarter, both of which will bring meaningful efficiencies going forward. We continue to invest in the business and work to position ourselves as a world class manufacturer in Northern Mexico, anchored by the new purpose-built facility and an exceptional workforce.”
Meyer concluded, “We remain confident in our direction and look forward to the future benefits of a built-out manufacturing campus combined with a healthier macroeconomic environment and more normalized supply chains.”
Fiscal Year 2022 Outlook
- The Company has reaffirmed its outlook for fiscal year 2022 as follows:
Fiscal Year 2022
RevenueBetween $340 million and $360 million
Railcar DeliveriesBetween 3,000 and 3,200 railcars
Mike Riordan, Chief Financial Officer of FreightCar America, added, “With our new footprint in Mexico, we have right sized our business and improved our operating structure, which has allowed us to meaningfully reduce our cost structure. Over the past year, we have seen our production capability increase beyond our original expectation and the team in Castaños capture the operational efficiencies we envisioned. This has led to $7.2 million of Adjusted EBITDA generated during the first nine months of 2022, a $15.6 million improvement from the comparable 2021 period. As a result of this strong performance, we are reaffirming our previously stated 2022 outlook.”Third Quarter 2022 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Tuesday, November 8, 2022 at 11:00 a.m. (Eastern Time) to discuss its third 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=1576520&tp_key=59e5a87e0a
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 13733654. 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 Tuesday November 8, 2022, until 12:00 a.m. (Eastern Time) on Wednesday November 23, 2022. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13733654. An archived version of the webcast will also be available on the FreightCar America Investor Relations 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 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; potential financial and operational impacts of the COVID-19 pandemic; 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
(In thousands, except for share data)
(Unaudited)September 30,
2022December 31,
2021Assets Current assets Cash, cash equivalents and restricted cash equivalents $ 18,371 $ 26,240 Accounts receivable, net 12,174 9,571 VAT receivable 5,047 31,136 Inventories, net 84,218 56,012 Related party asset 4,017 8,680 Prepaid expenses 8,094 5,087 Total current assets 131,921 136,726 Property, plant and equipment, net 21,137 18,236 Railcars available for lease, net 19,697 20,160 Right of use asset 15,725 16,669 Other long-term assets 4,571 8,873 Total assets $ 193,051 $ 200,664 Liabilities and Stockholders’ Equity Current liabilities Accounts and contractual payables $ 44,428 $ 41,185 Related party accounts payable 1,944 8,870 Accrued payroll and other employee costs 3,448 2,912 Reserve for workers' compensation 1,050 1,563 Accrued warranty 3,129 2,533 Customer deposits — 3,300 Deferred income state and local incentives, current — 1,291 Lease liability, current 1,262 1,955 Other current liabilities 9,028 5,711 Total current liabilities 64,289 69,320 Long-term debt, net of current portion 91,597 79,484 Warrant liability 35,772 32,514 Accrued pension costs — 35 Deferred income state and local incentives, long-term — 1,216 Lease liability, long-term 15,871 16,617 Other long-term liabilities 4,370 3,134 Total liabilities 211,899 202,320 Stockholders’ deficit Preferred stock — — Common stock 201 190 Additional paid-in capital 87,704 83,742 Accumulated other comprehensive loss 2,427 (5,522 ) Accumulated deficit (109,180 ) (80,066 ) Total stockholders' deficit (18,848 ) (1,656 ) Total liabilities and stockholders’ deficit $ 193,051 $ 200,664
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except for share and per share data)
(Unaudited)Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues $ 85,743 $ 58,307 $ 235,765 $ 128,031 Cost of sales 81,189 56,769 214,564 123,180 Gross profit 4,554 1,538 21,201 4,851 Selling, general and administrative expenses 7,112 5,701 21,878 21,146 Loss on pension settlement 8,105 — 8,105 — Restructuring and impairment charges — — — 6,530 Operating loss (10,663 ) (4,163 ) (8,782 ) (22,825 ) Interest expense (6,087 ) (3,562 ) (17,549 ) (9,276 ) Loss on change in fair market value of warrant liability (1,274 ) (293 ) (3,258 ) (18,969 ) Gain on extinguishment of debt — 10,129 — 10,129 Other income 190 145 2,347 490 Income (loss) before income taxes (17,834 ) 2,256 (27,242 ) (40,451 ) Income tax provision (benefit) (28 ) 1,525 1,872 2,161 Net income (loss) $ (17,806 ) $ 731 $ (29,114 ) $ (42,612 ) Net income (loss) per common share- basic $ (0.69 ) $ 0.03 $ (1.19 ) $ (2.11 ) Net income (loss) per common share - diluted $ (0.69 ) $ 0.03 $ (1.19 ) $ (2.11 ) Weighted average common shares outstanding – basic 25,718,414 20,485,438 24,470,659 20,225,671 Weighted average common shares outstanding – diluted 25,718,414 22,111,824 24,470,659 20,225,671
FreightCar America, Inc.
Segment Data
(In thousands)
(Unaudited)Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues: Manufacturing $ 82,817 $ 55,898 $ 226,548 $ 121,076 Corporate and Other 2,926 2,409 9,217 6,955 Consolidated revenues $ 85,743 $ 58,307 $ 235,765 $ 128,031 Operating income (loss): Manufacturing $ 3,054 $ 163 $ 16,470 $ (5,618 ) Corporate and Other (13,717 ) (4,326 ) (25,252 ) (17,207 ) Consolidated operating income (loss) $ (10,663 ) (4,163 ) (8,782 ) (22,825 )
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)Nine Months Ended September 30, 2022 2021 Cash flows from operating activities (in thousands) Net loss $ (29,114 ) $ (42,612 ) Adjustments to reconcile net loss to net cash flows used in operating activities: Restructuring and impairment charges — 6,530 Depreciation and amortization 3,110 3,304 Non-cash lease expense on right-of-use assets 944 1,173 Recognition of deferred income from state and local incentives (2,507 ) (1,665 ) Loss on change in fair market value for warrant liability 3,258 18,969 Loss on pension settlement 8,105 - Stock-based compensation recognized 2,307 2,829 Non-cash interest expense 11,309 3,782 Gain on extinguishment of debt — (10,129 ) Other non-cash items, net (9 ) 314 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (2,603 ) 1,688 VAT receivable 24,634 (25,622 ) Inventories (30,110 ) (4,276 ) Other assets (3,741 ) (1,682 ) Related party asset, net (2,263 ) (617 ) Accounts and contractual payables 4,386 1,502 Accrued payroll and employee benefits 536 (302 ) Income taxes payable 737 1,111 Accrued warranty 596 (2,619 ) Lease liability (1,439 ) (1,641 ) Customer deposits (3,300 ) (3,896 ) Other liabilities 1,798 (2,492 ) Accrued pension costs and accrued postretirement benefits (219 ) (607 ) Net cash flows used in operating activities (13,585 ) (56,958 ) Cash flows from investing activities Maturity of restricted certificates of deposit — 182 Purchase of property, plant and equipment (3,380 ) (1,983 ) Proceeds from sale of property, plant and equipment and railcars available for lease — 433 Net cash flows used in investing activities (3,380 ) (1,368 ) Cash flows from financing activities Proceeds from issuance of long-term debt — 16,000 Deferred financing costs — (1,517 ) Borrowings on revolving line of credit 84,396 38,571 Repayments on revolving line of credit (75,239 ) (21,225 ) Employee stock settlement (57 ) (7 ) Payment for stock appreciation rights exercised (4 ) (57 ) Net cash flows provided by financing activities 9,096 31,765 Net decrease in cash and cash equivalents (7,869 ) (26,561 ) 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 $ 18,371 $ 27,486 Supplemental cash flow information Interest paid $ 6,240 $ 4,575 Income tax refunds received, net of payments $ — $ 5 Non-cash transactions Change in unpaid construction in process $ 2,168 $ 68 Accrued PIK interest paid through issuance of PIK Note $ 1,093 $ 915 Issuance of warrants $ 8,560 $ 4,958 Issuance of equity fee $ 3,000 $ 1,000
FreightCar America, Inc.
Reconciliation of income before taxes to EBITDA(1) and Adjusted EBITDA(2)
(In thousands)
(Unaudited)Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Income (loss) before income taxes $ (17,834 ) $ 2,256 $ (27,242 ) $ (40,451 ) Depreciation & Amortization 1,050 1,108 3,110 3,304 Interest Expense, net 6,087 3,562 17,549 9,276 EBITDA (10,697 ) 6,926 (6,583 ) (27,871 ) Change in Fair Value of Warrant (a) 1,274 293 3,258 18,969 Restructuring and impairment charges (b) - - - 6,530 Gain on Debt Extinguishment (c) - (10,129 ) - (10,129 ) Alabama Grant Amortization (d) - (555 ) (1,857 ) (1,665 ) Mexican Permanent VAT (e) 908 - 908 - Loss on Pension Settlement (f) 8,105 - 8,105 - Transaction Costs (g) 116 196 116 491 Startup Costs (h) 949 - 949 - Consulting Costs (i) 226 - 988 - Corporate Realignment (j) 63 - 1,323 - Legal Reserve (k) - - - 500 Plant Transition Costs (l) - - - 2,386 Stock Based Compensation 817 (133 ) 2,307 2,829 Other, net (190 ) (145 ) (2,347 ) (490 ) Adjusted EBITDA $ 1,571 $ (3,547 ) $ 7,167 $ (8,450 ) (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 recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. d) The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). e) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. f) The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. g) The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. h) The Company incurred certain costs during 2022 related to new production lines. i) The Company incurred certain non-recurring consulting costs during the fourth quarter of 2021 and first quarter of 2022. j) The Company incurred certain non-recurring corporate realignment costs in 2022. k) During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. l) 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 in 2021. 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.
FreightCar America, Inc.
Reconciliation of Net income (loss) and Adjusted Net income (loss)(1)
(In thousands)
(Unaudited)Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Net income (loss) $ (17,806 ) $ 731 $ (29,114 ) $ (42,612 ) Change in Fair Value of Warrant (a) 1,274 293 3,258 18,969 Restructuring and impairment charges (b) - - - 6,530 Gain on Debt Extinguishment (c) - (10,129 ) - (10,129 ) Alabama Grant Amortization (d) - (555 ) (1,857 ) (1,665 ) Mexican Permanent VAT (e) 908 - 908 - Loss on Pension Settlement (f) 8,105 - 8,105 - Transaction Costs (g) 116 196 116 491 Startup Costs (h) 949 - 949 - Consulting Costs (i) 226 - 988 - Corporate Realignment (j) 63 - 1,323 - Legal Reserve (k) - - - 500 Plant Transition Costs (l) - - - 2,386 Stock Based Compensation 817 (133 ) 2,307 2,829 Other, net (190 ) (145 ) (2,347 ) (490 ) Total non-GAAP adjustments 12,268 (10,473 ) 13,750 19,421 Income tax impact on non-GAAP adjustments(m) 104 - 387 971 Adjusted Net loss $ (5,434 ) $ (9,742 ) $ (14,977 ) $ (22,220 ) (1) Adjusted net income (loss) represents net income (loss) 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 recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. d) The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). e) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. f) The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. g) The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. h) The Company incurred certain costs during 2022 related to new production lines. i) The Company incurred certain non-recurring consulting costs during the fourth quarter of 2021 and first quarter of 2022. j) The Company incurred certain non-recurring corporate realignment costs in 2022. k) During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. l) 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 in 2021. m) Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the applicable jurisdictional tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected. We believe that Adjusted net income (loss) 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 net income (loss) is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted net income (loss) 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 net income (loss) is not necessarily comparable to that of other similarly titled measures reported by other companies.
FreightCar America, Inc.
Reconciliation of EPS and Adjusted EPS(1)
(Unaudited)Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 EPS $ (0.69 ) $ 0.03 $ (1.19 ) $ (2.11 ) Adjustments per share: Change in Fair Value of Warrant (a) 0.05 0.01 0.13 0.94 Restructuring and impairment charges (b) - - - 0.32 Gain on Debt Extinguishment (c) - (0.50 ) - (0.50 ) Alabama Grant Amortization (d) - (0.03 ) (0.08 ) (0.08 ) Mexican Permanent VAT (e) 0.04 - 0.04 - Loss on Pension Settlement (f) 0.32 - 0.33 - Transaction Costs (g) - 0.01 - 0.02 Startup Costs (h) 0.04 - 0.04 - Consulting Costs (i) 0.01 - 0.04 - Corporate Realignment (j) - - 0.05 - Legal Reserve (k) - - - 0.02 Plant Transition Costs (l) - - - 0.12 Stock Based Compensation 0.03 (0.01 ) 0.09 0.14 Other, net (0.01 ) (0.01 ) (0.10 ) (0.02 ) Total non-GAAP adjustments pre-tax per share 0.48 (0.53 ) 0.54 0.96 Income tax impact on non-GAAP adjustments per share (m) - - 0.02 0.05 Adjusted EPS $ (0.21 ) $ (0.50 ) $ (0.63 ) $ (1.10 ) (1) Adjusted EPS represents basic EPS 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 recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. d) The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). e) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. f) The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. g) The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. h) The Company incurred certain costs during 2022 related to new production lines. i) The Company incurred certain non-recurring consulting costs during the fourth quarter of 2021 and first quarter of 2022. j) The Company incurred certain non-recurring corporate realignment costs in 2022. k) During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. l) 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 in 2021. m) Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the applicable jurisdictional tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected. We believe that Adjusted EPS 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 EPS is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EPS 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 EPS is not necessarily comparable to that of other similarly titled measures reported by other companies.
