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FreightCar America, Inc. Reports Second Quarter 2022 Results
Source: Nasdaq GlobeNewswire / 08 Aug 2022 16:15:01 America/New_York
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,
2022December 31,
2021Assets (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.
