FreightCar America, Inc. Reports First Quarter 2017 Results

Highlights

First quarter revenue of $139.5 million on deliveries of 1,525 units

First quarter net income of $0.6 million, or $0.05 per diluted share

Diversified backlog totaling 2,802 railcars valued at $285 million

Total cash, cash equivalents, marketable securities and restricted cash of $114.8 million at March 31, 2017

Full year 2017 delivery range increased to be between 4,200 and 4,400 railcars

 

CHICAGO, May 03, 2017 - FreightCar America, Inc. (NASDAQ:RAIL) today reported results for the first quarter ended March 31, 2017, with net income of $0.6 million, or $0.05 per diluted share, compared to net income of $12.7 million, or $1.03 per diluted share, in the same period last year. First quarter 2017 results included pre-tax restructuring charges of $1.8 million, of which $0.4 million were non-cash expenses, while first quarter 2016 results included a gain on a settlement of retiree benefit plan obligations of $14.3 million.

“Our cost reduction efforts and operational improvements are beginning to positively impact our results as deliveries and net income exceeded fourth quarter 2016 results. However, overall market conditions remain challenging as demonstrated by continued weakness in orders for new railcars,” said Joe McNeely, President and Chief Executive Officer. “While near term uncertainty still exists, we are confident that the cost reduction initiatives that we have implemented, our diversified product offering and our strong balance sheet have positioned the Company to manage through the downturn. Finally, deliveries for 2017, including the cars delivered in the first quarter and orders received to date in the second quarter, are now expected to range between 4,200 and 4,400 railcars.”

 

Consolidated revenues were $139.5 million in the first quarter of 2017 compared to $148.6 million in the same quarter of 2016. The Company delivered 1,525 railcars in the first quarter of 2017, which included 1,425 new railcars and 100 leased railcars. This compares to 1,609 railcars delivered in the first quarter of 2016, all of which were new railcars. Orders in the first quarter of 2017 totaled 68 railcars, of which 15 were new railcars and 53 were rebuilt railcars. The Company had a diversified backlog totaling 2,802 railcars at March 31, 2017, valued at $285 million.

 

Consolidated operating income for the first quarter of 2017 was $1.1 million compared to $19.6 million for the first quarter of 2016. Adjusted operating income, which excludes pre-tax restructuring charges totaling $1.8 million in the first quarter of 2017, was $2.9 million compared to adjusted operating income of $5.3 million in the first quarter of 2016, which excluded the gain on settlement of retiree benefit plan obligations of $14.3 million. Adjusted operating income is a non-GAAP financial measure. A reconciliation of adjusted operating income to operating income, the most directly comparable GAAP measure, is provided in the attached supplemental disclosure.

 

Cash, cash equivalents, marketable securities and restricted cash were $114.8 million as of March 31, 2017.

 

The Company will host a conference call and live webcast on Thursday, May 4, 2017 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s first quarter 2017 financial results. To participate in the conference call, please dial (800) 230-1766, Confirmation Number 422845.  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#: 422845

 

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 May 4, 2017 until 11:59 p.m. (Eastern Daylight Time) on June 4, 2017.  To access the replay, please dial (800) 475-6701.  The replay pass code is 422845.  An audio replay of the call will be available on the Company’s website within two days following the earnings call.

 

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.

 

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: 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)
	March 31,			December 31,
		2017			2016
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	98,067		$	92,750
Restricted certificates of deposit		5,720			5,970
Marketable securities		10,996			—
Accounts receivable, net		22,167			25,207
Inventories, net		77,501			97,904
Income taxes receivable		13,286			13,283
Other current assets		15,929			6,056
Total current assets		243,666			241,170
Property, plant and equipment, net		44,405			46,347
Railcars available for lease, net		23,962			24,018
Goodwill		21,521			21,521
Deferred income taxes, net		3,798			4,221
Other long-term assets		1,968			1,978
Total assets	$	339,320		$	339,255
Liabilities and Stockholders’ Equity
Current liabilities
Accounts and contractual payables	$	33,302		$	34,536
Accrued payroll and other employee costs		4,215			3,117
Reserve for workers’ compensation		4,187			4,444
Accrued warranty		8,591			8,324
Customer deposits and deferred revenue		645			371
Other current liabilities		3,520			3,343
Total current liabilities		54,460			54,135
Accrued pension costs		6,895			6,821
Accrued postretirement benefits, less current portion		5,852			5,769
Deferred income state and local incentives, long-term		10,825			11,380
Accrued taxes and other long-term liabilities		4,625			4,236
Total liabilities		82,657			82,341
Stockholders’ equity
Preferred stock		—			—
Common stock		127			127
Additional paid in capital		90,499			92,025
Treasury stock, at cost		(12,642	)		(14,583	)
Accumulated other comprehensive loss		(8,135	)		(8,163	)
Retained earnings		186,814			187,508
Total stockholders’ equity		256,663			256,914
Total liabilities and stockholders’ equity	$	339,320		$	339,255

 

FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
	Three Months Ended  March 31,
		2017			2016
	(In thousands, except for share and per share data)
Revenues	$	139,536		$	148,590
Cost of sales		129,646			132,703
Gross profit		9,890			15,887
Selling, general and administrative expenses		7,011			10,598
Gain on settlement of postretirement benefit plan obligation, net of plaintiffs’ attorneys’ fees		—			(14,306	)
Restructuring and impairment charges		1,777			—
Operating income		1,102			19,595
Interest expense and deferred financing costs		(42	)		(45	)
Other income		18			81
Income before income taxes		1,078			19,631
Income tax provision		440			6,964
Net income	$	638		$	12,667
Net income per common share - basic	$	0.05		$	1.03
Net income per common share - diluted	$	0.05		$	1.03
Weighted average common shares outstanding -
basic		12,269,555			12,252,131
Weighted average common shares outstanding -
diluted		12,269,555			12,252,131
Dividends declared per common share	$	0.09		$	0.09

 

FreightCar America, Inc.
Condensed Segment Data
(Unaudited)
	Three Months Ended  March 31,
		2017			2016
	(In thousands)
Revenues:
Manufacturing	$	137,740		$	146,071
Corporate and Other		1,796			2,519
Consolidated revenues	$	139,536		$	148,590
Operating income (loss):
Manufacturing	$	7,249		$	12,782
Corporate and Other (1)		(6,147	)		6,813
Consolidated operating income	$	1,102		$	19,595

(1) Results for the three months ended March 31, 2016 included a $14,306 gain on settlement of a postretirement benefit plan obligation, net of plaintiffs’ attorneys’ fees.

FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended  March 31,
		2017			2016
	(In thousands)
Cash flows from operating activities
Net income	$	638		$	12,667
Adjustments to reconcile net income to net cash  flows provided by (used in) operating activities:
Depreciation and amortization		2,337			2,619
Recognition of deferred income from state and local incentives		(555	)		(532	)
Gain on settlement of postretirement benefit plan obligation		—			(15,606	)
Deferred income taxes		408			16,149
Stock-based compensation recognized		214			229
Other non-cash items		84			334
Changes in operating assets and liabilities:
Accounts receivable		1,630			21,387
Inventories		20,101			(21,353	)
Other assets		(9,872	)		(3,152	)
Accounts and contractual payables		(1,170	)		5,431
Accrued payroll and employee benefits		1,098			(3,976	)
Income taxes receivable/payable		48			(6,277	)
Accrued warranty		267			385
Customer deposits and other liabilities		547			12,649
Payment for settlement of postretirement benefit plan obligation		—			(31,616	)
Accrued pension costs and accrued postretirement benefits		185			(6,283	)
Net cash flows provided by (used in) operating activities		15,960			(16,945	)
Cash flows from investing activities
Purchase of restricted certificates of deposit		(4,668	)		(1,182	)
Maturity of restricted certificates of deposit		4,918			2,910
Purchase of securities held to maturity		(10,995	)		—
Proceeds from maturity of securities		—			6,000
Purchases of property, plant and equipment		(296	)		(2,447	)
Proceeds from sale of property, plant and equipment		119			—
State and local incentives received		1,410			—
Net cash flows (used in) provided by investing activities		(9,512	)		5,281
Cash flows from financing activities
Employee stock settlement		(14	)		(70	)
Cash dividends paid to stockholders		(1,117	)		(1,111	)
Net cash flows used in financing activities		(1,131	)		(1,181	)
Net increase (decrease) in cash and cash equivalents		5,317			(12,845	)
Cash and cash equivalents at beginning of period		92,750			83,068
Cash and cash equivalents at end of period	$	98,067		$	70,223

FreightCar America, Inc.
Reconciliation of Non-GAAP Measures
(Unaudited)

Adjusted operating income (loss) represents the Company’s operating income (loss) adjusted to exclude the effects of $1.8 million of pre-tax restructuring and impairment charges related to the Company’s cost reduction plan in the first quarter of 2017, the $14.3 million pre-tax gain on settlement of the retiree benefits litigation in the first quarter of 2016 and $0.7 million of pre-tax restructuring and impairment charges related to the Company’s cost reduction plan in the fourth quarter of 2016. The Company believes that adjusted operating income (loss) is useful to investors because it allows investors to more effectively compare the Company’s financial results prior to and after the impact of the items described above. Adjusted operating income (loss) is not a financial measure presented in accordance with GAAP.

In addition, the presentation of this non-GAAP measure is intended to enhance the usefulness of the financial information by providing a measure that the Company’s management uses internally to evaluate the Company’s baseline performance. Accordingly, when analyzing our operating performance, investors should not consider adjusted operating income (loss) in isolation or as a substitute for operating income (loss) in accordance with GAAP. Our calculation of this non-GAAP measure is not necessarily comparable to that of other similarly titled measures reported by other companies. A reconciliation of adjusted operating income (loss) to operating income (loss), the most directly comparable GAAP measure, follows:

	Three Months Ended  March 31,						Three Months Ended  December 31,
		2017		2016				2016
	(In thousands)
Operating income (loss), as reported	$	1,102	$	19,595			$	(3,094	)
Less: Gain on settlement of retiree benefit plan obligations, net of plaintiffs’ attorneys’ fees		-		(14,306	)			-
Add: Restructuring and impairment charges		1,777		-				730
Adjusted operating income (loss)	$	2,879	$	5,289			$	(2,364	)

 

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