Company remains focused on completing final steps to reposition business
Castaños,
Second half delivery guidance narrowed to range between 750 and 850 railcars
Business Highlights
- Third quarter revenue of
$25.2 million on deliveries of 163 railcars - Third quarter net loss attributed to Freight Car America. Inc. (“FCA”) of
$40.3 million , or$3.03 per share, including$30.1 million , or$2.26 per share, of restructuring and impairment charges,$26.6 million of which is non-cash - Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit of
$32.9 million as ofSeptember 30, 2020 - Backlog on
September 30, 2020 totaled 1,776 railcars, including 100 railcars ordered during the quarter, with an aggregate value of approximately$195 million - Finalized early termination of the lease at
Cherokee, Alabama (“Shoals”) manufacturing facility effectiveFebruary 28, 2021 - Now owns 100% of its new Castaños,
Mexico manufacturing operation (“Castaños”), where all future railcar manufacturing is expected to be based byFebruary 2021 - Obtained new asset-backed credit facility to support the business and repositioning
- Entered into new
$40 million secured term loan agreement with a global investment management firm (“Lender”), with funding subject to stockholder approval, to strengthen balance sheet and drive future growth strategy - Began shipping cars from Castaños,
Mexico facility in early November and received several small orders for the new facility post quarter-end - Second half 2020 delivery outlook narrowed to range between 750 and 850 railcars
“During the third quarter,
Meyer continued, “Our industry remains in a cyclical downturn, which was intensified by the pandemic. Accelerating our repositioning effort to the finish line now greatly improves our ability to outlast the pandemic and then re-emerge in a position of strength. Our new breakeven is less than 2,000 railcars per year, and the Castaños factory is quickly scalable once we see positive industry trends. To support the accelerated finish and new business structure, we have obtained a new asset-backed credit facility, and we will have a new
Meyer concluded, “Our team at the Shoals factory remains focused on completing our customer commitments at that facility before we close the plant in
Third Quarter Results
- Consolidated revenues were
$25.2 million in the third quarter of 2020, compared to$17.5 million in the second quarter of 2020 and$40.7 million in the third quarter of 2019. The Company delivered 163 railcars in the third quarter of 2020, compared to 100 in the second quarter of 2020 and 467 railcars in the third quarter of 2019. - The Company had a backlog totaling 1,776 railcars at
September 30, 2020 , valued at approximately$195 million . - Consolidated operating loss for the third quarter of 2020 was
$41.3 million , compared to an operating loss of$36.3 million for the third quarter of 2019. Net loss attributable toFreightCar America, Inc. (“FCA”) in the third quarter of 2020 was$40.3 million , or$3.03 per diluted share, compared to a net loss attributable toFCA of$35.7 million , or$2.83 per diluted share, in the third quarter of 2019. Both consolidated operating loss and net loss attributable toFCA included restructuring and impairment charges of$30.1 million in the third quarter of 2020 and$23.0 million in the third quarter of 2019. - Inventories increased to
$60.2 million , from$25.1 million as ofDecember 31, 2019 , to support expected deliveries in the second half of 2020. - Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were
$32.9 million at the end of the third quarter, compared to$70.0 million as ofDecember 31, 2019 .
Third Quarter 2020 Conference Call & Webcast Information
The Company will host a conference call and live webcast on
Event URL: http://public.viavid.com/index.php?id=142262
Interested parties may also participate in the call by dialing 877-407-0789 or 201-689-8562 and should use confirmation number 13712647. Please dial in approximately 10 to 15 minutes prior to the start time of the call to ensure your participation. An audio replay of the conference call will be available beginning at
About
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 risk that our stockholders may not approve the issuance of the common stock underlying the warrant or that the term loan might not be funded; 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 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.
Important Information
This material may be deemed to be solicitation material in respect of the special meeting to be held on
INVESTOR & MEDIA CONTACT | |
TELEPHONE | 312-445-2870 |
Condensed Consolidated Balance Sheets
(Unaudited)
Assets | (in thousands, except for share and per share data) | ||||||
Current assets | |||||||
Cash, cash equivalents and restricted cash equivalents | $ | 32,757 | $ | 66,257 | |||
Restricted certificates of deposit | 182 | 3,769 | |||||
Accounts receivable, net of allowance for doubtful accounts of | 10,293 | 6,991 | |||||
Inventories, net | 60,186 | 25,092 | |||||
Assets held for sale | 10,383 | - | |||||
Income tax receivable | 109 | 535 | |||||
Other current assets | 4,737 | 7,035 | |||||
Total current assets | 118,647 | 109,679 | |||||
Property, plant and equipment, net | 19,443 | 38,564 | |||||
Railcars available for lease, net | 38,139 | 38,900 | |||||
Right of use asset | 34,059 | 56,507 | |||||
Other long-term assets | 817 | 1,552 | |||||
Total assets | $ | 211,105 | $ | 245,202 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts and contractual payables | $ | 20,606 | $ | 11,713 | |||
Accrued payroll and other employee costs | 4,258 | 1,389 | |||||
Reserve for workers' compensation | 3,475 | 3,210 | |||||
Accrued warranty | 7,508 | 8,388 | |||||
Customer deposits | 29,775 | 5,123 | |||||
Deferred income state and local incentives, current | 2,219 | 2,219 | |||||
Lease liability, current | 15,102 | 14,960 | |||||
Current portion of long-term debt | 15,825 | - | |||||
Other current liabilities | 4,750 | 2,428 | |||||
Total current liabilities | 103,518 | 49,430 | |||||
Long-term debt, net of current portion | 4,375 | 10,200 | |||||
Accrued pension costs | 5,754 | 6,510 | |||||
Deferred income state and local incentives, long-term | 3,058 | 4,722 | |||||
Lease liability, long-term | 44,548 | 53,766 | |||||
Other long-term liabilities | 3,446 | 3,420 | |||||
Total liabilities | 164,699 | 128,048 | |||||
Stockholders’ equity | |||||||
Preferred stock | - | - | |||||
Common stock | 136 | 127 | |||||
Additional paid in capital | 83,657 | 83,027 | |||||
(1,341 | ) | (989 | ) | ||||
Accumulated other comprehensive loss | (10,359 | ) | (10,780 | ) | |||
(Accumulated Deficit) Retained earnings | (24,236 | ) | 45,824 | ||||
Total | 47,857 | 117,209 | |||||
Noncontrolling interest in JV | (1,451 | ) | (55 | ) | |||
Total stockholders' equity | 46,406 | 117,154 | |||||
Total liabilities and stockholders’ equity | $ | 211,105 | $ | 245,202 | |||
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
(In thousands, except for share and per share data) | |||||||||||||||
Revenues | $ | 25,202 | $ | 40,651 | $ | 47,857 | $ | 185,020 | |||||||
Cost of sales | 29,281 | 46,061 | 66,883 | 191,255 | |||||||||||
Gross loss | (4,079 | ) | (5,410 | ) | (19,026 | ) | (6,235 | ) | |||||||
Selling, general and administrative expenses | 7,158 | 7,772 | 21,105 | 30,791 | |||||||||||
Loss on sale of railcars available for lease | - | 42 | - | 5,238 | |||||||||||
Restructuring and impairment charges | 30,103 | 23,032 | 31,250 | 24,351 | |||||||||||
Operating loss | (41,340 | ) | (36,256 | ) | (71,381 | ) | (66,615 | ) | |||||||
Interest expense and deferred financing costs | (208 | ) | (223 | ) | (671 | ) | (374 | ) | |||||||
Other income | 160 | 363 | 518 | 765 | |||||||||||
Loss before income taxes | (41,388 | ) | (36,116 | ) | (71,534 | ) | (66,224 | ) | |||||||
Income tax benefit | (75 | ) | (387 | ) | (78 | ) | (576 | ) | |||||||
Net loss | (41,313 | ) | (35,729 | ) | (71,456 | ) | (65,648 | ) | |||||||
Less: Net loss attributable to noncontrolling interest in JV | (991 | ) | - | (1,396 | ) | - | |||||||||
Net loss attributable to | $ | (40,322 | ) | $ | (35,729 | ) | $ | (70,060 | ) | $ | (65,648 | ) | |||
Net loss per common share attributable to | $ | (3.03 | ) | $ | (2.83 | ) | $ | (5.30 | ) | $ | (5.20 | ) | |||
Weighted average common shares outstanding – basic and diluted | 12,426,872 | 12,359,478 | 12,399,687 | 12,349,670 | |||||||||||
Segment Data
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues: | |||||||||||||||
Manufacturing | $ | 22,589 | $ | 37,868 | $ | 40,658 | $ | 176,280 | |||||||
Corporate and Other | 2,613 | 2,783 | 7,199 | 8,740 | |||||||||||
Consolidated revenues | $ | 25,202 | $ | 40,651 | $ | 47,857 | $ | 185,020 | |||||||
Operating (loss) income: | |||||||||||||||
Manufacturing | $ | (36,786 | ) | $ | (30,788 | ) | $ | (56,934 | ) | $ | (43,444 | ) | |||
Corporate and Other | (4,554 | ) | (5,468 | ) | (14,447 | ) | (23,171 | ) | |||||||
Consolidated operating loss | (41,340 | ) | (36,256 | ) | (71,381 | ) | (66,615 | ) | |||||||
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities | (in thousands) | |||||||
Net loss | $ | (71,456 | ) | $ | (65,648 | ) | ||
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
Non-cash restructuring and impairment charges | 26,868 | 24,351 | ||||||
Depreciation and amortization | 7,954 | 9,487 | ||||||
Change in inventory reserve | 6,206 | (1,501 | ) | |||||
Amortization expense - right-of-use leased assets | 4,910 | 8,168 | ||||||
Recognition of deferred income from state and local incentives | (1,665 | ) | (1,665 | ) | ||||
Loss on sale of railcars available for lease | - | 5,131 | ||||||
Stock-based compensation recognized | 296 | 754 | ||||||
Other non-cash items, net | 277 | (209 | ) | |||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (3,302 | ) | 9,483 | |||||
Inventories | (41,300 | ) | 10,407 | |||||
Other assets | 2,340 | (1,706 | ) | |||||
Accounts and contractual payables | 9,062 | (11,206 | ) | |||||
Accrued payroll and employee benefits | 3,011 | 1,254 | ||||||
Income taxes receivable/payable | 909 | (289 | ) | |||||
Accrued warranty | (880 | ) | (1,643 | ) | ||||
Lease liability | (9,110 | ) | (13,210 | ) | ||||
Customer deposits | 24,652 | (1,719 | ) | |||||
Other liabilities | 2,489 | 4,625 | ||||||
Accrued pension costs and accrued postretirement benefits | (242 | ) | (417 | ) | ||||
Net cash flows used in operating activities | (38,981 | ) | (25,553 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of restricted certificates of deposit | (4,037 | ) | (1,416 | ) | ||||
Maturity of restricted certificates of deposit | 7,624 | 5,862 | ||||||
Purchase of securities held to maturity | - | (1,986 | ) | |||||
Proceeds from maturity of securities | - | 20,025 | ||||||
Purchase of property, plant and equipment | (8,267 | ) | (3,292 | ) | ||||
Proceeds from sale of property, plant and equipment and railcars available for lease | 170 | 11,519 | ||||||
Net cash flows (used in) provided by investing activities | (4,510 | ) | 30,712 | |||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | 10,000 | 10,200 | ||||||
Employee stock settlement | (9 | ) | (59 | ) | ||||
Deferred financing costs | - | (929 | ) | |||||
Net cash flows provided by financing activities | 9,991 | 9,212 | ||||||
Net (decrease) increase in cash and cash equivalents | (33,500 | ) | 14,371 | |||||
Cash, cash equivalents and restricted cash equivalents at beginning of period | 66,257 | 45,070 | ||||||
Cash, cash equivalents and restricted cash equivalents at end of period | $ | 32,757 | $ | 59,441 |
Source:
2020 GlobeNewswire, Inc., source