FreightCar America, Inc. Reports First Quarter 2023 Results
Company reaffirms fiscal 2023 revenue, Adjusted EBITDA, and delivery outlook
Strong order intake with backlog extending into 2024
CHICAGO, May 09, 2023 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) (“FreightCar America” or the “Company”), a diversified manufacturer of railroad freight cars, today reported results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights
- Revenues of
$81.0 million on deliveries of 738 railcars, compared to revenues of$129.0 million on deliveries of 1,150 railcars in the prior quarter and revenues of$93.2 million on deliveries of 783 railcars in the first quarter of 2022 - Gross margin of
9.2% with gross profit of$7.5 million , compared to gross margin of3.6% with gross profit of$4.6 million in the prior quarter and gross margin of10.8% with gross profit of$10.1 million in the first quarter of 2022 - Net loss of (
$5.0) million , or ($0.19) per share and Adjusted Net Loss of ($5.7) million , or ($0.21) per share, accounting primarily for non-cash income associated with the change in fair market value of warrant liability - Adjusted EBITDA of
$2.1 million , compared to Adjusted EBITDA of$1.2 million in the prior quarter and Adjusted EBITDA of$3.3 million in the first quarter of 2022 - Railcar orders of 1,960 in the first quarter, with quarter-end backlog totaling 3,667 railcars for an aggregate value of approximately
$413 million - Signed deal to issue non-convertible preferred stock with financial partner to reduce debt and provide additional growth capital
- 2023 revenue, Adjusted EBITDA, and delivery outlook reaffirmed
Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “We were pleased with our first quarter results, which were in line with our expectations. As anticipated, we experienced sequential improvement in gross margin and profitability as a result of the continued ramp-up of the Castaños, Mexico factory and actions taken to mitigate previously discussed supply chain challenges. We continue to feel confident in our ability to approximately double Adjusted EBITDA this year while continuing to expand the new manufacturing campus.”
Meyer continued, “Our production schedule is essentially full for 2023, and we are now heavily focused on next year. We remain committed to positioning FreightCar America as the best-in-class manufacturer in the industry.”
Fiscal Year 2023 Outlook
The Company has reaffirmed its outlook for fiscal year 2023 as follows:
| Fiscal 2023 Outlook | Year-over-Year Growth at Midpoint | |
| Revenue | ||
| Adjusted EBITDA | ||
| Railcar Deliveries | 3,400 - 3,700 Railcars |
Mike Riordan, Chief Financial Officer of FreightCar America, added, “Given our strengthening order backlog, we are increasingly confident in our outlook and are reaffirming our full year revenue, Adjusted EBITDA, and railcar deliveries guidance ranges. Going forward, our organization is focused on executing and delivering the business in-hand, continuing to build backlog for next year, and creating opportunity for further improvement in our capital structure.”
First Quarter 2023 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Wednesday, May 10, 2023 at 11:00 a.m. (Eastern Time) to discuss its first quarter 2023 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=1610696&tp_key=685a03b758
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 13738212. 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 Wednesday May 10, 2023, until 12:00 a.m. (Eastern Time) on Thursday May 25, 2023. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13738212. 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 |
| RAIL@alpha-ir.com | |
| TELEPHONE | 312-445-2870 |
| FreightCar America, Inc. Consolidated Balance Sheets (In thousands, except for share data) (Unaudited) | |||||||
| March 31, 2023 | December 31, 2022 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash, cash equivalents and restricted cash equivalents | $ | 27,799 | $ | 37,912 | |||
| Accounts receivable, net of allowance for doubtful accounts of | 8,667 | 9,571 | |||||
| VAT receivable | 1,653 | 4,682 | |||||
| Inventories, net | 80,861 | 64,317 | |||||
| Assets held for sale | 3,675 | 3,675 | |||||
| Related party asset | 1,815 | 3,261 | |||||
| Prepaid expenses | 7,178 | 5,470 | |||||
| Total current assets | 131,648 | 128,888 | |||||
| Property, plant and equipment, net | 24,783 | 23,248 | |||||
| Railcars available for lease, net | 11,216 | 11,324 | |||||
| Right of use asset operating lease | 1,331 | 1,596 | |||||
| Right of use asset finance lease | 32,626 | 33,093 | |||||
| Other long-term assets | 1,065 | 1,589 | |||||
| Total assets | $ | 202,669 | $ | 199,738 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities | |||||||
| Accounts and contractual payables | $ | 55,766 | $ | 48,449 | |||
| Related party accounts payable | 1,430 | 3,393 | |||||
| Accrued payroll and other employee costs | 3,281 | 4,081 | |||||
| Reserve for workers' compensation | 840 | 841 | |||||
| Accrued warranty | 1,933 | 1,940 | |||||
| Current portion of long-term debt | 40,548 | 40,742 | |||||
| Other current liabilities | 8,281 | 6,539 | |||||
| Total current liabilities | 112,079 | 105,985 | |||||
| Long-term debt, net of current portion | 53,773 | 51,494 | |||||
| Warrant liability | 30,415 | 31,028 | |||||
| Accrued pension costs | 1,112 | 1,040 | |||||
| Lease liability operating lease, long-term | 1,737 | 1,780 | |||||
| Lease liability finance lease, long-term | 33,080 | 33,245 | |||||
| Other long-term liabilities | 2,987 | 3,750 | |||||
| Total liabilities | 235,183 | 228,322 | |||||
| Stockholders’ deficit | |||||||
| Preferred stock, designated as Series A voting and Series B non-voting, 0 shares issued and outstanding at March 31, 2023 and December 31, 2022) | — | — | |||||
| Common stock, shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 208 | 203 | |||||
| Additional paid-in capital | 90,165 | 89,104 | |||||
| Accumulated other comprehensive income | 1,063 | 1,022 | |||||
| Accumulated deficit | (123,950 | ) | (118,913 | ) | |||
| Total stockholders' deficit | (32,514 | ) | (28,584 | ) | |||
| Total liabilities and stockholders’ deficit | $ | 202,669 | $ | 199,738 | |||
| FreightCar America, Inc. Consolidated Statements of Operations (In thousands, except for share and per share data) (Unaudited) | |||||||||||
| Three Months | |||||||||||
| Three Months Ended March 31, | Ended December 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||
| Revenues | $ | 80,999 | $ | 93,236 | $ | 128,989 | |||||
| Cost of sales | 73,514 | 83,178 | 124,367 | ||||||||
| Gross profit | 7,485 | 10,058 | 4,622 | ||||||||
| Selling, general and administrative expenses | 6,388 | 10,713 | 6,349 | ||||||||
| Impairment on leased railcars | — | — | 4,515 | ||||||||
| Operating income (loss) | 1,097 | (655 | ) | (6,242 | ) | ||||||
| Interest expense | (6,600 | ) | (5,705 | ) | (7,874 | ) | |||||
| Gain (loss) on change in fair market value of Warrant liability | 613 | (20,730 | ) | 4,744 | |||||||
| Other (expense) income | (36 | ) | 1,496 | 79 | |||||||
| Loss before income taxes | (4,926 | ) | (25,594 | ) | (9,293 | ) | |||||
| Income tax provision | 111 | 253 | 440 | ||||||||
| Net loss | $ | (5,037 | ) | $ | (25,847 | ) | $ | (9,733 | ) | ||
| Net loss per common share – basic | $ | (0.19 | ) | $ | (1.11 | ) | $ | (0.37 | ) | ||
| Net loss per common share – diluted | $ | (0.19 | ) | $ | (1.11 | ) | $ | (0.37 | ) | ||
| Weighted average common shares outstanding – basic | 26,545,463 | 23,218,647 | 26,117,377 | ||||||||
| Weighted average common shares outstanding – diluted | 26,545,463 | 23,218,647 | 26,117,377 | ||||||||
| FreightCar America, Inc. Segment Data (In thousands) (Unaudited) | |||||||||||
| Three Months Ended | Three Months Ended | ||||||||||
| March 31, | December 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||
| Revenues: | |||||||||||
| Manufacturing | $ | 77,599 | $ | 90,124 | $ | 126,279 | |||||
| Corporate and Other | 3,400 | 3,112 | 2,710 | ||||||||
| Consolidated revenues | $ | 80,999 | $ | 93,236 | $ | 128,989 | |||||
| Operating income (loss): | |||||||||||
| Manufacturing | $ | 5,628 | $ | 8,516 | $ | (1,670 | ) | ||||
| Corporate and Other | (4,531 | ) | (9,171 | ) | (4,572 | ) | |||||
| Consolidated operating income (loss) | $ | 1,097 | $ | (655 | ) | $ | (6,242 | ) | |||
| FreightCar America, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities | |||||||
| Net loss | $ | (5,037 | ) | $ | (25,847 | ) | |
| Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||||
| Depreciation and amortization | 1,072 | 1,024 | |||||
| Non-cash lease expense on right-of-use assets | 731 | 316 | |||||
| Recognition of deferred income from state and local incentives | — | (1,858 | ) | ||||
| (Gain) loss on change in fair market value for Warrant liability | (613 | ) | 20,730 | ||||
| Stock-based compensation recognized | (91 | ) | 4,244 | ||||
| Non-cash interest expense | 4,264 | 3,721 | |||||
| Other non-cash items, net | (1 | ) | — | ||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | 904 | (12,517 | ) | ||||
| VAT receivable | 2,960 | (1,853 | ) | ||||
| Inventories | (19,698 | ) | (2,154 | ) | |||
| Related party asset, net | (362 | ) | 1,366 | ||||
| Accounts and contractual payables | 9,695 | 4,798 | |||||
| Lease liability | (1,191 | ) | (476 | ) | |||
| Customer deposits | — | 18,706 | |||||
| Other assets and liabilities | (337 | ) | (2,555 | ) | |||
| Net cash flows (used in) provided by operating activities | (7,704 | ) | 7,645 | ||||
| Cash flows from investing activities | |||||||
| Purchase of property, plant and equipment | (1,960 | ) | (960 | ) | |||
| Net cash flows used in investing activities | (1,960 | ) | (960 | ) | |||
| Cash flows from financing activities | |||||||
| Borrowings on revolving line of credit | 31,688 | 10,013 | |||||
| Repayments on revolving line of credit | (31,884 | ) | (1,910 | ) | |||
| Employee stock settlement | (106 | ) | (13 | ) | |||
| Payment for stock appreciation rights exercised | — | (4 | ) | ||||
| Financing lease payments | (147 | ) | — | ||||
| Net cash flows (used in) provided by financing activities | (449 | ) | 8,086 | ||||
| Net (decrease) increase in cash and cash equivalents | (10,113 | ) | 14,771 | ||||
| Cash, cash equivalents and restricted cash equivalents at beginning of period | 37,912 | 26,240 | |||||
| Cash, cash equivalents and restricted cash equivalents at end of period | $ | 27,799 | $ | 41,011 | |||
| Supplemental cash flow information | |||||||
| Interest paid | $ | 2,340 | $ | 1,984 | |||
| Non-cash transactions | |||||||
| Change in unpaid construction in process | $ | 539 | $ | 190 | |||
| Accrued PIK interest paid through issuance of PIK Note | $ | 1,658 | $ | 364 | |||
| Issuance of equity fee | $ | 535 | $ | 1,000 | |||
| FreightCar America, Inc. Reconciliation of loss before taxes to EBITDA(1) and Adjusted EBITDA(2) (In thousands) (Unaudited) | |||||||||||
| Three Months | |||||||||||
| Three Months Ended March 31, | Ended December 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||
| Income (Loss) before income taxes | $ | (4,926 | ) | $ | (25,594 | ) | $ | (9,293 | ) | ||
| Depreciation & Amortization | 1,072 | 1,024 | 1,025 | ||||||||
| Interest Expense, net | 6,600 | 5,705 | 7,874 | ||||||||
| EBITDA | 2,746 | (18,865 | ) | (394 | ) | ||||||
| Change in Fair Value of Warrant(a) | (613 | ) | 20,730 | (4,744 | ) | ||||||
| Impairment on leased railcars(b) | - | - | 4,515 | ||||||||
| Alabama Grant Amortization(c) | - | (1,857 | ) | - | |||||||
| Mexican Permanent VAT(d) | - | - | 1,861 | ||||||||
| Transaction Costs(e) | - | - | 37 | ||||||||
| Startup Costs(f) | - | - | 164 | ||||||||
| Consulting Costs(g) | - | 350 | 85 | ||||||||
| Corporate Realignment(h) | - | 185 | - | ||||||||
| Stock Based Compensation | (91 | ) | 4,244 | (201 | ) | ||||||
| Other, net | 36 | (1,496 | ) | (79 | ) | ||||||
| Adjusted EBITDA | $ | 2,078 | $ | 3,291 | $ | 1,244 | |||||
| (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) | During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | ||
| c) | The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss). | ||
| d) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | ||
| e) | The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements. | ||
| f) | The Company incurred certain costs during 2022 related to new production lines. | ||
| g) | The Company incurred certain non-recurring consulting costs during the first quarter of 2022. | ||
| h) | The Company incurred certain non-recurring corporate realignment costs in 2022. | ||
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 loss and Adjusted Net loss(1) (In thousands) (Unaudited) | |||||||||||
| Three Months | |||||||||||
| Three Months Ended March 31, | Ended December 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||
| Net income (loss) | $ | (5,037 | ) | $ | (25,847 | ) | $ | (9,733 | ) | ||
| Change in Fair Value of Warrant(a) | (613 | ) | 20,730 | (4,744 | ) | ||||||
| Impairment on leased railcars(b) | - | - | 4,515 | ||||||||
| Alabama Grant Amortization(c) | - | (1,857 | ) | - | |||||||
| Mexican Permanent VAT(d) | - | - | 1,861 | ||||||||
| Transaction Costs(e) | - | - | 37 | ||||||||
| Startup Costs(f) | - | - | 164 | ||||||||
| Consulting Costs(g) | - | 350 | 85 | ||||||||
| Corporate Realignment(h) | - | 185 | - | ||||||||
| Stock Based Compensation | (91 | ) | 4,244 | (201 | ) | ||||||
| Other, net | 36 | (1,496 | ) | (79 | ) | ||||||
| Total non-GAAP adjustments | (668 | ) | 22,156 | 1,638 | |||||||
| Income tax impact on non-GAAP adjustments(i) | - | (22 | ) | (5 | ) | ||||||
| Adjusted Net loss | $ | (5,705 | ) | $ | (3,713 | ) | $ | (8,100 | ) | ||
| (1) | Adjusted Net Loss represents net 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) | During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | ||
| c) | The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss). | ||
| d) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | ||
| e) | The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements. | ||
| f) | The Company incurred certain costs during 2022 related to new production lines. | ||
| g) | The Company incurred certain non-recurring consulting costs during the first quarter of 2022. | ||
| h) | The Company incurred certain non-recurring corporate realignment costs in 2022. | ||
| i) | Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective 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 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 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 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 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 | |||||||||||
| Three Months Ended March 31, | Ended December 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||
| EPS | $ | (0.19 | ) | $ | (1.11 | ) | $ | (0.37 | ) | ||
| Change in Fair Value of Warrant(a) | (0.02 | ) | 0.89 | (0.18 | ) | ||||||
| Impairment on leased railcars(b) | - | - | 0.17 | ||||||||
| Alabama Grant Amortization(c) | - | (0.08 | ) | - | |||||||
| Mexican Permanent VAT(d) | - | - | 0.07 | ||||||||
| Startup Costs(e) | - | - | 0.01 | ||||||||
| Consulting Costs(f) | - | 0.02 | - | ||||||||
| Corporate Realignment(g) | - | 0.01 | - | ||||||||
| Stock Based Compensation | - | 0.18 | (0.01 | ) | |||||||
| Other, net | - | (0.06 | ) | - | |||||||
| Total non-GAAP adjustments pre-tax per-share | (0.02 | ) | 0.96 | 0.06 | |||||||
| Income tax impact on non-GAAP adjustments per share(h) | - | - | - | ||||||||
| Adjusted EPS | $ | (0.21 | ) | $ | (0.15 | ) | $ | (0.31 | ) | ||
| (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) | During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | ||
| c) | The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss). | ||
| d) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | ||
| e) | The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements. | ||
| f) | The Company incurred certain costs during 2022 related to new production lines. | ||
| g) | The Company incurred certain non-recurring consulting costs during the first quarter of 2022. | ||
| h) | The Company incurred certain non-recurring corporate realignment costs in 2022. | ||
| i) | Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective 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.
