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FreightCar America, Inc. Reports Second Quarter 2023 Results
ソース: Nasdaq GlobeNewswire / 07 8 2023 15:15:00 America/Chicago
Company delivers strong quarterly results realizing significant revenue growth and gross margin expansion
Raises guidance for fiscal year 2023
CHICAGO, Aug. 07, 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 second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Revenues of $88.6 million on 760 railcar deliveries, up 56% compared to revenues of $56.8 million on 468 railcar deliveries in the second quarter of 2022
- Gross margin of 14.6% with gross profit of $13.0 million, compared to gross margin of 11.6% with gross profit of $6.6 million in the second quarter of 2022
- Net loss of ($18.9) million, or ($0.73) per share and Adjusted Net income of $2.7 million, or $0.02 per share, accounting primarily for non-cash items associated with the loss on debt extinguishment and change in fair market value of warrant liability
- Adjusted EBITDA of $8.0 million, compared to Adjusted EBITDA of $2.3 million in the second quarter of 2022
- Railcar orders of 381 in the second quarter and 2,341 for the first half of the year, with quarter-end backlog totaling 3,288 railcars for an aggregate value of approximately $382 million
- FY23 Adjusted EBITDA guidance raised to $18 - $22 million from prior guidance of $15 - $20 million
Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “FreightCar America finished an impressive quarter, with revenues up 56% year-over-year and gross margins of 14.6%. These results were fueled by our steadfast commitments to achieving the highest levels of customer satisfaction and operational excellence, and building a world-class manufacturing campus in Castaños, Mexico. The multi-year project to construct the campus is scheduled to be completed this August, after which we will have four production lines available and even more opportunities to differentiate ourselves within the industry.”
Meyer continued, “Consistent with our commitments, we announced the addition of Nick Randall as FreightCar America’s first Chief Operating Officer during the quarter. Nick brings a wealth of experience and will be a great asset as we continue to lay the groundwork for our future. Lastly, we completed the previously announced financing transaction during the quarter to replace our term loans with a preferred share offering. This transaction further strengthened our balance sheet and provides us with additional flexibility as we focus on the future and growth.”
Fiscal Year 2023 Outlook
The Company has raised its outlook for fiscal year 2023 as follows:
Fiscal 2023 Outlook Year-over-Year
Growth at MidpointRevenue $400 - $430 million 13.8% Adjusted EBITDA $18 - $22 million 137.8% Railcar Deliveries 3,400 - 3,700 Railcars 11.5% Mike Riordan, Chief Financial Officer of FreightCar America, added, “Market demand for our railcars remains strong. While new orders were lower than anticipated for the quarter, this was primarily a function of timing. With our order backlog fully booked for 2023, we are raising our previously stated full year Adjusted EBITDA guidance range from between $15 million and $20 million to between $18 million and $22 million. Despite foreign currency headwinds alongside the broader macro environment, we are making great progress in improving our margins. Increased profitability combined with our robust backlog and a stronger balance sheet, FreightCar America is positioned to execute as we head into the second half of the fiscal year and beyond.”
Second Quarter 2023 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Tuesday, August 8, 2023 at 11:00 a.m. (ET) to discuss its second quarter 2023 financial results. FreightCar America invites shareholders and other interested parties to listen to its financial results conference call via the following live and recorded methods:
Live Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1625284&tp_key=18422c6ac0
Recorded Webcast: A recorded webcast will be available until Wednesday, August 23, 2023 on FreightCar America’s website following the conference call date at: https://investors.freightcaramerica.com/news-events/event-calendar/
Teleconference: Dial-in numbers for the live Conference Call are (877) 407-0789 or (201) 689-8562; Passcode 13740188. Please call in at least 10 minutes prior to the start time of the call. An audio replay may be accessed at (844) 512-2921 or (412) 317-6671; Passcode: 13740188.
About FreightCar America
FreightCar America, headquartered in Chicago, Illinois, is a leading designer, producer and supplier of railroad freight cars, railcar parts and components. We also specialize in railcar repairs, complete railcar rebody services and railcar conversions that repurpose idled rail assets back into revenue service. Since 1901, our customers have trusted us to build quality railcars that are critical to economic growth and instrumental to the North American supply chain. To learn more about FreightCar America, visit 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 Contact: RAILIR@Riveron.com FreightCar America, Inc.
Consolidated Balance Sheets
(In thousands, except for share data)
(Unaudited)June 30,
2023December 31,
2022Assets Current assets Cash, cash equivalents and restricted cash equivalents $ 11,999 $ 37,912 Accounts receivable, net of allowance for doubtful accounts of $179 and $126 respectively 21,493 9,571 VAT receivable 1,421 4,682 Inventories, net 88,769 64,317 Assets held for sale — 3,675 Related party asset 1,308 3,261 Prepaid expenses 15,650 5,470 Total current assets 140,640 128,888 Property, plant and equipment, net 26,624 23,248 Railcars available for lease, net 7,070 11,324 Right of use asset operating lease 1,221 1,596 Right of use asset finance lease 32,160 33,093 Other long-term assets 529 1,589 Total assets $ 208,244 $ 199,738 Liabilities, Mezzanine Equity and Stockholders’ Deficit Current liabilities Accounts and contractual payables $ 41,778 $ 48,449 Related party accounts payable 1,213 3,393 Accrued payroll and other employee costs 3,641 4,081 Accrued warranty 1,632 1,940 Customer deposits 19,644 — Current portion of long-term debt 22,293 40,742 Other current liabilities 6,684 7,380 Total current liabilities 96,885 105,985 Long-term debt, net of current portion — 51,494 Warrant liability 40,714 31,028 Accrued pension costs 1,176 1,040 Lease liability operating lease, long-term 1,694 1,780 Lease liability finance lease, long-term 32,913 33,245 Other long-term liabilities 563 3,750 Total liabilities 173,945 228,322 Commitments and contingencies Mezzanine equity Series C Preferred stock, $0.01 par value, 85,412 shares authorized, 85,412 and 0 shares issued and outstanding on June 30, 2023 and December 31, 2022, respectively. Liquidation value $87,023,723 and $0 on June 30, 2023 and December 31, 2022, respectively. 83,253 — Stockholders’ deficit Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each
designated as Series A voting and Series B non-voting, 0 shares issued and outstanding
at June 30, 2023 and December 31, 2022)— — Common stock, $0.01 par value, 50,000,000 shares authorized, 17,899,191 and 17,223,306
shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively210 203 Additional paid-in capital 92,633 89,104 Accumulated other comprehensive income 1,099 1,022 Accumulated deficit (142,896 ) (118,913 ) Total stockholders' deficit (48,954 ) (28,584 ) Total liabilities, mezzanine equity and stockholders’ deficit $ 208,244 $ 199,738 FreightCar America, Inc.
Consolidated Statements of Operations
(In thousands, except for share and per share data)
(Unaudited)Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues $ 88,596 $ 56,786 $ 169,595 $ 150,022 Cost of sales 75,641 50,197 149,155 133,375 Gross profit 12,955 6,589 20,440 16,647 Selling, general and administrative expenses 5,851 4,053 12,239 14,766 Gain on sale of railcars available for lease 622 — 622 — Operating income 7,726 2,536 8,823 1,881 Interest expense (4,351 ) (5,757 ) (10,951 ) (11,462 ) (Loss) gain on change in fair market value of Warrant liability (6,755 ) 18,746 (6,142 ) (1,984 ) Loss on extinguishment of debt (14,880 ) — (14,880 ) — Other (expense) income (69 ) 661 (105 ) 2,157 (Loss) income before income taxes (18,329 ) 16,186 (23,255 ) (9,408 ) Income tax provision 560 1,647 671 1,900 Net (loss) income $ (18,889 ) $ 14,539 $ (23,926 ) $ (11,308 ) Net (loss) income per common share – basic $ (0.73 ) $ 0.58 $ (0.93 ) $ (0.47 ) Net (loss) income per common share – diluted $ (0.73 ) $ 0.58 $ (0.93 ) $ (0.47 ) Weighted average common shares outstanding – basic 28,113,825 24,499,784 27,552,297 23,994,327 Weighted average common shares outstanding – diluted 28,113,825 24,499,784 27,552,297 23,994,327 FreightCar America, Inc.
Segment Data
(In thousands)
(Unaudited)Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues: Manufacturing $ 85,724 $ 53,606 $ 163,323 $ 143,731 Corporate and Other 2,872 3,180 6,272 6,291 Consolidated revenues $ 88,596 $ 56,786 $ 169,595 $ 150,022 Operating income: Manufacturing $ 11,769 $ 4,900 $ 17,397 $ 13,416 Corporate and Other (4,043 ) (2,364 ) (8,574 ) (11,535 ) Consolidated operating income $ 7,726 $ 2,536 $ 8,823 $ 1,881 FreightCar America, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)Six Months Ended June 30, 2023 2022 Cash flows from operating activities Net loss $ (23,926 ) $ (11,308 ) Adjustments to reconcile net loss to net cash flows used in operating activities: Depreciation and amortization 2,105 2,060 Non-cash lease expense on right-of-use assets 1,307 636 Recognition of deferred income from state and local incentives — (2,507 ) Loss on change in fair market value for Warrant liability 6,142 1,984 Stock-based compensation recognized (191 ) 1,490 Non-cash interest expense 7,593 7,472 Loss on extinguishment of debt 14,880 — Other non-cash items, net (472 ) — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (11,922 ) (13,917 ) VAT receivable 2,963 16,940 Inventories (25,110 ) (16,926 ) Accounts and contractual payables (6,050 ) 3,525 Lease liability (1,991 ) (954 ) Customer deposits 19,644 15,406 Other assets and liabilities (10,548 ) (6,297 ) Net cash flows used in operating activities (25,576 ) (2,396 ) Cash flows from investing activities Purchase of property, plant and equipment (4,954 ) (2,808 ) Proceeds from sale of property, plant and equipment and railcars available for lease, net of selling costs 8,356 — Net cash flows provided by (used in) investing activities 3,402 (2,808 ) Cash flows from financing activities Proceeds from issuance of preferred shares, net of issuance costs 13,339 — Borrowings on revolving line of credit 89,223 49,282 Repayments on revolving line of credit (105,882 ) (48,770 ) Employee stock settlement (106 ) (13 ) Payment for stock appreciation rights exercised (6 ) (4 ) Financing lease payments (307 ) — Net cash flows (used in) provided by financing activities (3,739 ) 495 Net decrease in cash and cash equivalents (25,913 ) (4,709 ) 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 $ 11,999 $ 21,531 Supplemental cash flow information Interest paid $ 3,319 $ 3,990 Income taxes paid $ 1,516 $ 839 Non-cash transactions Change in unpaid construction in process $ 332 $ (8 ) Accrued PIK interest paid through issuance of PIK Note $ 3,161 $ 722 Issuance of preferred shares in exchange of term loan $ 72,607 $ — Issuance of warrants $ 3,010 $ 8,560 Issuance of equity fee $ 685 $ 2,000 FreightCar America, Inc.
Reconciliation of (loss) income before taxes to EBITDA(1) and Adjusted EBITDA(2)
(In thousands)
(Unaudited)Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (Loss) income before income taxes $ (18,329 ) $ 16,186 $ (23,255 ) $ (9,408 ) Depreciation & Amortization $ 1,033 1,036 $ 2,105 2,060 Interest Expense, net $ 4,351 5,757 $ 10,951 11,462 EBITDA (12,945 ) 22,979 (10,199 ) 4,114 Change in Fair Value of Warrant (a) 6,755 (18,746 ) 6,142 1,984 Loss on Debt Extinguishment (b) 14,880 - 14,880 - Alabama Grant Amortization (c) - - - (1,857 ) Consulting Costs (d) - 412 - 762 Corporate Realignment (e) - 1,075 - 1,260 Gain on Sale of Railcars Available for Lease (622 ) (622 ) Stock Based Compensation (100 ) (2,754 ) (191 ) 1,490 Other, net 69 (661 ) 105 (2,157 ) Adjusted EBITDA $ 8,037 $ 2,305 $ 10,115 $ 5,596 (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 second quarter of 2023, the Company recorded a non-cash loss on debt extinguishment of its term loan. 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 incurred certain non-recurring consulting costs during the first quarter of 2022. e) 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) income and Adjusted Net (loss) income(1)
(Unaudited)Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 Net income (loss) $ (18,889 ) $ 14,539 $ (23,926 ) $ (11,308 ) Change in Fair Value of Warrant (a) 6,755 (18,746 ) 6,142 1,984 Loss on Debt Extinguishment (b) 14,880 - 14,880 - Alabama Grant Amortization (c) - - - (1,857 ) Consulting Costs (d) - 412 - 762 Corporate Realignment (e) - 1,075 - 1,260 Stock Based Compensation (100 ) (2,754 ) (191 ) 1,490 Other, net 69 (661 ) 105 (2,157 ) Total non-GAAP adjustments 21,604 (20,674 ) 20,936 1,482 Income tax impact on non-GAAP adjustments (f) - (26 ) - (48 ) Adjusted Net income (loss) $ 2,715 $ (6,161 ) $ (2,990 ) $ (9,874 ) (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 second quarter of 2023, the Company recorded a non-cash loss on debt extinguishment of its term loan. 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 incurred certain non-recurring consulting costs during the first quarter of 2022. e) The Company incurred certain non-recurring corporate realignment costs in 2022. f) 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 Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 EPS $ (0.73 ) $ 0.58 $ (0.93 ) $ (0.47 ) Change in Fair Value of Warrant (a) 0.24 (0.81 ) 0.22 0.08 Loss on Debt Extinguishment (b) 0.54 - 0.54 - Alabama Grant Amortization (c) - - - (0.08 ) Consulting Costs (d) - 0.01 - 0.03 Corporate Realignment (e) - 0.04 - 0.05 Stock Based Compensation (0.02 ) (0.12 ) (0.02 ) 0.06 Other, net (0.01 ) (0.03 ) (0.01 ) (0.09 ) Total non-GAAP adjustments pre-tax per-share 0.75 (0.91 ) 0.73 0.05 Income tax impact on non-GAAP adjustments per share (f) - - - - Adjusted EPS $ 0.02 $ (0.33 ) $ (0.20 ) $ (0.42 ) (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 second quarter of 2023, the Company recorded a non-cash loss on debt extinguishment of its term loan. 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 incurred certain non-recurring consulting costs during the first quarter of 2022. e) The Company incurred certain non-recurring corporate realignment costs in 2022. f) 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.
