FreightCar America, Inc. Reports Second Quarter 2012 Results

FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the second quarter ended June 30, 2012, with revenues of $181.2 million and net income of $5.6 million, or $0.46 per diluted share. For the same quarter in 2011, the Company reported revenues of $97.6 million and net income of $0.2 million, or $0.02 per diluted share. Revenues were $219.1 million and net income was $9.7 million, or $0.81 per diluted share, in the first quarter of 2012.

The Company delivered 2,786 railcars to customers in the second quarter of 2012, of which 1,815 were new cars, 361 were used cars and 610 were leased cars. This compares to 1,309 railcars delivered in the second quarter of 2011 and 2,613 railcars delivered in the first quarter of 2012. There were 961 units ordered in the second quarter of 2012. This compares to 1,089 units ordered in the second quarter of 2011 and 1,244 units ordered in the first quarter of 2012. Total manufacturing backlog was 5,109 units at June 30, 2012 compared to 4,986 units at June 30, 2011 and 6,934 units at March 31, 2012.

“I am pleased to report solid results for the second quarter despite challenging macroeconomic and industry conditions,” said Ed Whalen, President and Chief Executive Officer. “We had another strong quarter of deliveries and revenues as we drew upon the backlog of orders taken in the second half of last year. Our product diversification efforts resulted in second quarter orders for railcars other than coal including hoppers, gondolas and flat cars. Coal demand continued to remain under pressure in the second quarter. However, coal export activity remains strong and we have also seen a modest rebound in coal demand related to above average power generation needs in the later weeks of the quarter due to higher than normal early summer temperatures. While an uncertain economic outlook persists, we remain focused on operating efficiently, expanding our product offerings, delivering quality products and services to our customers and producing positive returns for our shareholders,” Whalen concluded.

The Manufacturing segment had revenues of $171.8 million in the second quarter of 2012 compared to $88.3 million for the second quarter of 2011. Manufacturing segment revenues were $210.4 million in the first quarter of 2012. Operating income for the Manufacturing segment was $15.3 million in the second quarter of 2012 compared to $2.1 million in the second quarter of 2011 and $22.7 million in the first quarter of 2012.

Revenues for the Services segment were $9.4 million in the second quarter of 2012 compared to $9.3 million in the second quarter of 2011 and $8.6 million in the first quarter of 2012. Services segment operating income was $0.7 million for the second quarter of 2012 compared to $1.2 million in the second quarter of 2011 and $0.7 million in the first quarter of 2012.

Corporate costs were $6.6 million for the quarter ended June 30, 2012 compared to $5.2 million in the same quarter of 2011. Corporate costs were $7.4 million in the first quarter of 2012.

The Company’s effective tax rate was 39.3% in the first six months ended June 30, 2012. The effective tax rate was 81.1% in the first half of 2011.

Cash and cash equivalents and restricted cash as of June 30, 2012 were $124.4 million, compared to $144.6 million as of March 31, 2012. The decrease in cash is due to the addition of inventory on lease and reduction of payables during the quarter. The Company’s $30.0 million revolving credit facility remains undrawn.

Railcars under lease totaled $67.1 million at the end of the second quarter of 2012 compared to $44.4 million at the end of the first quarter of 2012 and $65.8 million at the end of the second quarter of 2011.

The Company will host a conference call and live webcast on Monday, August 6, 2012 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s second quarter 2012 financial results. To participate in the conference call, please dial (800) 230-1766, Confirmation Number 255509. 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#: 255509

If you need technical assistance, call the toll-free AT&T Conference Casting Support Help Line at 1-888-793-6118. 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 August 6, 2012 until 11:59 p.m. (Eastern Daylight Time) on September 6, 2012. To access the replay, please dial (800) 475-6701. The replay pass code is 255509. 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 railroad freight cars, supplies railcar parts, leases freight cars through its JAIX Leasing Company subsidiary, and provides railcar maintenance, repairs and management through its FreightCar Rail Services, LLC subsidiary. FreightCar America designs and builds coal cars, bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago, Illinois and has facilities in the following locations: Clinton, Indiana, Danville, Illinois, Lakewood, Colorado, Grand Island, Nebraska, Hastings, Nebraska, Johnstown, Pennsylvania, and Roanoke, Virginia. 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)

 

 

June 30, 2012
         

December 31, 2011
(In thousands)
Assets
Current assets
Cash and cash equivalents $     107,442 $ 101,870
Restricted cash 17,004 1,815
Accounts receivable, net 7,249 10,125
Inventories 72,592 72,877
Inventory on lease 23,061
Other current assets 6,056 2,618
Deferred income taxes, net       10,982               10,982  
Total current assets 244,386 200,287
 
Property, plant and equipment, net 36,848 35,984
Railcars available for lease, net 44,042 54,746
Goodwill 22,128 22,128
Deferred income taxes, net 19,067 28,150
Other long-term assets       3,783               4,168  
Total assets $     370,254             $ 345,463  
 

Liabilities and Stockholders’ Equity
Current liabilities
Account and contractual payables $ 37,663 $ 28,110
Accrued payroll and employee benefits 5,152 5,611
Accrued postretirement benefits 5,174 5,174
Accrued warranty 7,773 7,795
Customer deposits 18,798 17,964
Other current liabilities       7,685               5,044  
Total current liabilities 82,245 69,698
Accrued pension costs 12,371 14,202
Accrued postretirement benefits, less current portion 58,894 59,887
Accrued taxes and other long-term liabilities       4,296               4,342  
Total liabilities       157,806               148,129  
 
Stockholders’ equity
Preferred stock
Common stock 127 127
Additional paid in capital 99,825 100,204
Treasury stock, at cost (34,616 ) (35,904 )
Accumulated other comprehensive loss (21,957 ) (22,302 )
Retained earnings       169,069               155,209  
Total stockholders’ equity       212,448               197,334  
Total liabilities and stockholders’ equity

$
    370,254             $ 345,463  
 
               

FreightCar America, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)
 
Three Months Ended

June 30,
Six Months Ended

June 30,
  2012         2011         2012         2011  
(In thousands, except share and per share data)
       
Revenues $ 181,206 $ 97,583 $ 400,272 $ 169,823
Cost of sales   164,163         93,618     359,498         163,616  
Gross profit 17,043 3,965 40,774 6,207
Selling, general and administrative expense 7,642 6,870 16,335 12,867
Gain on sale of railcars available for lease   (14 )       (975 )   (962 )       (975 )
Operating income (loss) 9,415 (1,930 ) 25,401 (5,685 )
 
Interest expense, net   (96 )       (54 )   (186 )       (117 )
Income (loss) before income taxes 9,319 (1,984 ) 25,215 (5,802 )
Income tax provision (benefit)   3,756         (2,162 )   9,918         (4,708 )
Net income (loss) 5,563 178 15,297 (1,094 )

Less: Net (loss) income attributable tononcontrolling interest in JV
          (6 )           12  
Net income (loss) attributable to FreightCar America $ 5,563       $ 184   $ 15,297       $ (1,106 )
 

Net income (loss) per common share attributable  to FreightCar America – basic
$ 0.47       $ 0.02   $ 1.28       $ (0.09 )
 

Net income (loss) per common share attributable  to FreightCar America – diluted
$ 0.46       $ 0.02   $ 1.28       $ (0.09 )
 

Weighted average common shares outstanding -  basic
  11,931,565         11,914,883     11,927,992         11,911,469  
 

Weighted average common shares outstanding -  diluted
  11,983,901         11,994,460     11,992,808         11,911,469  
 
Dividends declared per common share $ 0.06       $   $ 0.12       $  
 
                         

FreightCar America, Inc.

Condensed Segment Data

(Unaudited)
 
Three Months Ended

June 30,
Six Months Ended

June 30,
    2012       2011       2012       2011
(In thousands)
Revenues:            
Manufacturing

 

$

 

171,771
$     88,291 $     382,220 $     151,460
Services     9,435               9,292               18,052               18,363  
Consolidated Total

 

$

 

181,206
        $     97,583         $     400,272         $     169,823  
 
Operating Income (Loss):
Manufacturing

 

$

 

15,253
$ 2,107 $ 37,942 $ 2,323
Services 726 1,161 1,379 2,256
Corporate     (6,564 )             (5,198 )             (13,920 )             (10,264 )
Consolidated Total

 

$

 

9,415
        $     (1,930 )       $     25,401         $     (5,685 )
 
     

Condensed Consolidated Statements of Cash Flows

(Unaudited)
 
Six Months Ended

June 30,
2012           2011
(In thousands)
Cash flows from operating activities          
Net income (loss) $   15,297 $   (1,094 )
Adjustments to reconcile net income (loss) to net cashflows provided by (used in) operating activities:
Depreciation and amortization 4,165 4,458
Gain on sale of railcars available for lease (962 ) (975 )
Other non-cash items 609 303
Deferred income taxes 8,868 (4,827 )
Stock-based compensation expense recognized 952 1,093
Changes in operating assets and liabilities:
Accounts receivable 2,876 (73,514 )
Inventories 304 (6,900 )
Inventory on lease (23,061 ) (7,062 )
Other current assets (2,992 ) 2,685
Account and contractual payables 9,178 17,467
Accrued payroll and employee benefits (459 ) (55 )
Income taxes receivable (71 ) 416
Accrued warranty (22 ) (1,096 )
Customer deposits and other current liabilities 2,851 56,895
Deferred revenue, non-current (182 ) (272 )
Accrued pension costs and accrued postretirement benefits     (2,479 )               (4,285 )
Net cash flows provided by (used in) operating activities     14,872                 (16,763 )
Cash flows from investing activities
Restricted cash deposits (15,525 )
Restricted cash withdrawals 336 119

Proceeds from sale of property, plant and equipment, railcars availablefor lease and assets held for sale
10,526

6,531
Purchase price adjustment for business acquired (166 )
Purchases of property, plant and equipment     (3,157 )               (367 )
Net cash flows (used in) provided by investing activities     (7,820 )               6,117  
Cash flows from financing activities
Employee restricted stock settlement (43 ) (65 )
Cash dividends paid to stockholders     (1,437 )                
Net cash flows used in financing activities     (1,480 )               (65 )
 
Net increase (decrease) in cash and cash equivalents 5,572 (10,711 )
Cash and cash equivalents at beginning of period     101,870                 61,780  
Cash and cash equivalents at end of period $   107,442             $   51,069  
 

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