Highlights
  • Revenue of $126.2 million on deliveries of 1,372 units
  • Net loss of $0.5 million, or $(0.04) per diluted share
  • Diversified backlog totaling 6,207 railcars valued at $612 million
  • Targeted cost reduction plan expected to reduce annual operating costs by approximately $5.0 million

CHICAGO, Aug. 01, 2016 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ:RAIL) today reported results for the second quarter ended June 30, 2016, with a net loss of $0.5 million, or $(0.04) per diluted share, compared to net income of $7.4 million, or $0.60 per diluted share, in the same period last year.

"The second quarter results did not meet our expectations," said Joe McNeely, President and Chief Executive Officer. "Second quarter results reflected lower deliveries and higher costs due to a number of production-related matters, including the introduction of new car types. We are aggressively addressing all production issues and looking to significantly reduce our operating costs as we enter an increasingly competitive environment. Our backlog remains solid, totaling 6,207 railcars at June 30, 2016, with full year 2016 deliveries now expected to be between 5,600 and 6,100 railcars."

Consolidated revenues were $126.2 million in the second quarter of 2016 compared to $235.6 million in the same quarter of 2015. The Company delivered 1,372 railcars in the second quarter of 2016, all of which were new railcars. This compares to 2,611 railcars delivered in the second quarter of 2015, which included 1,861 new and 750 rebuilt railcars.

Consolidated operating loss for the second quarter of 2016 was $0.6 million, compared to operating income of $10.9 million in the second quarter of 2015.

Cash, cash equivalents, marketable securities and restricted cash were $83.6 million as of June 30, 2016, compared to $116.9 million as of December 31, 2015.  The decrease reflects the $32.9 million payment made in the first quarter of 2016 related to the retiree medical benefits litigation settlement.

COST REDUCTION PLAN

Over the next 12 months, the Company expects to reduce its annual operating costs by approximately $5 million by implementing the following:
  • 15% reduction of the Company's salaried workforce
  • Closure of the Johnstown administrative office
  • Reduction of certain discretionary spending

These actions are currently underway and are expected to be completed by the middle of 2017. The total estimated costs relating to this program are approximately $4.0 million, including approximately $2.5 million of employee-related costs and approximately $1.3 million in non-cash charges for asset impairments.  The Company expects to incur approximately $1.5 million of these costs in the third quarter of 2016 and approximately $0.8 million of these costs in the fourth quarter of 2016. 

"We plan to manage our cost structure to align it with the evolving business environment," said Mr. McNeely. "We do not make these decisions lightly. These decisions are difficult but necessary to better position us to deliver solid results and maintain our financial strength." 

The Company will host a conference call and live webcast on Tuesday, August 2, 2016 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company's second quarter 2016 financial results. To participate in the conference call, please dial (800) 288-8967, Confirmation Number 398562.  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#: 398562

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 August 2, 2016 until 11:59 p.m. (Eastern Daylight Time) on September 2, 2016.  To access the replay, please dial (800) 475-6701.  The replay pass code is 398562.  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; 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, December 31,
  2016 2015
  (In thousands)
Assets    
Current assets    
Cash and cash equivalents $     63,463   $     83,068  
Restricted cash and restricted certificates of deposit     5,168       6,896  
Marketable securities      14,988       26,951  
Accounts receivable, net     16,530       39,708  
Inventories, net     136,079       115,354  
Other current assets     26,479       8,704  
Total current assets     262,707       280,681  
     
Property, plant and equipment, net     47,266       42,596  
Railcars available for lease, net     24,369       24,729  
Goodwill     21,521       21,521  
Deferred income taxes, net     10,827       34,722  
Other long-term assets     1,877       2,655  
Total assets $     368,567   $     406,904  
     
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts and contractual payables $     39,141   $     34,304  
Accrued payroll and employee benefits     3,576       8,303  
Accrued postretirement benefits     405       405  
Reserve for workers' compensation     4,299       4,165  
Accrued warranty     8,964       9,239  
Customer deposits and deferred revenue      18,724       8,615  
Income taxes payable         4,180  
Other current liabilities     3,317       3,346  
Total current liabilities     78,426       72,557  
Accrued pension costs     6,465       6,673  
Accrued postretirement benefits, less current portion     5,986       72,497  
Deferred income state and local incentives, long-term     11,126       12,190  
Accrued taxes and other long-term liabilities     7,784       7,876  
Total liabilities     109,787       171,793  
     
Stockholders' equity    
Preferred stock     —        
Common stock     127       127  
Additional paid in capital     91,577       93,939  
Treasury stock, at cost     (14,551 )     (17,516 )
Accumulated other comprehensive loss     (7,985 )     (21,078 )
Retained earnings     189,612       179,639  
Total stockholders' equity     258,780       235,111  
Total liabilities and stockholders' equity $     368,567   $     406,904  

FreightCar America, Inc. Condensed Consolidated Statements of Operations (Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2016     2015       2016     2015  
  (In thousands, except for share and per share data)
           
Revenues $ 126,157   $ 235,637     $ 274,747   $ 328,441  
Cost of sales   118,080     213,831       250,783     302,082  
Gross profit   8,077     21,806       23,964     26,359  
Selling, general and administrative expenses   8,678     10,924       19,276     19,767  
Gain on sale of railcars available for lease                 (1,187 )
Gain on settlement of postretirement benefit obligation, net of plaintiffs' attorneys' fees             (14,306 )    
Operating (loss) income   (601 )   10,882       18,994     7,779  
                           
Interest expense and deferred financing costs   (41 )   (58 )     (86 )   (128 )
Other income   1     31       82     83  
(Loss) income before income taxes   (641 )   10,855       18,990     7,734  
Income tax (benefit) provision   (173 )   3,458       6,791     2,410  
Net (loss) income $ (468 ) $ 7,397     $ 12,199   $ 5,324  
           
Net (loss) income per common share - basic $ (0.04 ) $ 0.60     $ 0.99   $ 0.44  
           
Net (loss) income per common share - diluted $ (0.04 ) $ 0.60     $ 0.99   $ 0.43  
           
Weighted average common shares outstanding -          
basic   12,261,308     12,195,683       12,256,720     12,108,636  
           
Weighted average common shares outstanding -          
diluted   12,261,308     12,244,468       12,256,720     12,190,154  
           
Dividends declared per common share $ 0.09   $ 0.09     $ 0.18   $ 0.18  
           

FreightCar America, Inc. Condensed Segment Data (Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2016     2015       2016     2015  
  (In thousands)
Revenues:          
Manufacturing $     124,224   $     227,016     $     270,295   $     312,113  
Corporate and other (1)     1,933       8,621         4,452       16,328  
Consolidated revenues $     126,157   $     235,637     $     274,747   $     328,441  
           
Operating (Loss) Income:          
Manufacturing $     5,430   $     17,235     $     18,212   $     19,093  
Corporate and other (1)(2)     (6,031 )     (6,353 )       782       (11,314 )
Consolidated operating (loss) income $     (601 ) $     10,882     $     18,994   $     7,779  

(1) Results for the three and six months ended June 30, 2015 included results from the Company's railcar repair and maintenance services business that was sold on September 30, 2015.
(2) Results for the six months ended June 30, 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)
 
  Six Months Ended  June 30,
    2016     2015  
  (In thousands)
Cash flows from operating activities    
Net income $   12,199   $   5,324  
Adjustments to reconcile net income to net cash flows used in operating activities:    
Depreciation and amortization     5,117       4,948  
Recognition of deferred income from state and local incentives      (1,064 )      (351 )
Gain on sale of railcars available for lease            (1,187 )
Gain on settlement of postretirement benefit plan obligation      (15,606 )      
Deferred income taxes     16,904       1,670  
Stock-based compensation expense recognized     674       1,178  
Other non-cash items     731       1,622  
Changes in operating assets and liabilities:    
Accounts receivable     23,178       (33,832 )
Inventories     (21,445 )     (69,649 )
Other assets     (6,659 )     (3,528 )
Accounts and contractual payables     4,486       30,576  
Accrued payroll and employee benefits     (4,727 )     (1,481 )
Income taxes receivable/payable     (7,682 )     734  
Accrued warranty     (275 )     (85 )
Customer deposits and other liabilities     10,014       (33,007 )
Payment for settlement of postretirement benefit plan obligation     (31,616 )    
Accrued pension costs and accrued postretirement benefits     (6,404 )     1,310  
Net cash flows used in operating activities     (22,175 )     (95,758 )
     
Cash flows from investing activities    
Purchase of restricted certificates of deposit     (1,182 )     (2,165 )
Maturity of restricted certificates of deposit     2,910       295  
Purchase  of securities held to maturity         (17,997 )
Proceeds from maturity of securities     12,001       24,004  
Proceeds from sale of property, plant and equipment and railcars available for lease         7,651  
Purchases of property, plant and equipment     (8,781 )     (10,163 )
State and local incentives received         4,907  
Net cash flows provided by investing activities     4,948       6,532  
             
Cash flows from financing activities            
Stock option exercise         4,885  
Employee stock settlement     (71 )     (1,048 )
Deferred financing costs     (81 )    
Excess tax benefit from stock-based compensation         13  
Cash dividends paid to stockholders     (2,226 )     (2,201 )
Net cash flows (used in) provided by financing activities       (2,378 )       1,649  
     
Net decrease in cash and cash equivalents     (19,605 )     (87,577 )
Cash and cash equivalents at beginning of period       83,068         113,532  
Cash and cash equivalents at end of period $   63,463   $   25,955  

 
MEDIA CONTACT Matthew S. KohnkeTELEPHONE (800) 458-2235

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