Highlights
  • Fourth quarter revenue of $135.5 million on deliveries of 1,364 units
  • Fourth quarter net income of $0.1 million, or $0.01 per diluted share
  • Full year 2016 net income of $12.3 million, or $1.00 per diluted share
  • Year-end backlog totaling 4,259 railcars valued at $419 million
  • Additional cost reductions enacted to reduce annual selling, general and administrative costs by approximately $3.0 million
  • Total cash, cash equivalents and restricted cash of $98.7 million at December 31, 2016

CHICAGO, Feb. 27, 2017 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ:RAIL) today reported results for the fourth quarter ended December 31, 2016, with net income of $0.1 million, or $0.01 per diluted share, compared to net income of $11.7 million, or $0.94 per diluted share, in the same period last year.

"In 2016, the rail industry experienced a second year of reduced car loadings and a large oversupply of railcars, which contributed to a 45% reduction in deliveries in the fourth quarter," said Joe McNeely, President and Chief Executive Officer. "Additionally, in the fourth quarter, we continued to experience higher than expected manufacturing costs associated with certain first-time car builds. We continue to address our production processes and expect improvements in these builds going forward."

"Our delivery outlook for 2017 reflects year-over-year volume reductions as lower industry order trends are expected to persist. In this period of weak demand, we are focused on maintaining a strong cash position which provides stability. Based upon our current production schedules and customer delivery requirements, we expect to deliver between 3,200 and 3,800 new railcars in 2017, including 100 leased railcars," Mr. McNeely continued. "As a result of this outlook, we have implemented additional reductions in our salaried administrative workforce and discretionary spending, which are expected to yield an additional $3.0 million in annualized savings in addition to the $5.0 million of annualized savings we announced last year. Furthermore, we will be idling our Danville, Illinois, manufacturing facility for railcar production effective March 31, 2017."

FOURTH QUARTER RESULTS

Consolidated revenues were $135.5 million in the fourth quarter of 2016 compared to $203.3 million in the same quarter of 2015. The Company delivered 1,364 railcars in the fourth quarter of 2016, which included 1,137 new railcars and 227 rebuilt railcars. This compares to 2,464 railcars delivered in the fourth quarter of 2015, which included 1,692 new railcars, 672 rebuilt railcars and 100 leased railcars.

Consolidated operating loss for the fourth quarter of 2016 was $3.1 million. Adjusted operating loss, which excludes restructuring and impairment charges totaling $0.7 million in the fourth quarter of 2016, was $2.4 million in the fourth quarter of 2016 compared to operating income of $16.1 million in the fourth quarter of 2015. Adjusted operating income (loss) is a non-GAAP financial measure. A reconciliation of adjusted operating income (loss) to operating income, the most directly comparable GAAP measure, is provided in the attached supplemental disclosure.

The income tax benefit of $3.2 million recorded in the fourth quarter of 2016 included a $2.7 million benefit from the reduction of a reserve for an uncertain tax position.

Cash, cash equivalents and restricted cash were $98.7 million as of December 31, 2016.

COST REDUCTION PLAN

In the first quarter of 2017, the Company has made further reductions to its salaried administrative workforce and other discretionary costs, which are expected to reduce its annual operating costs by approximately $3.0 million. The total estimated costs relating to this program are approximately $1.0 million of employee-related costs. 

Mr. McNeely concluded, "When the cost reduction plans are fully implemented, we will have eliminated approximately $8.0 million of costs on an annualized basis, allowing FreightCar America to be well-positioned when the freight car market recovers." 

BACKLOG

Total manufacturing backlog was 4,259 units at December 31, 2016, compared to 9,840 units at December 31, 2015 and 5,613 units at September 30, 2016.

FULL YEAR RESULTS

Consolidated revenues for the fiscal year ended December 31, 2016 were $523.7 million compared to $772.9 million for the fiscal year ended December 31, 2015. The Company delivered 5,559 railcars in 2016, which included 5,332 new railcars and 227 rebuilt railcars. This compares to 8,980 railcars delivered in 2015, which included 6,280 new railcars, 2,600 rebuilt railcars and 100 railcars leased.

Consolidated operating income for 2016 was $15.8 million compared to $46.8 million in 2015. Adjusted operating income, which excludes restructuring and impairment charges, the gain on settlement of the retiree benefit plan obligation in 2016 and the gain on sale of the railcar repair and maintenance services business in 2015, was $3.8 million in 2016 compared to adjusted operating income of $42.2 million in 2015.

Net income in 2016 was $12.3 million, or $1.00 per diluted share, compared to $31.8 million, or $2.58 per diluted share, in 2015. 

The Company will host a conference call and live webcast on Tuesday, February 28, 2017 at 11:00 a.m. (Eastern Standard Time) to discuss the Company's fourth quarter 2016 financial results. To participate in the conference call, please dial (800) 230-1085, Confirmation Number 418091.  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#: 418091

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 Standard Time) on February 28, 2017 until 11:59 p.m. (Eastern Daylight Time) on March 28, 2017.  To access the replay, please dial (800) 475-6701.  The replay pass code is 418091.  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)  
   
  December 31,   December 31,  
  2016     2015  
  (In thousands)  
Assets              
Current assets              
Cash and cash equivalents $ 92,750   $ 83,068  
Restricted cash and restricted certificates of deposit   5,970     6,896  
Marketable securities       26,951  
Accounts receivable, net   25,207     39,708  
Inventories, net   97,904     115,354  
Income taxes receivable   13,283      
Other current assets   6,056     8,704  
Total current assets   241,170     280,681  
     
Property, plant and equipment, net   46,347     42,596  
Railcars available for lease, net   24,018     24,729  
Goodwill   21,521     21,521  
Deferred income taxes, net   4,221     34,722  
Other long-term assets   1,978     2,655  
Total assets $ 339,255   $ 406,904  
     
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts and contractual payables $ 34,536   $ 34,304  
Accrued payroll and other employee costs   3,117     8,708  
Reserve for workers' compensation   4,444     4,165  
Accrued warranty   8,324     9,239  
Customer deposits and deferred revenue   371     8,615  
Income taxes payable   9     4,180  
Other current liabilities   3,334     3,346  
Total current liabilities   54,135     72,557  
Accrued pension costs   6,821     6,673  
Accrued postretirement benefits, less current portion   5,769     72,497  
Deferred income state and local incentives, long-term   11,380     12,190  
Accrued taxes and other long-term liabilities   4,236     7,876  
Total liabilities   82,341     171,793  
     
Stockholders' equity    
Preferred stock        
Common stock   127     127  
Additional paid in capital   92,025     93,939  
Treasury stock, at cost   (14,583 )   (17,516 )
Accumulated other comprehensive loss   (8,163 )   (21,078 )
Retained earnings   187,508     179,639  
Total stockholders' equity   256,914     235,111  
Total liabilities and stockholders' equity $ 339,255   $ 406,904  
             

FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
  Three Months Ended December 31,   Twelve Months Ended December 31,
    2016     2015       2016     2015  
  (In thousands, except for share and per share data)
           
Revenues $ 135,523   $ 203,299     $ 523,731   $ 772,854  
Cost of sales   128,797     176,047       483,552     690,193  
Gross profit   6,726     27,252       40,179     82,661  
Selling, general and administrative expenses   9,090     11,190       36,376     41,663  
Gain on sale of railcars available for lease                 (1,187 )
Gain on sale of railcar repair and maintenance services business and facility                 (4,578 )
Gain on settlement of postretirement benefit obligation, net of plaintiffs' attorneys' fees             (14,306 )    
Restructuring and impairment charges   730           2,261      
Operating (loss) income   (3,094 )   16,062       15,848     46,763  
Interest expense and deferred financing costs   (56 )   (59 )     (171 )   (243 )
Other income   16     25       111     116  
(Loss) income before income taxes   (3,134 )   16,028       15,788     46,636  
Income tax (benefit) provision   (3,208 )   4,374       3,464     14,831  
Net income $ 74   $ 11,654     $ 12,324   $ 31,805  
           
Net income per common share - basic $ 0.01   $ 0.95     $ 1.00   $ 2.59  
           
Net income per common share - diluted $ 0.01   $ 0.94     $ 1.00   $ 2.58  
           
Weighted average common shares outstanding -          
basic   12,268,072     12,243,144       12,262,275     12,175,955  
           
Weighted average common shares outstanding -          
diluted   12,268,072     12,248,387       12,262,275     12,217,755  
           
Dividends declared per common share $ 0.09   $ 0.09     $ 0.36   $ 0.36  
           

FreightCar America, Inc.
Condensed Segment Data
(Unaudited)
 
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2016     2015       2016     2015  
  (In thousands)
Revenues:          
Manufacturing $ 133,805   $ 200,316     $ 516,063   $ 745,723  
Corporate and other (1)   1,718     2,983       7,668     27,131  
Consolidated revenues $ 135,523   $ 203,299     $ 523,731   $ 772,854  
           
Operating (Loss) Income:          
Manufacturing $ 3,833   $ 24,254     $ 29,012   $ 69,165  
Corporate and other (1)(2)(3)   (6,927 )   (8,192 )     (13,164 )   (22,402 )
Consolidated operating (loss) income $ (3,094 ) $ 16,062     $ 15,848   $ 46,763  
                           

(1) Results for the twelve months ended December 31, 2015 included results from the Company's railcar repair and maintenance services business that was sold on September 30, 2015.(2) Results for the twelve months ended December 31, 2016 included a $14,306 gain on settlement of a postretirement benefit plan obligation, net of plaintiffs' attorneys' fees.(3) Results for the three and twelve months ended December 31, 2016 included restructuring and impairment charges of $730 and $2,261, respectively.
 
 
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
  Twelve Months Ended  December 31,
    2016     2015  
  (In thousands)
Cash flows from operating activities    
Net income $ 12,324   $ 31,805  
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:    
Depreciation and amortization   9,736     10,028  
Recognition of deferred income from state and local incentives   (2,129 )   (1,415 )
Gain on sale of railcars available for lease       (1,187 )
Gain on sale of railcar repair and maintenance services business and facility       (4,578 )
Gain on settlement of postretirement benefit plan obligation   (15,606 )    
Deferred income taxes   22,723     (2,679 )
Stock-based compensation expense recognized   1,149     2,183  
Other non-cash items   1,800     1,465  
Changes in operating assets and liabilities:    
Accounts receivable   15,911     (38,398 )
Inventories   17,056     (36,927 )
Other assets   2,992     (1,642 )
Accounts and contractual payables   260     137  
Accrued payroll and employee benefits   (5,589 )   2,033  
Income taxes receivable/payable   (12,746 )   6,374  
Accrued warranty   (915 )   497  
Customer deposits and other liabilities   (8,690 )   (34,802 )
Payment for settlement of postretirement benefit plan obligation   (31,616 )    
Accrued pension costs and accrued postretirement benefits   (6,445 )   1,421  
Net cash flows provided by (used in) operating activities   215     (65,685 )
     
Cash flows from investing activities    
Purchase of restricted certificates of deposit   (6,370 )   (2,165 )
Maturity of restricted certificates of deposit   7,296     1,284  
Purchase of securities held to maturity       (32,944 )
Proceeds from maturity of securities   27,001     54,004  
Proceeds from sale of property, plant and equipment and railcars   available for lease   2     7,654  
Proceeds from sale of railcar repair and maintenance services business   and facility       17,589  
Purchases of property, plant and equipment   (13,846 )   (16,699 )
Cost of railcars available for lease       (8,724 )
State and local incentives received       15,733  
Net cash flows provided by investing activities   14,083     35,732  
     
Cash flows from financing activities    
Stock option exercise       4,925  
Employee stock settlement   (78 )   (1,052 )
Deferred financing costs   (83 )    
Excess tax benefit from stock-based compensation       35  
Cash dividends paid to stockholders   (4,455 )   (4,419 )
Net cash flows used in financing activities   (4,616 )   (511 )
     
Net increase (decrease) in cash and cash equivalents   9,682     (30,464 )
Cash and cash equivalents at beginning of period   83,068     113,532  
Cash and cash equivalents at end of period $ 92,750   $ 83,068  
             

FreightCar America, Inc. Reconciliation of Non-GAAP Measures (Unaudited)

This press release contains non-GAAP measures which adjust operating income (loss) to exclude the impact of the following items:
  • For the twelve months ended December 31, 2015, a $4.6 million gain on sale of the railcar repair and maintenance services business;
  • For the twelve months ended December 31, 2016, a $14.3 million pre-tax gain on settlement of the retiree benefits litigation; and
  • For the three and twelve months ended December 31, 2016, $0.7 million and $2.3 million, respectively, of restructuring and impairment charges related to the Company's cost reduction plan.

The Company believes that adjusted operating income (loss) information is useful to investors because it allows investors to more effectively compare the Company's financial results prior to and after the impact of the items described above, which are unusual in nature. Adjusted operating income (loss) is not a financial measure presented in accordance with GAAP.

In addition, the presentation of this non-GAAP measure is intended to enhance the usefulness of the financial information by providing measures that the Company's management uses internally to evaluate the Company's baseline performance. Accordingly, when analyzing our operating performance, investors should not consider adjusted operating income (loss) in isolation or as a substitute for operating income (loss) in accordance with GAAP. Our calculation of such non-GAAP measures is not necessarily comparable to that of other similarly titled measures reported by other companies. A reconciliation of adjusted operating income (loss) to operating income (loss), the most directly comparable GAAP measure, follows:

  Three Months Ended December 31, Twelve Months Ended December 31,
    2016     2015   2016     2015  
  (In thousands) (In thousands)
         
Operating income (loss), as reported $ (3,094 ) $ 16,062 $ 15,848   $ 46,763  
Less: Gain on sale of railcar repair and maintenance services business and facility   -     -   -     (4,578 )
Less: Gain on settlement of retiree benefit plan obligations, net of plaintiffs' attorneys' fees   -     -   (14,306 )   -  
Add: Restructuring and impairment charges   730     -   2,261     -  
Adjusted operating income (loss) $ (2,364 ) $ 16,062 $ 3,803   $ 42,185  
                       

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

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