FreightCar America, Inc. Reports Third Quarter 2009 Results
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CHICAGO--(BUSINESS WIRE)-- FreightCar America, Inc. (NASDAQ: RAIL) today reported net income of $1.1 million, or $0.09 per diluted share, for the three months ended September 30, 2009 on revenues of $55.1 million. For the second quarter of 2009, the Company generated sales of $104.3 million and net income of $7.0 million, or $0.59 per diluted share. For the third quarter of 2008, the Company generated sales of $238 million and net income of $10.0 million, or $0.85 per diluted share.
There were no net orders for new railcars in the third quarter of 2009, compared to 694 units ordered in the second quarter of 2009, and 2,329 units ordered in the third quarter of 2008. Railcar deliveries totaled 695 units in the third quarter, compared to 1,207 units delivered in the second quarter of 2009 and 3,082 units delivered in the third quarter of 2008. Total backlog of unfilled orders was 777 units at the end of the third quarter, compared with 1,472 units at the end of the second quarter of 2009 and 4401 units at the end of the third quarter of 2008.
"The decline in order activity in the quarter illustrates that the market for new railcars remains very challenging. However, I believe we are performing well in a difficult environment," said Chris Ragot, President and CEO.
"With little visibility to a recovery in the new car market, the preservation of cash and our strong balance sheet continues to be a high priority for us. Cash and investments on-hand at the end of the quarter were approximately $134 million. Additionally, our two credit facilities are still undrawn."
Cash on-hand at the end of the second quarter of 2009 was $152 million. The decrease in cash during the quarter was due to an increase in inventory due to the timing of orders and a $12.1 million pension contribution.
Selling, general and administrative expenses for the third quarter of 2009 were $6.6 million, compared to $6.7 million in the second quarter of 2009 and $7.2 million in the third quarter of 2008. Mr. Ragot stated, "Given the difficult outlook for 2010, we are taking immediate steps to further reduce costs. These actions include additional headcount and salary reductions and limits on outside services, which will result in a further meaningful reduction in spending."
The gross margin rate for the third quarter of 2009 was 12.5% compared to 15.3% for the second quarter of 2009 and 9.5% for the third quarter of 2008. The decrease in the rate from the previous quarter was due to lower margins on new car sales. The increase in gross margin rate compared to the prior year was due to an increase in parts sales and leasing revenues, which carry higher margins than new car sales.
As of September 30, 2009, the Company's net investment in railcars under operating leases was $62 million, compared to $71 million at the end of the second quarter of 2009 and $36 million at the end of the third quarter of 2008. Year to date, the Company has invested $91 million in new railcars under leases and generated cash proceeds from the sale of leased railcars of $76 million.
Mr. Ragot closed by stating, "We continue to pursue several strategic initiatives to broaden and strengthen our revenue sources, including refurbishment, after-market parts and services and international expansion. We believe that patience will be rewarded as the railcar market continues to be soft, and we will be prudent in investing in opportunities as they present themselves."
The Company will host a conference call on Friday, November 6, 2009 at 11:00 a.m. (Eastern Standard Time) to discuss the Company's third quarter financial results. To participate in the conference call, please dial (800) 398-9379. 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 1:00 p.m. (Eastern Standard Time) on November 6, 2009 until 11:59 p.m. (Eastern Standard Time) on December 4, 2009. To access the replay, please dial (800) 475-6701. The replay pass code is 121923. 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, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds 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 manufacturing facilities in Danville, Illinois and Roanoke, Virginia. More information about FreightCar America is available on its website at www.freightcaramerica.com.
This press release contains statements 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 acceptance of customer 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. More information about FreightCar America is available on its website at www.freightcaramerica.com.
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2008
2009
(as restated)
(In thousands)
Assets
Current assets
Cash and cash equivalents $ 113,691 $ 129,192
Securities available for sale, at fair value 19,986 --
Accounts receivable, net 2,259 73,120
Inventories 56,191 31,096
Leased railcars held for sale 9,528 11,490
Property, plant and equipment held for sale 2,461 --
Other current assets 8,270 6,789
Deferred income taxes ,net 15,404 16,003
Total current assets 227,790 267,690
Property, plant and equipment, net 28,852 30,582
Railcars on operating leases 52,334 34,735
Goodwill 21,521 21,521
Deferred income taxes 11,923 23,281
Other long-term assets 4,843 5,484
Total assets $ 347,263 $ 383,293
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 27,604 $ 47,328
Accrued payroll and employee benefits 4,762 9,530
Accrued postretirement benefits 5,364 5,364
Accrued warranty 10,403 11,476
Customer deposits 2,590 7,367
Other current liabilities 5,719 7,939
Total current liabilities 56,442 89,004
Accrued pension costs 15,669 26,763
Accrued postretirement benefits, less current 53,805 55,293
portion
Other long-term liabilities 6,431 7,407
Total liabilities 132,347 178,467
Stockholders' equity
Preferred stock -- --
Common stock 127 127
Additional paid in capital 97,603 98,253
Treasury stock, at cost (36,926 ) (38,871 )
Accumulated other comprehensive loss (16,086 ) (16,471 )
Retained earnings 170,027 161,687
Total FreightCar America stockholders' equity 214,745 204,725
Noncontrolling interest in India JV 171 101
Total stockholders' equity 214,916 204,826
Total liabilities and stockholders' equity $ 347,263 $ 383,293
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2008
2009 2009
(as restated) (as restated)
(In thousands, except share and per share data)
Revenues $ 55,131 $ 238,008 $ 199,022 $ 474,441
Cost of sales 48,252 215,420 165,865 435,234
Gross profit 6,879 22,588 33,157 39,207
Selling,
general and
administrative
expense
(including
non-cash
stock-based 6,595 7,207 20,630 23,076
compensation
expense of
$563 $608,
$1,654 and
$2,301,
respectively)
Plant closure
charges -- 268 (495 ) 20,133
(income)
Operating 284 15,113 13,022 (4,002 )
income (loss)
Interest
(expense) (210 ) 632 (505 ) 2,523
income, net
Operating
income (loss) 74 15,745 12,517 (1,479 )
before income
taxes
Income tax
(benefit) (971 ) 5,702 2,101 (900 )
provision
Net income 1,045 10,043 10,416 (579 )
(loss)
Less: Net loss
attributable
to (24 ) -- (72 ) --
noncontrolling
interest in
India JV
Net income
(loss)
attributable $ 1,069 $ 10,043 $ 10,488 $ (579 )
to FreightCar
America
Net income
(loss) per
common share $ 0.09 $ 0.85 $ 0.88 $ (0.05 )
attributable
to FreightCar
America- basic
Net income
(loss) per
common share
attributable $ 0.09 $ 0.85 $ 0.88 $ (0.05 )
to FreightCar
America-
diluted
Weighted
average common
shares
outstanding -
basic 11,867,314 11,809,024 11,859,361 11,776,503
Weighted
average common
shares
outstanding -
Diluted 11,875,748 11,841,236 11,864,161 11,776,503
Dividends
declared per $ 0.06 $ 0.06 $ 0.18 $ 0.18
common share
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2008
2009
(as restated)
(In thousands)
Cash flows from operating activities
Net income (loss) attributable to FreightCar $ 10,488 $ (579 )
America
Adjustments to reconcile net income to net cash
flows used in operating activities:
Plant closure charges -- 20,133
Depreciation and amortization 4,024 3,215
Other non-cash items 2,359 (268 )
Deferred income taxes 11,722 (7,811 )
Compensation expense under stock option and 1,653 2,301
restricted share award agreements
Noncontrolling interest in India JV 70 --
Changes in operating assets and liabilities:
Accounts receivable 70,861 (55,252 )
Inventories (27,075 ) (65,669 )
Leased railcars held for sale (7,948 ) (705 )
Other current assets (197 ) (6,174 )
Accounts payable (19,108 ) 74,948
Accrued payroll and employee benefits (4,768 ) (4,178 )
Income taxes receivable/payable (1,789 ) 7,398
Accrued warranty (1,073 ) 752
Other current liabilities and customer deposits (6,964 ) 10,910
Deferred revenue, non-current (599 ) --
Accrued pension costs and accrued postretirement (12,204 ) (6,163 )
benefits
Net cash flows provided by (used in) operating 19,452 (27,142 )
activities
Cash flows from investing activities
Purchase of securities available for sale (19,967 ) --
Cost of railcars on operating leases produced or (8,758 ) (35,201 )
acquired
Purchases of property, plant and equipment (4,047 ) (4,117 )
Net cash flows used in investing activities (32,772 ) (39,318 )
Cash flows from financing activities
Payments on long-term debt (28 ) (48 )
Deferred financing costs paid (5 ) (969 )
Issuance of common stock -- 627
Cash dividends paid to stockholders (2,148 ) (2,139 )
Net cash flows used in financing activities (2,181 ) (2,529 )
Net decrease in cash and cash equivalents (15,501 ) (68,989 )
Cash and cash equivalents at beginning of period 129,192 197,042
Cash and cash equivalents at end of period $ 113,691 $ 128,053
Source: FreightCar America, Inc.
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