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8-K - FORM 8-K - FreightCar America, Inc. | l41897e8vk.htm |
Exhibit 99.1
INVESTOR AND MEDIA CONTACT
|
Joe McNeely | |
TELEPHONE
|
(800) 458-2235 |
FOR IMMEDIATE RELEASE
|
February 17, 2011 |
FreightCar America, Inc. Reports Fourth Quarter and Full Year 2010 Results
Chicago, IL, February 17, 2011 FreightCar America, Inc. (NASDAQ: RAIL) today reported
results for its fourth quarter ended December 31, 2010, with revenues of $51.0 million and a net
loss of $3.5 million, or $0.29 per diluted share. For the third quarter of 2010, the Company
reported revenues of $41.3 million and a net loss of $4.7 million, or $0.39 per diluted share. For
the fourth quarter of 2009, the Company generated revenues of $49.4 million and a net loss of $5.5
million, or $0.47 per diluted share.
The Company delivered 694 railcars to customers in the fourth quarter of 2010, all of which were
new railcars. This compares to 600 railcars delivered in the third quarter of 2010 and 697 railcars
delivered in the fourth quarter of 2009. There were 331 units ordered in the fourth quarter of
2010, compared to 17 units ordered in the third quarter of 2010 and 185 railcars ordered in the
fourth quarter of 2009. Total backlog was 2,054 units at December 31, 2010 compared to 2,417 units
at September 30, 2010 and 265 units at December 31, 2009.
Our sales and order volume for the fourth quarter of 2010 reflects the persistent
macro-economic challenges which have continued to impact the overall market and demand for
coal-carrying railcars. While the improved results for the fourth quarter of 2010, as compared to
the third quarter of 2010, reflect the increase in deliveries, we were still affected by ongoing
competitive pricing pressures and underutilization of our manufacturing capacity. While it is
difficult to assess when sustained demand for coal cars will return, we are encouraged by the fact
that, since the beginning of 2011, the Company has received orders for more than 3,000 new railcars
to be manufactured and delivered during 2011 and 2012. Looking forward, we continue to see positive
signs in the market. Electricity generation and coal loadings increased year-over-year, coal
stockpiles are down compared to the prior year and railcars in storage continue to decrease. We
believe this activity will translate into increased demand for coal cars over the long term and we
are well positioned to effectively meet our customers needs, said Ed Whalen, President and Chief
Executive Officer.
Whalen continued, We have successfully integrated the business assets of DTE Rail Services into
our operations. This acquisition has served to further the Companys strategic growth initiative
to expand our presence in the railcar services sector and we will continue to evaluate similar
strategic opportunities moving forward. For 2011, we continue to focus on factors within our
control: maximizing operational efficiency, strict cost management, preservation of our financial
strength and flexibility. We believe that FreightCar Americas coal car market position, strong
balance sheet and strategic initiatives will enable it to be a more competitive company as improved
industry conditions gain a foothold and we emerge from the economic downturn.
Gross profit for the fourth quarter of 2010 was about breakeven, compared to $(0.8) million, or
(2.0%), for the third quarter of 2010 and $3.4 million, or 6.8%, for the fourth quarter of 2009.
Selling, general and administrative expenses for the fourth quarter of 2010 were $6.6 million,
compared to $6.5 million for the third quarter of 2010 and $10.7 million for the fourth quarter of
2009.
The Companys effective tax rate for the fourth quarter of 2010 was 43.4%, compared to 40.3% for
the third quarter of 2010. The favorable tax treatment of certain amortization provides additional
tax benefit to the Company, increasing its effective tax rate in periods of loss and reducing its
effective tax rate during periods of profitability.
Cash and marketable securities as of December 31, 2010 were $64.1 million, compared to $96.8
million as of September 30, 2010 and $129.4 million as of December 31, 2009. The decrease in cash
primarily reflects the $23.3 million paid for the business assets of DTE Rail Services, an increase
in inventories, and other operating activities. The Companys $30.0 million revolving credit
facility remains undrawn.
Railcars under lease totaled $65.4 million at the end of the fourth quarter of 2010 compared to
$65.9 million at the end of the third quarter of 2010 and $61.0 million at the end of the fourth
quarter of 2009.
FULL YEAR RESULTS
Sales for 2010 were $142.9 million, compared to 2009 sales of $248.5 million. The net loss for 2010
was $12.8 million, or $1.07 per diluted share, compared to net income of $4.9 million, or $0.42 per
diluted share, for 2009.
Railcar deliveries in 2010 were 2,229 (2,079 cars sold and 150 cars leased) compared to deliveries
of 3,377 cars in 2009 (2,297 cars sold and 1,080 cars leased).
The Companys gross margin rate of 1.9% for 2010 is a reflection of the persistent challenging
market conditions experienced during the year and the resulting relatively low level of demand for
coal cars in combination with extremely competitive pricing dynamics. This compares to the gross
margin rate of 14.7% for 2009, which, while also influenced by the economic downturn, reflected a
more favorable car mix, better pricing environment relative to 2010 and a contract cancellation
payment of $3.9 million that the Company received in 2009.
SG&A expense for 2010 was $24.6 million compared to $31.3 million in 2009, a decrease of 21%. This
decrease reflects significant actions undertaken to reduce SG&A expense over the year, including
certain compensation-related actions. SG&A expense for 2009 included a number of non-recurring
costs including: severance costs of $3.1 million; costs associated with the restatement of the
Companys financial statements of $1.0 million; and costs associated with the suspension of the
Companys salaried pension plan of $0.8 million.
The Company will host a conference call on Thursday, February 17, 2011 at 11:00 a.m. (Eastern
Standard Time) to discuss the Companys fourth quarter financial results. To participate in the
conference call, please dial (800) 230-1093. 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:
http://205.144.147.162/cgi-bin/confCast
Conference ID#: 190785
If you need technical assistance, call the toll-free AT&T ConferenceCasting 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 call. An audio replay of the conference call
will be available beginning at 1:00 p.m. (Eastern Standard Time) on February 17, 2011 until 11:59
p.m. (Eastern Daylight Savings Time) on March 17, 2011. To access the replay, please dial (800)
475-6701. The replay pass code is 190785. An audio replay of the call will be available on the
Companys website within two days following the earnings call.
* * * * *
FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in
coal-carrying railcars, 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. 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 facilities in the following
locations: Clinton, Indiana; Danville, Illinois; Grand Island, Nebraska; Hastings, Nebraska;
Johnstown, Pennsylvania; Lakewood, Colorado; 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 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.
# # #
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
(In thousands) | ||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 61,780 | $ | 98,015 | ||||
Restricted cash |
2,322 | 1,420 | ||||||
Securities available for sale, at fair value |
| 29,976 | ||||||
Accounts receivable, net |
4,106 | 3,728 | ||||||
Inventories |
57,713 | 40,800 | ||||||
Leased railcars held for sale |
6,686 | 2,200 | ||||||
Assets held for sale |
| 2,478 | ||||||
Other current assets |
7,065 | 9,467 | ||||||
Deferred income taxes, net |
10,804 | 15,315 | ||||||
Total current assets |
150,476 | 203,399 | ||||||
Long-term inventory |
7,793 | 5,611 | ||||||
Property, plant and equipment, net |
40,503 | 28,170 | ||||||
Railcars on operating leases |
58,725 | 58,771 | ||||||
Goodwill |
22,052 | 21,521 | ||||||
Deferred income taxes, net |
26,203 | 13,404 | ||||||
Other long-term assets |
4,891 | 4,690 | ||||||
Total assets |
$ | 310,643 | $ | 335,566 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 12,882 | $ | 16,948 | ||||
Accrued payroll and employee benefits |
4,129 | 7,958 | ||||||
Accrued postretirement benefits |
5,347 | 5,329 | ||||||
Accrued warranty |
7,932 | 9,146 | ||||||
Customer deposits |
3,894 | 4,631 | ||||||
Other current liabilities |
4,447 | 5,332 | ||||||
Total current liabilities |
38,631 | 49,344 | ||||||
Accrued pension costs |
15,689 | 15,675 | ||||||
Accrued postretirement benefits |
59,959 | 57,962 | ||||||
Other long-term liabilities |
3,784 | 6,332 | ||||||
Total liabilities |
118,063 | 129,313 | ||||||
Stockholders equity |
||||||||
Preferred stock |
| | ||||||
Common stock |
127 | 127 | ||||||
Additional paid in capital |
98,722 | 97,979 | ||||||
Treasury stock, at cost |
(36,539 | ) | (37,123 | ) | ||||
Accumulated other comprehensive loss |
(20,000 | ) | (18,578 | ) | ||||
Retained earnings |
150,274 | 163,761 | ||||||
Total FreightCar America stockholders equity |
192,584 | 206,166 | ||||||
Noncontrolling interest in India JV |
(4 | ) | 87 | |||||
Total stockholders equity |
192,580 | 206,253 | ||||||
Total liabilities and stockholders equity |
$ | 310,643 | $ | 335,566 | ||||
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenues |
$ | 51,030 | $ | 49,440 | $ | 142,889 | $ | 248,462 | ||||||||
Cost of sales |
51,059 | 46,075 | 140,167 | 211,940 | ||||||||||||
Gross (loss) profit |
(29 | ) | 3,365 | 2,722 | 36,522 | |||||||||||
Selling, general and administrative expense |
6,570 | 10,686 | 24,618 | 31,316 | ||||||||||||
Plant closure and sale income |
(399 | ) | | (399 | ) | (495 | ) | |||||||||
Operating (loss) income |
(6,200 | ) | (7,321 | ) | (21,497 | ) | 5,701 | |||||||||
Interest expense, net |
(49 | ) | (164 | ) | (876 | ) | (669 | ) | ||||||||
Operating (loss) income before income taxes |
(6,249 | ) | (7,485 | ) | (22,373 | ) | 5,032 | |||||||||
Income tax (benefit) provision |
(2,713 | ) | (1,853 | ) | (9,511 | ) | 248 | |||||||||
Net (loss) income |
(3,536 | ) | (5,632 | ) | (12,862 | ) | 4,784 | |||||||||
Less: Net loss attributable to noncontrolling
interest in India JV |
(60 | ) | (84 | ) | (91 | ) | (156 | ) | ||||||||
Net (loss) income attributable to FreightCar America |
$ | (3,476 | ) | $ | (5,548 | ) | $ | (12,771 | ) | $ | 4,940 | |||||
Net (loss) income per common share attributable to
FreightCar America basic |
$ | (0.29 | ) | $ | (0.47 | ) | $ | (1.07 | ) | $ | 0.42 | |||||
Net (loss) income per common share attributable to
FreightCar America diluted |
$ | (0.29 | ) | $ | (0.47 | ) | $ | (1.07 | ) | $ | 0.42 | |||||
Weighted average common shares outstanding -
basic |
11,906,308 | 11,867,314 | 11,896,148 | 11,861,366 | ||||||||||||
Weighted average common shares outstanding -
diluted |
11,906,308 | 11,867,314 | 11,896,148 | 11,870,350 | ||||||||||||
Dividends declared per common share |
$ | 0.00 | $ | 0.06 | $ | 0.06 | $ | 0.24 | ||||||||
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Twelve Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities |
||||||||
Net (loss) income |
$ | (12,862 | ) | $ | 4,784 | |||
Adjustments to reconcile net (loss) income to net cash
flows used in operating activities: |
||||||||
Depreciation and amortization |
7,015 | 5,658 | ||||||
Other non-cash items |
(1,809 | ) | 4,231 | |||||
Deferred income taxes |
(7,738 | ) | 11,830 | |||||
Compensation expense under stock option and restricted
share award agreements |
1,675 | 1,829 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
3,320 | 69,392 | ||||||
Inventories |
(13,482 | ) | (18,314 | ) | ||||
Leased railcars held for sale |
(6,686 | ) | (1,420 | ) | ||||
Prepaid expenses |
(3,612 | ) | 591 | |||||
Accounts payable |
(5,102 | ) | (29,910 | ) | ||||
Accrued payroll and employee benefits |
(3,829 | ) | (1,572 | ) | ||||
Income taxes receivable/payable |
3,260 | (5,271 | ) | |||||
Accrued warranty |
(1,214 | ) | (2,330 | ) | ||||
Customer deposits and other current liabilities |
(1,122 | ) | (5,310 | ) | ||||
Deferred revenue, non-current |
(464 | ) | (711 | ) | ||||
Accrued pension costs and accrued postretirement benefits |
579 | (10,613 | ) | |||||
Net cash flows (used in) provided by operating activities |
(42,071 | ) | 22,864 | |||||
Cash flows from investing activities |
||||||||
Restricted cash deposits |
(5,644 | ) | (5,658 | ) | ||||
Restricted cash withdrawals |
4,742 | 4,238 | ||||||
Purchase of securities available for sale |
(29,982 | ) | (49,933 | ) | ||||
Maturity of securities available for sale |
59,996 | 19,986 | ||||||
Cost of railcars on operating leases produced or acquired |
| (15,603 | ) | |||||
Sale of railcars on operating leases |
169 | | ||||||
Proceeds from sale of property, plant and equipment held for sale |
2,377 | | ||||||
Acquisition of business |
(23,319 | ) | | |||||
Purchases of property, plant and equipment |
(1,431 | ) | (4,314 | ) | ||||
Net cash flows provided by (used in) investing activities |
6,908 | (51,284 | ) | |||||
Cash flows from financing activities |
||||||||
Payments on long-term debt |
| (28 | ) | |||||
Deferred financing costs paid |
(116 | ) | (5 | ) | ||||
Employee restricted stock settlement |
(240 | ) | | |||||
Investment in noncontrolling interest by joint venture partner |
| 142 | ||||||
Cash dividends paid to stockholders |
(716 | ) | (2,866 | ) | ||||
Net cash flows used in financing activities |
(1,072 | ) | (2,757 | ) | ||||
Net decrease in cash and cash equivalents |
(36,235 | ) | (31,177 | ) | ||||
Cash and cash equivalents at beginning of period |
98,015 | 129,192 | ||||||
Cash and cash equivalents at end of period |
$ | 61,780 | $ | 98,015 | ||||