FreightCar America’s Q3 Results Improve From Q2, Still Behind Year-Ago Levels
NOV 10, 2020 - 7:29 am
FreightCar America reported Q3/20 consolidated revenues of $25.2 million compared with $17.5 million in Q2/20 and $40.7 million in Q3/19. The company delivered 163 railcars in Q3/20 compared with 100 in Q2/20 and 467 in Q3/19.
The company had a backlog totaling 1,776 railcars at Sept. 30, 2020, valued at approximately $195 million.
Consolidated operating loss for Q3/20 was $41.3 million compared with an operating loss of $36.3 million for Q3/19. Net loss attributable to FreightCar America in Q3/20 was $40.3 million compared with a net loss attributable to FreightCar America of $35.7 million in Q3/19. Both consolidated operating loss and net loss attributable to FreightCar America included restructuring and impairment charges of $30.1 million in Q3/20 and $23 million in Q3/19.
Inventories increased to $60.2 million from $25.1 million as of Dec. 31, 2019, to support expected deliveries in the second half of 2020.
Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit were $32.9 million at the end of the third quarter compared with $70 million as of Dec. 31, 2019.
In the third quarter, FreightCar America finalized early termination of its lease at the Cherokee, AL, (Shoals) manufacturing facility, effective Feb. 28, 2021. In addition, the company now owns 100% of its new Castaños, Mexico, manufacturing operation, where all future railcar manufacturing is expected to be based by February 2021. The company also began shipping cars from the Castaños facility in early November and received several small orders for the new facility post quarter-end.
The company also obtained a new asset-backed credit facility to support the business and repositioning and entered into a new $40 million secured term loan agreement with a global investment management firm, with funding subject to stockholder approval.
“During the third quarter, FreightCar America made substantial progress towards the final steps of its business transformation. We completed the acquisition of the remaining portion of the Castaños joint venture, successfully started production, achieved our Association of American Railroads (AAR) plant certifications and are starting to ship to customers this week. By moving all production to Mexico by early 2021, we have reset our cost-base and are multiple steps closer to reaching our goal to become the highest quality and lowest cost producer in the industry,” Jim Meyer, president and CEO of FreightCar America, said. “Our former joint venture partners are among the best in the industry and we have solidified them as part of the team, including an operational leadership role and as stockholders with board representation.
“Our industry remains in a cyclical downturn, which was intensified by the pandemic. Accelerating our repositioning effort to the finish line now greatly improves our ability to outlast the pandemic and then re-emerge in a position of strength. Our new breakeven is less than 2,000 railcars per year, and the Castaños factory is quickly scalable once we see positive industry trends. To support the accelerated finish and new business structure, we have obtained a new asset-backed credit facility, and we will have a new $40 million secured term loan following successful completion of the related stockholder vote. This term loan is vital to backstop the business during the elongated industry downcycle, support the final few steps of the transformation, and fund future working capital and growth investment needs.
“Our team at the Shoals factory remains focused on completing our customer commitments at that facility before we close the plant in February 2021. Given our progress to date, we are narrowing our previous forecast for second half deliveries to range between 750 and 850 railcars. Finally, our business repositioning and transition to Castaños are being extremely well received by our customers and we anticipate no lost time as we complete the move. We look forward [to] completing our repositioning and believe it will allow us to drive both higher levels growth and profitability as our industry enters its next upcycle.”
FreightCar America is a diversified manufacturer of railroad freight cars that also supplies railcar parts and leases freight cars through its FreightCar America Leasing Company subsidiaries.
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