FreightCar America (FCA) has reported its third-quarter 2020 results, including consolidated revenues of $25.2 million on deliveries of 163 railcars—a 38% drop from the year-earlier period’s $40.7 million on deliveries of 467 railcars—as the industry “remains in a cyclical downturn, which was intensified by the pandemic.” The company continues to move all railcar production to its new Mexico facility by early 2021.
Third-quarter 2020 revenues were a 44% increase from second-quarter 2020’s $17.5 million on deliveries of 100 railcars.
The company’s backlog at Sept. 30 totaled 1,776 railcars, valued at approximately $195 million.
Among FCA’s other third-quarter 2020 results:
- Consolidated operating loss was $41.3 million, compared with an operating loss of $36.3 million for third-quarter 2019. Net loss attributable to FCA was $40.3 million, or $3.03 per diluted share, compared to a net loss attributable to FCA of $35.7 million, or $2.83 per diluted share, in the comparable 2019 period. Both consolidated operating loss and net loss attributable to FCA included restructuring and impairment charges of $30.1 million in third-quarter 2020 and $23.0 million in the third-quarter 2019.
- Inventories increased to $60.2 million, from $25.1 million as of December 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 to $70.0 million as of December 31, 2019.
“During the third quarter, FreightCar America made substantial progress toward the final steps of its business transformation,” President and CEO Jim Meyer said. “We completed the acquisition of the remaining portion of the Castaños [Mexico manufacturing facility] 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.”
Meyer continued: “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 [in Cherokee, Ala.,] 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 completing our repositioning and believe it will allow us to drive both higher levels growth and profitability as our industry enters its next upcycle.”