While FreightCar America (FCA) “delivered another quarter of strong top-line growth” and produced “another record number of railcars at the Castaños facility,” third-quarter 2022 “financial results were muted by the combined impacts of delivering lower margin orders accepted at the bottom of the cycle and elevated freight costs,” FCA President and CEO Jim Meyer reported on Nov. 7.
“We expect margins to strengthen starting in the fourth quarter as these orders are completed,” Meyer continued.
For the three months ended Sept. 30, 2022, the freight railcar manufacturer posted revenues of $85.7 million, up 47.1% year-over-year, with deliveries of 783 railcars, which rose 55% year-over-year. Quarter-end backlog totaled 2,529 railcars with an aggregate value of approximately $276 million. In third-quarter 2021, quarter-end backlog totaled 1,895 railcars with an aggregate value of about $198 million.
Gross margin for the quarter was 5.3% with gross profit of $4.6 million, vs. gross margin of 2.6% with gross profit of $1.5 million for the prior-year period. Manufacturing operating income came in at $3.1 million, compared with $163,000 in third-quarter 2021.
FCA posted a net loss of ($17.8) million for third-quarter 2022, or ($0.69) per share, and adjusted net loss of ($5.4) million, or ($0.21) per share, “accounting for primarily non-cash items including an $8.1 million pre-tax pension settlement loss,” the company said.
Adjusted EBITDA was $1.6 million for the quarter, compared with adjusted EBITDA loss of ($3.5) million for the previous-year period.
FCA reaffirmed its 2022 revenue outlook of between $340 million and $360 million, with deliveries of between 3,000 and 3,200 railcars.
“While there is much more work to accomplish, we continued to make solid progress on our strategic and performance initiatives in Castaños,” Meyer said. (The Castaños facility produced its first railcar in fourth-quarter 2020.) “The new fabrication shop started operating in the third quarter and our expanded wheel mounting and axle machining facility achieved AAR certification just after the close of the quarter, both of which will bring meaningful efficiencies going forward. We continue to invest in the business and work to position ourselves as a world-class manufacturer in Northern Mexico, anchored by the new purpose-built facility and an exceptional workforce.”
“We remain confident in our direction and look forward to the future benefits of a built-out manufacturing campus combined with a healthier macroeconomic environment and more normalized supply chains,” Meyer reported.
“With our new footprint in Mexico, we have right-sized our business and improved our operating structure, which has allowed us to meaningfully reduce our cost structure,” said Mike Riordan, who was promoted to Chief Financial Officer in March. “Over the past year, we have seen our production capability increase beyond our original expectation and the team in Castaños capture the operational efficiencies we envisioned. This has led to $7.2 million of adjusted EBITDA generated during the first nine months of 2022, a $15.6 million improvement from the comparable 2021 period. As a result of this strong performance, we are reaffirming our previously stated 2022 outlook”
For more on Meyer’s efforts to turn around the historic, 121-year-old company by consolidating manufacturing in Mexico and positioning it to meet the needs of the market, read the May 2021 Railway Age Q&A