“We are already seeing the early benefits of moving our manufacturing footprint” to Mexico, FreightCar America, Inc. (FCA) President and CEO Jim Meyer said during the company’s first-quarter earnings report, noting “the leverage from our new operations and cost structure will serve us well in the improving market.”
For the first three months of 2021, FreightCar America revenue came in at $32.4 million on deliveries of 309 railcars, representing a 46.5% drop from fourth-quarter 2020’s $60.4 million, with 477 cars delivered; and a 523% jump from first-quarter 2020’s $5.2 million, with 11 cars delivered.
At the end of March 2021, the company had a total backlog of 1,380 cars, whose aggregate value was about $137 million.
FreightCar America reported a first-quarter 2021 net loss of $38.4 million, or $1.92 per share, which included $6.7 million in restructuring and impairment charges and a $22.1 million “non-cash charge related to the change in fair market value of warrant liability.” Excluding those charges, adjusted EBITDA loss was $1.3 million, the company said.
Additionally, the carbuilder had a gross margin of $1.8 million—“positive for the second consecutive quarter despite the operational complexities of completing the transition” from the Shoals facility in Cherokee, Ala., to Castaños, Mexico. This compares with a loss of $8.8 million in first-quarter 2020.
“We continue to be impressed with the ramp-up of the Castaños facility and the dedication and talent of the new team,” Meyer said. “We are also seeing encouraging signs of momentum building across the end-markets we serve. We expect this momentum to translate positively to FreightCar’s business with sales inquiries and new order activity proving to be stronger than we initially anticipated. As a result, we have raised our 2021 outlook to between 1,600 and 1,750 railcar deliveries, up from our initial expectations of between 1,400 and 1,600 railcars.”
Meyer added that “[g]iven the pace of progress and in anticipation of higher demand, we have increased our term loan with our financial partner to bring in $16 million of additional liquidity. These funds will bolster our balance sheet and fund working capital needs.”
Among the other first-quarter 2021 results:
• Both consolidated operating loss and net loss for first-quarter 2021 and prior periods included “non-operating charges that significantly impacted results,” FreightCar America said. These included:
—Non-cash changes in the fair market value of warrant liability of $22.1 million in the first three months of 2021, and $3.7 million in fourth-quarter 2020, “reflecting the company’s share price appreciation during both periods.”
—Restructuring and impairment charges of $6.7 million in first-quarter 2021 and $900,000 in first-quarter 2020.
—Impairment charges of $19.0 million in fourth-quarter 2020, “related to leased railcars, partially offset by $12.9 million of non-cash restructuring gains, largely related to the termination of the lease” at the Shoals facility.
• Consolidated operating loss was $14.0 million, compared with an operating loss of $9.2 million in fourth-quarter 2020 and an operating loss of $17.1 million in first-quarter 2020.
• Net loss was $38.4 million, or $1.92 per share, vs. a net loss of $14.6 million, or $0.87 per share, in fourth-quarter 2020, and a net loss of $17.2 million, or $1.29 per share, in first-quarter 2020.
• Adjusted EBITDA for fourth-quarter 2020 was positive $1.7 million, and adjusted EBITDA loss was $12.9 million for first-quarter 2020.