For FreightCar America (FCA), the benefits of transitioning its manufacturing to Castaños, Mexico were evident in 2021 with “positive gross margin for the fifth consecutive quarter and manufacturing operating income for the third consecutive quarter, despite persistent supply chain challenges and inflationary pressures,” President and CEO Jim Meyer said during a fourth-quarter and full-year 2021 earnings announcement on March 22.
Meanwhile, FCA also reported promoting Michael A. Riordan to Chief Financial Officer, effective March 21, succeeding Terence R. Rogers, who will leave the company after a transition period.
Fourth-Quarter 2021 Highlights
For the three months ended Dec. 31, 2021, FCA revenue came in at $75.0 million on deliveries of 604 railcars, representing a 23.8% increase from fourth-quarter 2020’s $60.6 million with 477 railcars delivered, and a 28.6% gain from third-quarter 2021’s $58.3 million with 505 railcars delivered.
Quarter-end backlog totaled 2,323 railcars with an aggregate value of approximately $240.2 million. FCA raised its 2022 delivery outlook from between 2,350 and 2,650 railcars to between 2,600 and 2,900 railcars, vs. 1,731 deliveries in fiscal year 2021.
Gross margin for fourth-quarter 2021 was $6.6 million and manufacturing operating income, $4.9 million.
FCA reported fourth-quarter 2021 net income of $1.2 million, or $0.06 per share, vs. a net loss of ($14.4) million, or ($0.87) per share, in the prior-year period, and net income of $0.7 million, or $0.03 per share, in third-quarter 2021.
Consolidated operating income for the quarter came in at $63,000, compared with an operating loss of ($9.2) million in fourth-quarter 2020 and an operating loss of ($4.2) million in third-quarter 2021.
Adjusted EBITDA for fourth-quarter 2021 was $1.2 million, vs. adjusted EBITDA of $1.7 million for fourth-quarter 2020 and adjusted EBITDA loss of ($3.5) million for third-quarter 2021.
Full-Year 2021 Highlights
For fiscal year 2021, FCA reported:
• Consolidated revenues of $203.1 million vs. $108.4 million for fiscal year 2020.
• Railcar deliveries of 1,731 railcars, including 1,354 new and 377 rebuilt cars. This compares with 751 railcars in 2020, including 600 new and 151 rebuilt cars.
• Consolidated operating loss of ($22.8) million, including $6.5 million related to restructuring and impairment charges and $0.2 million related to impairment on leased railcars. Consolidated operating loss for 2020 was ($80.6) million, including $18.3 million related to restructuring and impairment charges and $19.0 million related to impairment on leased railcars.
• Net loss of ($41.4) million, or ($2.00) per share, vs. net loss of ($84.4) million, or ($6.29) per share, in 2020.
• An inventory increase to $56.0 million from $38.8 million as of Dec. 31, 2020, which the company attributed to “higher levels of production and raw material costs.”
• Year-end total liquidity of $41.2 million, which included cash, cash equivalents, restricted cash equivalents and restricted certificates of deposit of $26.2 million and $15 million available under the Deferred Draw Loan that closed in December 2021.
FCA reported 2022 priorities—as announced during its “Strategic Update” call last month—which include:
• Achieving “positive Adjusted EBITDA for the full year, based on the current market outlook.”
• Completing “construction of a 162,000-square-foot fabrication shop and expansion of the wheel and axle shop by mid-year 2022 to achieve substantial additional operational efficiencies.”
• Finishing “construction of additional production lines, doubling annual capacity to between 4,000 and 5,000 railcars by early 2023.”
“The company is on track to double its annual railcar production capacity to between 4,000 to 5,000 railcars during 2023, which we expect to be well timed with an increase in the railcar demand cycle,” Meyer said. “FreightCar America is now extremely well positioned for growth, and we are anticipating solid performance, starting in the first quarter of 2022. We believe that our performance in 2022 will demonstrate the true potential for the business.”
Meyer also recognized outgoing CFO Terence R. Rogers and his successor Michael A. Riordan: “On behalf of the entire FreightCar America team, I want to thank Terry for his many contributions to our successes during the past year. Terry joined us on short notice last year at a critical time for the company. He has been an integral part of the team and we wish him all the very best.
“We are thrilled to have Mike become part of FreightCar America’s executive leadership team. Mike has been instrumental in everything that we have accomplished over the past couple of years and has provided leadership through both his financial expertise and comprehensive knowledge of our operations. He is an operating partner in every sense.”
“I am excited to have the opportunity to lead the company as its CFO as we pivot to our next phase which includes sustainable growth,” said Riordan, who has served FCA as Corporate Controller and Chief Accounting Officer since November 2020. “I also want to thank Terry for his support and mentorship during the past year as I prepared for this role.”