FreightCar America ‘Poised for Growth’Written by Marybeth Luczak, Executive Editor
With restructuring complete and railcar manufacturing operations transitioned from Cherokee, Ala., to Castaños, Mexico, FreightCar America is “poised for growth and a strong future,” President and CEO Jim Meyer reported on Feb. 9.
Meyer provided a brief overview of 2021 and a preview of the 2022 outlook for FreightCar America during an investor call, in advance of the company’s fourth-quarter and full-year earnings report, to be issued on March 22.
Here are the highlights:
• In fourth-quarter 2021, FreightCar America achieved its “fifth consecutive quarter of positive gross margin, third consecutive quarter of positive manufacturing operating income, and first quarter of positive Adjusted EBITDA at the Castaños facility.” (The facility began shipments in fourth-quarter 2020.)
• The railcar manufacturer “reaffirm[ed] its ability to achieve positive Adjusted EBITDA under normal business conditions at volume levels of 2,000 units per year.”
• FreightCar America achieved “annual fixed cost savings of approximately $20 million and labor cost savings of more than 60%, on average, compared with the prior U.S.-based footprint.”
• Total railcar deliveries increased 130% vs. 2020, with the “large majority” produced at the Castaños facility.
• The company booked 1,032 new railcar orders during fourth-quarter 2021.
• FreightCar America finished 2021 with “total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit (total cash) of $26.2 million, and total liquidity of over $40 million, including the new Deferred Draw Loan that closed in December 2021.”
• The company is “on track to receive the majority of its Mexican value-added tax (VAT) receivable in 2022, which was $31.1 million at year-end.”
In 2022, FreightCar America looks to deliver between 2,350 and 2,650 railcars, an increase of more than 44% compared with fiscal 2021 “at the midpoint of the range”; to achieve “positive Adjusted EBITDA for the full fiscal year, based on the current market outlook”; to complete construction of a 162,000-square-foot fabrication shop and expansion of the existing wheel and axle shop by mid-year; and to complete construction of additional production lines, doubling annual capacity to between 4,000 and 5,000 railcars by early 2023.
“I am very proud of our team’s accomplishments and hard work to transform the company,” Meyer said. “We finished building a strong foundation in 2021 and now have a company that is positioned for growth. 2022 will be the first year for which our operations and results will not be obscured by restructuring activities. As such, we believe that our performance this year will provide more clarity on the full potential of FreightCar America.”
For third-quarter 2021 results, read “For FreightCar America, ‘Continuing Momentum’ in 3Q21.”
Also, for more on Meyer’s efforts to turn around the historic, 120-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.