GlobeNewswire Inc | May 17, 2021 07:40AM EDT

May 17, 2021

First quarter revenues up substantially year-over-year

Company raises 2021 delivery outlook

Second consecutive quarter of positive gross margins, driven by new operating structure

CHICAGO, May 17, 2021 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the first quarter ended March 31, 2021.

Business Highlights

-- First quarter revenue of $32.4 million, up 523% year-over-year, on deliveries of 309 railcars -- Gross margin of $1.8 million, positive for the second consecutive quarter despite the operational complexities of completing the transition from Shoals to Castaos -- First quarter net loss of $38.4 million, or $1.92 per share, which included $6.7 million of restructuring charges and a $22.1 million non-cash charge related to the change in fair market value of warrant liability -- Adjusted EBITDA loss was $1.3 million, which excludes the previously mentioned adjustments -- Quarter-end backlog totaled 1,380 railcars with an aggregate value of approximately $137 million -- 2021 delivery outlook raised to between 1,600 and 1,750 railcars, up from between 1,400 and 1,600 railcars -- Subsequent to quarter end, entered into amendment to an existing term loan, providing an additional $16 million in short-term financing to fund working capital required for growth

We are already seeing the early benefits of moving our manufacturing footprint to Castaos, which drove the improved year-over-year performance and resulted in our second consecutive quarter of positive gross margin, said Jim Meyer, President and Chief Executive Officer of FreightCar America. We continue to be impressed with the ramp-up of the Castaos facility and the dedication and talent of the new team.

Meyer added, We are also seeing encouraging signs of momentum building across the end-markets we serve. We expect this momentum to translate positively to FreightCars 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. We are simply thrilled by what has been accomplished at FreightCar in the last 6 12 months and believe the leverage from our new operations and cost structure will serve us well in the improving market.

Meyer concluded, Given 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. We are thankful to have a strong financial partner that is able to provide this flexible financing.

First Quarter Results

-- Consolidated revenues were $32.4 million in the first quarter of 2021, compared to $60.6 million in the fourth quarter of 2020 and $5.2 million in the first quarter of 2020. The Company delivered 309 railcars in the first quarter of 2021, compared to 477 railcars in the fourth quarter of 2020 and 11 railcars in the first quarter of 2020. -- Both consolidated operating loss and net loss for the current and prior periods included non-operating charges that significantly impacted results, including:Non-cash changes in the fair market value of warrant liability of $22.1 million in the first quarter of 2021 and $3.7 million in the fourth quarter of 2020, reflecting the Companys share price appreciation during both periods;Restructuring and impairment charges of $6.7 million in the first quarter of 2021 and $0.9 million in the first quarter of 2020; andImpairment charges of $19.0 million in the fourth quarter of 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 Cherokee, Alabama (Shoals) manufacturing facility. -- Consolidated operating loss for the first quarter of 2021 was $14.0 million, compared to operating loss of $9.2 million in the fourth quarter of 2020 and operating loss of $17.1 million in the first quarter of 2020. -- Net loss in the first quarter of 2021 was $38.4 million, or $1.92 per share, compared to net loss of $14.6 million, or $0.87 per share, in the fourth quarter of 2020, and net loss of $17.2 million, or $1.29 per share, in the first quarter of 2020. -- Adjusted EBITDA loss for the first quarter of 2021 was $1.3 million. Adjusted EBITDA for the fourth quarter of 2020 was positive $1.7 million and Adjusted EBITDA loss was $12.9 million for the first quarter of 2020. The Adjusted EBITDA excludes the adjustments mentioned above and those reflected in the table below.

Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit (total cash) was $31.7 million as of March 31, 2021, compared to $54.2 million as of December 31, 2020. The decrease was due to: 1) timing impact for collection of the Companys value-added-tax (VAT) refund; 2) one-time freight and labor expense associated with the move from Shoals to Castaos; and 3) working capital/prepaid expenses to support higher production levels. The cumulative VAT paid in Mexico was $13.2 million as of March 31, 2021.

First Quarter 2021 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Monday, May 17, 2021 at 11:00 a.m. (Eastern Daylight Time) to discuss the Companys first quarter 2021 financial results. The Companys earnings release for the first quarter of 2021 will be available on the Investor Relations page of the Companys website at www.freightcaramerica.com.

Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call which can be accessed at:

Event URL: http://public.viavid.com/index.php?id=144641

Please note that the webcast is listen-only and webcast participants will not be able to participate in the question and answer portion of the conference call. Interested parties may also participate in the call by dialing (877) 407-0789 and entering the passcode 13719213. Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call.

An audio replay of the conference call will be available beginning at 2:00 p.m. (Eastern Daylight Time) on May 17, 2021 until 12:00 a.m. (Eastern Daylight Time) on Monday, May 31, 2021. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13719213. An audio replay of the call will be available on the Companys website within two days following the earnings call.

About FreightCar America

FreightCar America, Inc. is a diversified manufacturer of railroad freight cars that also supplies railcar parts and leases freight cars through its FreightCar America Leasing Company subsidiaries. FreightCar America designs and builds high-quality railcars, including open top hopper cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, boxcars and coal cars, and also specializes in the conversion of railcars for repurposed use. FreightCar America is headquartered in Chicago, Illinois and has facilities in the following locations: Castaos, Mexico; Johnstown, Pennsylvania; and Shanghai, Peoples Republic of China. More information about FreightCar America is available on its website at www.freightcaramerica.com.

Forward-Looking Statements

This press release may contain statements relating to our expected financial performance and/or future business prospects, events and plans that are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. These potential risks and uncertainties include, among other things: risks relating to the potential financial and operational impacts of the COVID-19 pandemic; the cyclical nature of our business; adverse economic and market conditions; fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials; our ability to maintain relationships with our suppliers of railcar components; our reliance upon a small number of customers that represent a large percentage of our sales; the variable purchase patterns of our customers and the timing of completion, delivery and customer acceptance of orders; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings by our customers; and other competitive factors. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

INVESTOR & MEDIA CONTACT Lisa Fortuna or Stephen PoeE-MAIL RAIL@alpha-ir.comTELEPHONE 312-445-2870

FreightCar America, Inc.Condensed Consolidated Balance Sheets(Unaudited)

(in thousands, except for share and per share data) March 31, December 2021 31, 2020Assets Current assets Cash, cash equivalents and restricted cash $ 31,556 $ 54,047 equivalentsRestricted certificates of deposit 182 182 Accounts receivable, net of allowance for doubtful 6,217 9,421 accounts of $1,006 and $1,235 respectivelyVAT receivable 13,216 4,462 Inventories, net 37,054 38,831 Assets held for sale - 10,383 Prepaid expenses 8,998 3,652 Total current assets 97,223 120,978 Property, plant and equipment, net 19,516 19,642 Railcars available for lease, net 20,791 20,933 Right of use asset 17,712 18,152 Other long-term assets 2,828 3,037 Total assets $ 158,070 $ 182,742 Liabilities and Stockholders? Equity Current liabilities Accounts and contractual payables $ 27,168 $ 18,654 Accrued payroll and other employee costs 1,282 2,505 Reserve for workers' compensation 2,629 2,645 Accrued warranty 4,008 5,216 Customer deposits - 4,351 Deferred income state and local incentives, current 1,842 2,219 Lease liability, current 2,027 11,635 Current portion of long-term debt 19,315 17,605 Other current liabilities 3,578 6,319 Total current liabilities 61,849 71,149 Long-term debt, net of current portion 36,811 37,668 Warrant liability 34,858 12,730 Accrued pension costs 6,698 7,046 Deferred income state and local incentives, long-term 2,325 2,503 Lease liability, long-term 18,074 18,549 Other long-term liabilities 5,162 2,600 Total liabilities 165,777 152,245 Stockholders? equity Preferred stock, $0.01 par value, 2,500,000 sharesauthorized (100,000 shares each designated as Series - - A voting and Series B non-voting, 0 shares issued andoutstanding at March 31, 2021 and December 31, 2020)Common stock, $0.01 par value, 50,000,000 sharesauthorized, 16,033,481 and 15,861,406 shares issued 161 159 at March 31, 2021 and December 31, 2020, respectivelyAdditional paid in capital 82,519 82,064 Treasury stock, at cost, 446,587 and 327,577 shares (1,782 ) (1,344 )at March 31, 2021 and December 31, 2020, respectivelyAccumulated other comprehensive loss (11,607 ) (11,763 )Accumulated deficit (76,998 ) (38,619 )Total stockholders' equity (deficit) (7,707 ) 30,497 Total liabilities and stockholders? equity $ 158,070 $ 182,742

FreightCar America, Inc. Condensed Consolidated Statements of Operations(Unaudited)

Three Months Ended March 31, 2021 2020 Revenues $ 32,370 $ 5,197 Cost of sales 30,566 14,000 Gross profit (loss) 1,804 (8,803 )Selling, general and administrative 9,151 7,410 expensesRestructuring and impairment charges 6,650 880 Operating loss (13,997 ) (17,093 )Interest expense (2,502 ) (296 )Loss on change in fair market value of (22,128 ) - warrant liabilityOther income 115 224 Loss before income taxes (38,512 ) (17,165 )Income tax benefit (133 ) (2 )Net loss (38,379 ) (17,163 ) Less net loss attributable to - (216 )noncontrolling interest in JVNet loss attributable to FreightCar America $ (38,379 ) $ (16,947 )Net loss per common share attributable to $ (1.92 ) $ (1.29 )FreightCar America- basicNet loss per common share attributable to $ (1.92 ) $ (1.29 )FreightCar America- dilutedWeighted average common shares outstanding 20,001,505 12,366,880 ? basicWeighted average common shares outstanding 20,001,505 12,366,880 ? diluted

FreightCar America, Inc.Segment Data(Unaudited)

Three Months Ended March 31, 2021 2020 Revenues: Manufacturing $ 30,019 $ 2,940 Corporate and Other 2,351 2,257 Consolidated revenues $ 32,370 $ 5,197 Operating loss: Manufacturing (1) $ (5,530 ) $ ) (11,800Corporate and Other (8,467 ) ) (5,293Consolidated operating loss (13,997 ) ) (17,093Consolidated interest expense (2,502 ) (296 ) Loss on change in fair market value of (22,128 ) - warrant liabilityConsolidated other income 115 224 Consolidated loss before income taxes $ (38,512 ) $ ) (17,165

FreightCar America, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,(in thousands) 2021 2020 Cash flows from operating activities Net loss $ (38,379 ) $ (17,163 ) Adjustments to reconcile net loss to net cash flows used in operating activities:Restructuring and impairment charges 6,650 880 Depreciation and amortization 1,197 3,013 Non-cash lease expense on right-of-use 440 990 assetsRecognition of deferred income from state (555 ) (555 ) and local incentivesLoss on change in fair market value for 22,128 - warrant liabilityStock-based compensation recognized 2,662 227 Non-cash interest expense 982 - Other non-cash items, net (36 ) 1,868 Changes in operating assets and liabilities, net of acquisitions:Accounts receivable 3,204 1,265 VAT receivable (8,754 ) 8 Inventories 3,419 (17,809 ) Other assets (5,133 ) (1,273 ) Accounts and contractual payables 320 6,953 Accrued payroll and employee benefits (1,166 ) (654 ) Income taxes receivable/payable (134 ) (8 ) Accrued warranty (1,208 ) (312 ) Lease liability (577 ) (1,686 ) Other liabilities (7,114 ) 18,443 Accrued pension costs and accrued (222 ) (214 ) postretirement benefitsNet cash flows used in operating (22,276 ) (6,027 ) activitiesCash flows from investing activities Maturity of restricted certificates of - 3,769 depositPurchase of property, plant and equipment (542 ) (3,670 ) Proceeds from sale of property, plant and 373 164 equipment and railcars available for leaseNet cash flows (used in) provided by (169 ) 263 investing activitiesCash flows from financing activities Borrowings on revolving line of credit 165 - Repayments on revolving line of credit (165 ) - Employee stock settlement (7 ) (9 ) Payment for stock appreciation rights (39 ) - exercisedNet cash flows provided by (used in) (46 ) (9 ) financing activitiesNet decrease in cash and cash equivalents (22,491 ) (5,773 ) Cash, cash equivalents and restricted cash 54,047 66,257 equivalents at beginning of yearCash, cash equivalents and restricted cash $ 31,556 $ 60,484 equivalents at end of yearSupplemental cash flow information Interest paid $ 1,180 $ 143 Income tax refunds received, net of $ 5 $ - payments

FreightCar America, Inc.Reconciliation of income before taxes to EBITDA(1) and Adjusted EBITDA(2)(Unaudited)

Three Three Months Ended Months March 31, Ended December 31, 2021 2020 2020 Loss before income taxes $ (38,512 ) $ (17,164 ) $ (14,365 ) Depreciation & Amortization 1,197 3,008 1,248 Interest Expense, net 2,502 296 1,553 EBITDA (34,813 ) (13,860 ) (11,564 ) Change in Fair Value of 22,128 - 3,657 Warrant ^(a)Restructuring and impairment 6,650 880 (12,925 ) charges ^(b)Impairment of leased railcars - - 18,951 ^(c)Alabama Grant Amortization ^ (555 ) (555 ) (555 ) (d)Transaction Costs ^(e) - - 322 Retention & Success Bonuses ^ - 431 2,211 (f)Legal Reserve ^(g) 500 - - Plant Transition Costs ^(h) 2,246 175 1,252 Stock Based Compensation 2,662 250 455 Other, net (115 ) (224 ) (58 ) Adjusted EBITDA $ (1,297 ) $ (12,903 ) $ 1,746

(1)EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall performance of the companys business. EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similar titled measures reported by other companies.

(2)Adjusted EBITDA represents EBITDA before the following charges:

a) This adjustment removes the non-cash expense associated with the change in fair market value of the Companys warrant liability. b) The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities during 2019 and 2020.c) During the fourth quarter of 2020, the Company recorded a non-cash impairment charge on its leased railcar fleet.d) The Company amortizes deferred grant income to cost of goods sold that represent a non-cash reduction to its gross margin (loss).e) The Company incurred certain costs in the fourth quarter of 2020 for nonrecurring professional services associated with the acquisition of its Castaos joint venture.f) During 2019, the Company implemented retention and success bonus programs for certain employees during its restructuring.g) During the first quarter of 2021, the Company recognized a charge related to a legal dispute.h) During 2020, the Company implemented a program to shift production originally planned for its US plants to its Castaos facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaos facility.

We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.