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MEDIA CONTACT
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Kevin Bagby
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TEL.
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(800) 458-2235
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FOR IMMEDIATE RELEASE
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February
7, 2006 8:02 AM EST
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FreightCar America, Inc. Reports Quarterly Net Income
Per Diluted Share of $1.38 as the Backlog Reaches
Record Level of 20,729 Units
Sales Were $927.2 Million and Net Income Per Diluted Share Was $4.04 For the Year Ended December 31,
2005
FreightCar America, Inc. (Nasdaq:RAIL)
today reported financial results for the three months ended December 31,
2005. For the fourth quarter
of 2005, sales were $267.3 million and net income attributable to common
stockholders was $17.6 million, or $1.38 per diluted share. In comparison, for
the fourth quarter of 2004, the Company had sales of $179.7 million and a net
loss attributable to common stockholders of $9.6 million, or $1.40 per diluted share.
After giving effect to the Company's initial
public offering and the related transactions, as well as the exercise of stock
options, pro forma earnings per share were $1.38 on a fully diluted basis for
the three months ended December 31, 2005, compared to a pro forma loss per
share of $0.51 on a fully diluted basis for the same period in 2004. Pro forma earnings per share is a non-GAAP financial
measure. A reconciliation of the Company's net income (loss) per common share
attributable to common stockholders to pro forma earnings (loss) per share is
set forth in the supplemental disclosure attached to this press release.
Net income for the fourth quarter of 2005 was
$17.6 million, compared to a net loss of $9.4 million for the fourth quarter of
2004. EBITDA was $28.6 million in the fourth quarter of 2005 compared with an
EBITDA loss of $4.7 million in the fourth quarter of 2004. Adjusted EBITDA was
$28.8 million in the fourth quarter of 2005 compared with Adjusted EBITDA of
$5.5 million in the fourth quarter of 2004. The improvement in EBITDA reflects
increased sales volume, operating leverage attributable to higher volume,
improved productivity, and the impact of the pass-through of increases in raw
material costs to our customers with respect to all of our railcar deliveries.
EBITDA and Adjusted EBITDA are non-GAAP financial measures. A reconciliation of
the Company's net income (loss) to EBITDA and Adjusted EBITDA is set forth in
the supplemental disclosure attached to this press release.
"Order activity for new railcars totaled
5,305 units in the fourth quarter of 2005, a 120% increase compared with the
order activity in the fourth quarter of 2004, while the backlog of unfilled
orders reached a record 20,729 units at December 31, 2005, compared with 11,397
units at December 31, 2004," said John E. Carroll, Jr., President and CEO.
"Our strong earnings performance
reflects the ability of our management team to increase our production levels
while improving productivity. We have optimized production flow in our lowest
cost facilities with a positive impact on operating margins.
"We are pleased with the performance in
the quarter, and we will continue to execute the orders on hand by focusing on
output and cost control."
For the year ended December 31, 2005, sales were $927.2 million and net income
attributable to common stockholders was $45.4 million, or $4.04 per diluted
share. In comparison, for the year ended December 31, 2004, the Company had sales of $482.2 million and a net
loss attributable to common stockholders of $25.9 million, or $3.76 per diluted
share. Pro forma earnings per share, EBITDA and Adjusted EBITDA amounts for the
years ended December 31, 2005 and 2004 are shown on the attached statements and
schedules.
The Company will host a conference call on Tuesday, February
7, 2006, at 11:00 a.m. (Eastern time) to discuss
the Company's fourth quarter and full year 2005 financial results. To
participate in the conference call, please dial 800-230-1074. 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 2:30 p.m. (Eastern time) on Tuesday, February 7, 2006, until 11:59 p.m. (Eastern time) on February 14, 2006. To access the replay, please dial 800-475-6701. The
replay pass code is 816199. An audio replay of the call will also be available
on the Company's website for at least 1 week following the earnings call.
FreightCar America, Inc. manufactures railroad freight cars,
with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle
carriers. It is headquartered in Chicago, Illinois and has manufacturing facilities in Danville, Illinois, Roanoke, Virginia and Johnstown, Pennsylvania.
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: 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 acceptance of customer orders; the highly competitive
nature of our industry; the risk of lack of acceptance of our new railcar
offerings by our customers; and the additional risk factors described in our
filings with the Securities and Exchange Commission. 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.
More information about FreightCar America is available on its website at
www.freightcaramerica.com.
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31, Dec. 31,
2005 2004
-------- --------
(In thousands)
Assets
Current assets
Cash and cash equivalents $ 61,737 $ 11,213
Restricted cash -- 1,200
Accounts receivable, net 3,854 4,136
Inventories 75,089 73,218
Prepaid expenses and other current assets 4,033 983
Deferred income taxes 9,410 10,519
-------- --------
Total current assets 154,123 101,269
Property, plant and equipment, net 23,889 24,199
Restricted cash -- 11,755
Deferred financing costs, net 688 915
Deferred offering costs -- 2,013
Intangible assets, net 12,834 13,637
Goodwill 21,521 21,521
Deferred income taxes 12,227 15,834
-------- --------
Total assets $225,282 $191,143
======== ========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable $ 59,514 $ 69,631
Current portion of long-term debt 70 2,000
Accrued payroll and employee benefits 13,015 5,855
Accrued pension costs 10,174 4,049
Income taxes payable 4,235 --
Accrued warranty 7,878 5,964
Other current liabilities 3,885 5,274
Industrial revenue bonds -- 5,200
-------- --------
Total current liabilities 98,771 97,973
Long-term debt, less current portion 154 48,858
Deferred revenue -- 4,883
Accrued pension costs, less current portion 11,693 16,767
Accrued postretirement benefits, less current
portion 22,465 18,988
Rights to additional acquisition consideration,
including accumulated accretion of $0 and
$20,408, respectively -- 28,581
-------- --------
Total liabilities 133,083 216,050
-------- --------
Commitments and contingencies
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31, Dec. 31,
2005 2004
-------- --------
(In thousands)
Redeemable preferred stock
Series A voting (pre-merger company) -- 8,486
Series B non-voting (pre-merger company) -- 3,696
-------- --------
Total redeemable preferred stock -- 12,182
Stockholders' equity (deficit)
Preferred stock
Series A voting -- --
Series B non-voting -- --
-------- --------
Total preferred stock -- --
Common stock
Common stock 126 --
Class A voting (pre-merger company) -- --
Class B non-voting (pre-merger company) -- --
-------- --------
Total common stock 126 --
Additional paid in capital 93,932 8,900
Accumulated other comprehensive loss (5,556) (5,055)
Retained earnings (deficit) 3,697 (40,934)
-------- --------
Total stockholders' equity (deficit) 92,199 (37,089)
-------- --------
Total liabilities and stockholders' equity
(deficit) $225,282 $191,143
======== ========
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2005 2004 2005 2004
----------- ---------- ----------- ----------
(In thousands, except share and per share data)
Sales $ 267,263 $ 179,737 $ 927,187 $ 482,180
Cost of sales 233,888 173,426 820,638 468,309
----------- ---------- ----------- ----------
Gross profit 33,375 6,311 106,549 13,871
Selling, general
and
administrative
expense 6,615 3,901 27,733 14,601
Compensation
expense under
stock option and
restricted share
award agreements
(selling, general
and
administrative
expense) 207 8,900 358 8,900
Provision for
settlement of
labor disputes
(selling, general
and
administrative
expense) -- -- 370 9,159
----------- ---------- ----------- ----------
Operating income
(loss) 26,553 (6,490) 78,088 (18,789)
Interest income (575) (195) (1,225) (282)
Related-party
interest expense -- 1,845 3,253 7,029
Third-party
interest expense 95 292 1,447 1,111
Interest expense
and related
accretion on
rights to
additional
acquisition
consideration -- 1,559 6,382 5,716
Write-off of
deferred
financing costs -- -- 439 --
Amortization of
deferred
financing costs 77 95 337 459
----------- ---------- ----------- ----------
Income (loss)
before income
taxes 26,956 (10,086) 67,455 (32,822)
Income tax
provision
(benefit) 9,361 (712) 21,762 (7,962)
----------- ---------- ----------- ----------
Net income (loss) 17,595 (9,374) 45,693 (24,860)
Redeemable
preferred stock
dividends
accumulated -- 265 311 1,062
----------- ---------- ----------- ----------
Net income (loss)
attributable to
common
stockholders $ 17,595 $ (9,639) $ 45,382 $ (25,922)
=========== ========== =========== ==========
Net income (loss)
per common share
attributable
to common
stockholders -
basic $ 1.40 $ (1.40) $ 4.08 $ (3.76)
=========== ========== =========== ==========
Net income (loss)
per common share
attributable
to common
stockholders -
diluted $ 1.38 $ (1.40) $ 4.04 $ (3.76)
=========== ========== =========== ==========
Weighted average
common shares
outstanding -
basic 12,532,700 6,888,750 11,135,440 6,888,750
=========== ========== =========== ==========
Weighted average
common shares
outstanding -
diluted 12,722,223 6,888,750 11,234,075 6,888,750
=========== ========== =========== ==========
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
December 31,
-------------------
2005 2004
-------- --------
(In thousands)
Cash flows from operating activities
Net income (loss) $ 45,693 $(24,860)
Adjustments to reconcile net income (loss) to net
cash flows provided by (used in) operating
activities:
Depreciation 7,220 6,760
Loss on disposal of equipment 2 299
Amortization of intangible assets 590 590
Amortization of deferred financing costs 337 460
Write-off of deferred financing costs 439 --
Accretion of Senior Notes 1,071 715
Accretion of deferred revenue 791 380
PIK Notes issued for interest 2,182 6,315
Interest expense and related accretion on rights
to additional acquisition consideration 6,382 5,716
Deferred income taxes 4,817 (7,962)
Provision for settlement of labor disputes 370 9,159
Compensation expense under stock option and
restricted share award agreements 358 8,900
Changes in operating assets and liabilities:
Accounts receivable 282 (3,062)
Inventories (1,871) (44,648)
Prepaid expenses and other current assets (3,599) (385)
Accounts payable (10,487) 44,971
Accrued payroll and employee benefits 6,812 464
Income tax payable/receivable 4,235 815
Accrued warranty 1,914 640
Other current liabilities (537) (1,642)
Deferred revenue (5,674) (713)
Accrued pension costs and accrued
postretirement benefits 4,487 (3,472)
-------- --------
Net cash flows provided by (used in) operating
activities 65,814 (560)
-------- --------
Cash flows from investing activities
Restricted cash withdrawals (deposits), net 12,955 (1,257)
Purchases of property, plant and equipment (7,520) (2,215)
-------- --------
Net cash flows provided by (used in) investing
activities 5,435 (3,472)
-------- --------
Cash flows from financing activities
Issuance of common stock (net of issuance costs)
and deferred offering costs 87,320 (2,013)
Payments on long-term debt (59,331) (2,750)
Redemption of preferred stock and payment of
accumulated dividends (13,000) --
Payment of additional acquisition consideration (34,963) --
Cash dividends paid to common stockholders (751) --
-------- --------
Net cash flows used in financing activities (20,725) (4,763)
-------- --------
Net increase (decrease) in cash and cash
equivalents 50,524 (8,795)
Cash and cash equivalents at beginning of period 11,213 20,008
-------- --------
Cash and cash equivalents at end of period $ 61,737 $ 11,213
======== ========
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
December 31,
-----------------
2005 2004
------- -------
(In thousands)
Supplemental cash flow information
Cash paid for:
Interest (includes, for the year ended December 31,
2005, $26,790 relating to additional acquisition
consideration and $28,361 relating to Senior Notes
and previously accrued but unpaid PIK Notes) $56,506 $ 1,120
======= =======
Income tax refunds received $ -- $ 839
======= =======
Income taxes paid $12,718 $ --
======= =======
Non-Cash transactions:
Capital lease obligations incurred for equipment $ 244 $ --
======= =======
Redeemable preferred stock dividend accumulated $ -- $ 1,062
======= =======
FreightCar America, Inc.
Supplemental Disclosure I
Reconciliation of net income (loss) per common share attributable to
common stockholders to pro forma earnings (loss) per share(1)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------- ------------------
2005 2004 2005 2004
------- ------- ------- --------
(In thousands, except share and per
share data)
Net income (loss) per common
share attributable
to common stockholders -
basic $ 1.40 $ (1.40) $ 4.08 $ (3.76)
======= ======= ======= ========
Net income (loss) per common
share attributable
to common stockholders -
diluted $ 1.38 $ (1.40) $ 4.04 $ (3.76)
======= ======= ======= ========
Net income (loss) attributable
to common stockholders $17,595 $(9,639) $45,382 $(18,789)
Related-party interest expense -- 1,845 3,253 7,029
Third-party interest expense -- 292 964 1,111
Write-off of deferred financing
costs -- -- 439 --
Fees for termination of
management services agreements
(selling, general and
administrative expense) -- -- 900 --
Tax effects of related-party
interest expense, third-party
interest expense, write-off of
deferred financing costs and
fees for termination of
management services agreements -- (778) (2,022) (2,963)
Interest expense and related
accretion on rights to
additional acquisition
consideration -- 1,559 6,382 5,716
Tax effect of interest expense
and related accretion on
rights to additional
acquisition consideration -- -- (5,326) --
Redeemable preferred stock
dividends accumulated -- 265 311 1,062
------- ------- ------- --------
Adjusted net income (loss)
attributable to common
stockholders $17,595 $(6,456) $50,283 $ (6,834)
======= ======= ======= ========
Pro forma earnings (loss) per
share - basic $ 1.40 $ (0.52) $ 4.01 $ (0.55)
======= ======= ======= ========
Pro forma earnings (loss) per
share - diluted $ 1.38 $ (0.51) $ 3.95 $ (0.54)
======= ======= ======= ========
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(In thousands, except share and per share data)
Weighted average
common shares
outstanding -
basic (prior to
adjustments) 12,532,700 6,888,750 11,135,440 6,888,750
=========== =========== =========== ===========
Effect of common
shares issued upon
full exercise of
the options granted
in 2004 under the
Company's stock
option plan -- 543,950 -- 543,950
Effect of common
shares issued in
the initial public
offering, as if the
transaction
occurred on the
first day of the
respective period -- 5,100,000 1,397,260 5,100,000
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding -
basic (following
adjustments) 12,532,700 12,532,700 12,532,700 12,532,700
=========== =========== =========== ===========
Dilutive effect of
options and awards
granted under the
2005 Long-Term
Incentive Plan, as
if the options and
awards were granted
on the first day of
the respective
period 189,911 189,911 189,911 189,911
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding -
diluted (following
adjustments) 12,722,611 12,722,611 12,722,611 12,722,611
=========== =========== =========== ===========
(1) Pro forma earnings per share represents the Company's net income
(loss) per common share attributable to common shareholders as
adjusted to give effect to: (1) with respect to the three months
and twelve months ended December 31, 2004, the shares of common
stock (the "2004 Option Shares") issued in the first quarter of
2005 as a result of the full exercise of the options granted in
2004 (the "2004 Options") under the Company's stock option plan;
(2) the issuance of stock options and restricted share awards
under the 2005 Long-Term Incentive Plan; (3) the completion of the
Company's initial public offering on April 11, 2005; and (4) the
related transactions involving uses of the offering proceeds. The
adjustments relating to the Company's initial public offering and
the related transactions reflect: (i) the increase in the number
of weighted average shares as a result of the issuance of the new
shares sold in the offering; (ii) the removal from the calculation
of net income (loss) of interest expense relating to the Company's
term loan, senior notes and PIK notes, rights to additional
acquisition consideration and industrial revenue bonds that the
Company is no longer obligated to pay as a result of the repayment
in full of such obligations with the proceeds from the offering;
(iii) the removal from the calculation of net income (loss) of the
write-off of deferred financing costs and fees for termination of
management services agreements in connection with the offering;
(iv) the redemption of the Company's preferred stock with the
proceeds from the offering; (v) the tax effects of the removal of
related-party interest expense, third-party interest expense,
write-off of deferred financing costs and fees for termination of
management services agreements from the calculation of net income
(loss); and (vi) the tax effect of interest expense and related
accretion on rights to additional acquisition consideration, which
expense became deductible for tax purposes upon payment of the
additional acquisition consideration with the proceeds from the
offering. The Company believes that pro forma earnings per share
information is useful to investors because it illustrates the
effect on the Company's financial results of the completion of the
Company's initial public offering and the related transactions.
Since the offering and the related transactions involved changes
to the Company's capital structure and the repayment of all of the
Company's outstanding debt obligations (eliminating for future
periods certain expenses that the Company historically has been
obligated to pay), the Company believes that pro forma earnings
per share will allow investors to more effectively compare the
Company's financial results prior to and after the offering. In
addition, the Company believes that giving effect to the 2004
Option Shares with respect to the results for the three months and
twelve months ended December 31, 2004 provides a more consistent
basis for comparison of the financial results between the periods.
Pro forma earnings per share is not a financial measure presented
in accordance with U.S. generally accepted accounting principles,
or U.S. GAAP. Accordingly, when analyzing our operating
performance, investors should not consider pro forma earnings per
share in isolation or as a substitute for earnings per share
calculated in accordance with U.S. GAAP. Our calculation of pro
forma earnings per share is not necessarily comparable to that of
other similarly titled measures reported by other companies.
FreightCar America, Inc.
Supplemental Disclosure II
Reconciliation of net income (loss) to EBITDA(1) and
Adjusted EBITDA(2)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------- ------------------
2005 2004 2005 2004
------- ------- ------- --------
(In thousands)
Net income (loss) $17,595 $(9,374) $45,693 $(24,860)
Income tax provision (benefit) 9,361 (712) 21,762 (7,962)
Related-party interest expense -- 1,845 3,253 7,029
Third-party interest expense 95 292 1,447 1,111
Interest expense and related
accretion on rights to
additional acquisition
consideration -- 1,559 6,382 5,716
Interest income (575) (195) (1,225) (282)
Amortization of deferred
financing costs 77 95 337 459
Write-off of deferred financing
costs -- -- 439 --
Amortization of intangible
assets 147 148 590 590
Depreciation 1,890 1,682 7,220 6,760
------- ------- ------- --------
EBITDA 28,590 (4,660) 85,898 (11,439)
Provision for settlement of
labor disputes -- -- 370 9,159
Loss on customer contract for
box railcars -- 1,244 1,500 8,949
Non-cash expense relating to
stock options and restricted
share awards 207 8,900 358 8,900
------- ------- ------- --------
Adjusted EBITDA $28,797 $ 5,484 $88,126 $ 15,569
======= ======= ======= ========
(1) EBITDA represents net income (loss) before income tax expense,
interest expense, net, amortization and depreciation of property
and equipment. 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 operating
performance of a company's 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 similarly titled measures reported by other
companies.
(2) Adjusted EBITDA represents EBITDA before the following charges:
(a) charges in connection with our settlement with the union
representing the unionized employees in our Johnstown,
Pennsylvania manufacturing facility, also referred to as
the Johnstown settlement. On November 15, 2004, we entered
into the Johnstown settlement and recorded a $9.2 million
charge with respect to the year ended December 31, 2004.
For the three months ended March 31, 2005, we recorded an
additional charge of $370,000 relating to the Johnstown
settlement consisting of a retroactive payment to
unionized Johnstown employees for certain previously
unpaid work hours. We recorded no charges relating to the
Johnstown settlement for the periods after March 31, 2005;
(b) charges of $1.2 million for the three months ended
December 31, 2004 and charges of $8.9 million and $1.5
million for the years ended December 31, 2004 and 2005,
respectively, in connection with losses on a customer
contract for box railcars, which reflects increased raw
material, labor and other costs that exceeded the fixed
purchase price under this contract. We recorded no charges
relating to the customer contract for box railcars for the
periods after March 31, 2005. This customer contract was
our first contract for the manufacture of box railcars. We
delivered all of the box railcars under this contract, and
we do not plan to produce any box railcars in the future;
and
(c) non-cash charges reflecting the grant of the 2004 Options
that were recorded in the fourth quarter of 2004 and the
issuance of stock options and restricted share awards
under the 2005 Long-Term Incentive Plan.
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 effects of the Johnstown
settlement, the losses on a customer contract for box railcars and
non-cash expenses relating to the grant of the 2004 Options and
stock options and restricted share awards under the 2005 Long-Term
Incentive Plan. We also believe that Adjusted EBITDA is useful to
investors in assessing our ability to comply as of the relevant
balance sheet dates with the financial covenants under our former
revolving credit facility and senior notes. In addition, Adjusted
EBITDA is equivalent to the measure that was used to determine our
eligibility to enter into our new revolving credit agreement upon
the closing of our initial public offering. 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.
FreightCar America, Inc.
Kevin Bagby, 800-458-2235
Source: Business Wire (February 7, 2006 - 8:02 AM EST)