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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
8, 2007
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FreightCar America,
Inc. Reports Quarterly Net Income of $2.65 Per Diluted
Share
FreightCar America, Inc. (NASDAQ: RAIL) today reported financial results for
the three months ended December 31,
2006. For the fourth quarter of 2006, sales were $390.8 million and
net income attributable to common stockholders was $34.0 million, or $2.65 per
diluted share. In comparison, for the fourth quarter of 2005, the Company had
sales of $267.3 million and net income attributable to common stockholders of
$17.6 million, or $1.38 per diluted share.
Net income for the fourth quarter of 2006 was $34.0 million, compared to net
income of $17.6 million for the fourth quarter of 2005. EBITDA was $53.1
million in the fourth quarter of 2006, compared with EBITDA of $28.6 million in
the fourth quarter of 2005. The improvement in net income and EBITDA reflected
increased sales volume, operating leverage attributable to higher volume and
improved productivity. EBITDA is a non-GAAP financial measure. A reconciliation
of the Company's net income to EBITDA is set forth in the supplemental
disclosures attached to this press release.
"Our strong fourth quarter reflects management's continued focus on execution.
Productivity at all of our production facilities steadily improved in the
quarter. Over 10% of fourth quarter output was steel-bodied railcars. Even with
diversification from aluminum cars to carbon steel and stainless steel designs,
operating margins continued to be outstanding," said John E. Carroll, Jr.,
President and CEO.
"Orders for new railcars totaled 2,199 units in the fourth quarter of
2006, compared with 357 units in the third quarter of 2006 and 5,035 units for
the fourth quarter of 2005. The backlog of unfilled orders was 9,315 units at December 31, 2006, compared with
12,176 units at September 30, 2006
and 20,729 units at December 31, 2005."
"The Company's efforts to enhance shareholder value through our open
market common share buyback of up to $50.0 million will commence in the first
quarter of 2007. Our strategic initiative to develop other railcar types
remains on track, and we continue to explore other opportunities to further
enhance shareholder value. We remain focused on cost reduction programs to
improve our competitive position, including reassessing our manufacturing
facilities. The expansion of our Roanoke, Virginia
facility is on schedule, and we plan to ship the first aluminum/stainless steel
hybrid cars in the first quarter of 2007."
As of December 31, 2006, the Company adopted Statement of Financial
Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension
and Other Postretirement Plans -- An amendment of FASB Statements No. 87, 88,
106 and 132(R). Adoption of this standard reduced stockholders' equity at December 31, 2006 by $21.2 million
and will not change current or ongoing cash flows or plan costs.
For the year ended December 31,
2006, sales were $1,444.8 million and net income attributable to
common stockholders was $128.7 million, or $10.07 per diluted share. In
comparison, for the year ended December
31, 2005, the Company had sales of $927.2 million and net income
attributable to common stockholders of $45.4 million, or $4.04 per diluted share.
Pro forma earnings per share and EBITDA amounts for the years ended December 31, 2006 and 2005, are shown in the supplemental disclosures attached to
this press release.
The Company will host a conference call on Thursday, February 8, 2007 at 11:00 a.m. (Eastern Standard Time) to discuss the
Company's fourth quarter financial results. To participate in the conference
call, please dial (888) 428-4480. 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 Standard Time) on Thursday, February 8, 2007 until 11:59 p.m. (Eastern Standard Time) on February 14, 2007. To access the
replay, please dial (800) 475-6701. The replay pass code is 860301. An audio
replay of the call will be available on the Company's website within two days
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)
December 31, December 31,
2006 2005
------------- ------------
(In thousands)
Assets
Current assets
Cash and cash equivalents $ 212,026 $ 61,737
Accounts receivable, net 11,369 3,854
Inventories 106,643 75,089
Other current assets 5,045 4,033
Deferred income taxes 8,462 9,410
------------- ------------
Total current assets 343,545 154,123
Property, plant and equipment, net 25,905 23,889
Deferred financing costs, net 382 688
Intangible assets, net (a) 5,673 12,834
Goodwill 21,521 21,521
Deferred income taxes (a) 22,955 12,227
------------- ------------
Total assets $ 419,981 $ 225,282
============= ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 103,038 $ 59,514
Accrued payroll and employee benefits
(a) 16,600 13,015
Accrued pension costs (a) -- 10,174
Income taxes payable 9,816 4,235
Accrued warranty 12,051 7,878
Customer deposits 11,652 --
Other current liabilities 3,831 3,955
------------- ------------
Total current liabilities 156,988 98,771
Long-term debt, less current portion 93 154
Accrued pension costs, less current portion
(a) 9,576 11,693
Accrued postretirement benefits, less
current portion (a) 49,455 22,465
------------- ------------
Total liabilities 216,112 133,083
------------- ------------
Commitments and contingencies
Stockholders' equity
Preferred stock -- --
Common stock 127 126
Additional paid in capital 99,981 93,932
Accumulated other comprehensive loss
(a) (26,774) (5,556)
Retained earnings 130,535 3,697
------------- ------------
Total stockholders' equity 203,869 92,199
------------- ------------
Total liabilities and stockholders' equity $ 419,981 $ 225,282
============= ============
(a) December 31, 2006 amounts include the effects of the Company's
adoption of Statement of Financial Accounting Standards ("SFAS") No. 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans -- An amendment of FASB Statements No. 87, 88,
106 and 132(R). This statement was not applied retrospectively.
Adoption of this standard reduced stockholders' equity at December
31, 2006 by $21.2 million and will not change current or ongoing cash
flows or plan costs.
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------- ------------------------
2006 2005 2006 2005
------------------------- ------------------------
(In thousands, except share and per share data)
Sales $ 390,831 $ 267,263 $ 1,444,800 $ 927,187
Cost of sales 329,324 233,888 1,211,349 820,638
------------------------- ------------------------
Gross profit 61,507 33,375 233,451 106,549
Selling, general and
administrative
expense 8,821 6,615 32,260 27,733
Compensation expense
under stock option
and restricted
share award
agreements
(selling, general
and administrative
expense) 456 207 2,130 358
Provision for
settlement of labor
disputes (selling,
general and
administrative
expense) -- -- -- 370
------------------------- ------------------------
Operating income 52,230 26,553 199,061 78,088
Interest income (2,208) (575) (5,860) (1,225)
Interest expense 90 95 352 11,082
Amortization and
write-off of
deferred financing
costs 77 77 306 776
------------------------- ------------------------
Income before income
taxes 54,271 26,956 204,263 67,455
Income tax provision 20,306 9,361 75,530 21,762
------------------------- ------------------------
Net income 33,965 17,595 128,733 45,693
Redeemable preferred
stock dividends
accumulated -- -- -- 311
------------------------- ------------------------
Net income
attributable to
common stockholders $ 33,965 $ 17,595 $ 128,733 $ 45,382
========================= ========================
Net income per
common share
attributable to
common stockholders
- basic $ 2.69 $ 1.40 $ 10.23 $ 4.08
========================= ========================
Net income per
common share
attributable to
common stockholders
- diluted $ 2.65 $ 1.38 $ 10.07 $ 4.04
========================= ========================
Weighted average
common shares
outstanding - basic 12,636,176 12,532,700 12,586,889 11,135,440
========================= ========================
Weighted average
common shares
outstanding -
diluted 12,797,437 12,722,223 12,785,015 11,234,075
========================= ========================
Dividends declared
per common share $ 0.06 $ 0.03 $ 0.15 $ 0.06
========================= ========================
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
December 31,
------------------
2006 2005
------------------
(In thousands)
Cash flows from operating activities
Net income $128,733 $ 45,693
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation and amortization 5,442 7,810
Non-cash interest expense related to senior notes
and rights to additional acquisition
consideration -- 9,635
Other non-cash items 259 1,569
Deferred income taxes 2,568 4,817
Provision for settlement of labor disputes -- 370
Stock-based compensation expense 2,130 358
Changes in operating assets and liabilities:
Accounts receivable (7,515) 282
Inventories (31,554) (1,871)
Other current assets (1,012) (3,599)
Accounts payable 42,448 (10,487)
Accrued payroll and employee benefits 3,414 6,812
Income tax payable/receivable 5,581 4,235
Accrued warranty 4,173 1,914
Customer deposits and other current liabilities 11,614 (6,211)
Accrued pension costs and accrued postretirement
benefits (12,125) 4,487
------------------
Net cash flows provided by operating activities 154,156 65,814
------------------
Cash flows from investing activities
Restricted cash withdrawals, net -- 12,955
Proceeds from sale of property, plant and equipment 1,082 --
Purchases of property, plant and equipment (6,903) (7,520)
------------------
Net cash flows (used in) provided by investing
activities (5,821) 5,435
------------------
Cash flows from financing activities
Payments on long-term debt (71) (59,331)
Issuance of common stock, net of issuance costs 2,089 87,320
Excess tax benefit from stock-based compensation 1,831 --
Redemption of preferred stock and payment of
accumulated dividends -- (13,000)
Payments of additional acquisition consideration -- (34,963)
Cash dividends paid to stockholders (1,895) (751)
------------------
Net cash flows provided by (used in) financing
activities 1,954 (20,725)
------------------
Net increase in cash and cash equivalents 150,289 50,524
Cash and cash equivalents at beginning of period 61,737 11,213
------------------
Cash and cash equivalents at end of period $212,026 $ 61,737
==================
FreightCar America, Inc.
Supplemental Disclosure I
Reconciliation of net income per common share
attributable to common stockholders to
pro forma earnings per share(1)
(Unaudited)
Three Months
Ended Year Ended
December 31, December 31,
----------------- -----------------
2006 2005 2006 2005
----------------- -----------------
(In thousands, except share and per
share data)
Net income per common share
attributable to common
stockholders - basic $ 2.69 $ 1.40 $ 10.23 $ 4.08
================= =================
Net income per common share
attributable to common
stockholders - diluted $ 2.65 $ 1.38 $ 10.07 $ 4.04
================= =================
Net income attributable to common
stockholders $33,965 $17,595 $128,733 $45,382
Related-party interest expense -- -- -- 3,253
Third-party interest expense -- -- -- 964
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 -- -- -- (2,022)
Interest expense and related
accretion on rights to additional
acquisition consideration -- -- -- 6,382
Tax effect of interest expense and
related accretion on rights to
additional acquisition
consideration -- -- -- (5,326)
Redeemable preferred stock
dividends accumulated -- -- -- 311
----------------- -----------------
Adjusted net income attributable to
common stockholders $33,965 $17,595 $128,733 $50,283
================= =================
Pro forma earnings per share -
basic $ 2.69 $ 1.40 $ 10.23 $ 4.01
================= =================
Pro forma earnings per share -
diluted $ 2.65 $ 1.38 $ 10.07 $ 3.95
================= =================
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2006 2005 2006 2005
---------------------- ----------------------
(In thousands, except share and per share
data)
Weighted average common
shares outstanding -
basic (prior to
adjustments) 12,636,176 12,532,700 12,586,889 11,135,440
====================== ======================
Effect of common shares
issued in the initial
public offering, as if
the transaction occurred
on the first day of the
respective period -- -- -- 1,397,260
---------------------- ----------------------
Weighted average common
shares outstanding -
basic (following
adjustments) 12,636,176 12,532,700 12,586,889 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 161,261 189,911 198,126 189,911
---------------------- ----------------------
Weighted average common
shares outstanding -
diluted (following
adjustments) 12,797,437 12,722,611 12,785,015 12,722,611
====================== ======================
(1) Pro forma earnings per share represents the Company's net income
per common share attributable to common stockholders as adjusted to
give effect to: (1) the issuance of stock options and restricted
share awards under the 2005 Long-Term Incentive Plan; (2) the
completion of the Company's initial public offering on April 11,
2005; and (3) 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 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 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; 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 had 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. 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 to EBITDA(1)
(Unaudited)
Three Months
Ended Year Ended
December 31, December 31,
---------------- -----------------
2006 2005 2006 2005
---------------- -----------------
(In thousands)
Net income $33,965 $17,595 $128,733 $45,693
Income tax provision 20,306 9,361 75,530 21,762
Related-party interest expense -- -- -- 3,253
Third-party interest expense 90 95 352 1,447
Interest expense and related
accretion on rights to additional
acquisition consideration -- -- -- 6,382
Interest income (2,208) (575) (5,860) (1,225)
Amortization of deferred financing
costs 77 77 306 337
Write-off of deferred financing
costs -- -- -- 439
Amortization of intangible assets 147 147 590 590
Depreciation 712 1,890 4,852 7,220
---------------- -----------------
EBITDA $53,089 $28,590 $204,503 $85,898
================ =================
(1) EBITDA represents net income 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.