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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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April
27 , 2006 8:02 AM EST
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FreightCar America, Inc. Reports Quarterly Net Income Per
Diluted Share of $1.67 on Sales of $292.8 Million
FreightCar America, Inc. (NASDAQ:RAIL) today
reported financial results for the three months ended March 31, 2006. For the first quarter of 2006,
sales were $292.8 million and net income attributable to common stockholders
was $21.4 million, or $1.67 per diluted share. In comparison, for the first
quarter of 2005, the Company had sales of $165.8 million and net income
attributable to common stockholders of $1.6 million, or $0.22 per diluted
share.
After giving effect to the Company's initial public offering and the related
transactions, pro forma earnings per share were $1.67 on a fully diluted basis
for the three months ended March 31,
2006, compared to pro forma earnings per share of $0.38 on a fully
diluted basis for the same period in 2005. Pro forma earnings
per share is a non-GAAP financial measure. A reconciliation of the Company's
net income per common share attributable to common stockholders to pro forma
earnings per share is set forth in the supplemental disclosure attached to this
press release.
Net income for the first quarter of 2006 was $21.4 million, compared to net
income of $1.9 million for the first quarter of 2005. EBITDA was $34.9 million
in the first quarter of 2006, compared with EBITDA of $8.7 million in the first
quarter of 2005. The improvement in EBITDA reflects increased sales volume,
operating leverage attributable to higher volume, improved productivity, and
the impact of pass-through of increases in material costs to our customers with
respect to all of our railcar deliveries. EBITDA is a non-GAAP financial
measure. A reconciliation of the Company's net income to EBITDA is set forth in the supplemental disclosure attached to this
press release.
"We are pleased with our operating results in the first quarter. Our
management team did a spectacular job of, first, providing the level of
business needed to expand production, then executing on our commitments by
obtaining timely deliveries of raw materials and components, and increasing
production rates while maintaining excellent quality and productivity,"
said John E. Carroll, Jr., President and CEO.
"Orders for new railcars totaled 1,031 units in the first quarter of
2006, compared with orders of 5,070 units for the same period in 2005. The
backlog of unfilled orders was 17,794 units at March 31, 2006, compared with 14,146 units at March 31, 2005. While our backlog
declined during the first quarter of 2006, orders in the railcar industry tend
to be uneven and our business prospects remain strong."
Carroll continued, "We continue to explore strategic initiatives to
further enhance shareholder value through organic growth opportunities, driving
cost reduction programs to improve our competitive position, and continuing to
assess our manufacturing structure."
The Company will host a conference call on Thursday, April 27, 2006 at 10:00
a.m. (Eastern Daylight Time) to discuss the Company's first quarter
financial results. To participate in the conference call, please dial (877)
209-0397. Interested parties are asked to dial in approximately 10 minutes
prior to the start time of the call.
An audio replay of the conference call will be available beginning at 1:30 p.m. (Eastern Daylight Time) on Thursday, April 27, 2006 until 11:59 p.m. (Eastern Daylight Time) on May 4, 2006. To access the replay,
please dial (800) 475-6701. The replay pass code is 825192. An audio replay of
the call will also be available on the Company's website for at least one 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)
March 31, December
31,
2006 2005
------------------
(In thousands)
Assets
Current assets
Cash and cash equivalents $82,522 $61,737
Accounts receivable, net 14,878 3,854
Inventories 103,926 75,089
Deposits and other current assets 4,082 4,033
Deferred income taxes 9,410 9,410
------------------
Total current assets 214,818 154,123
Property, plant and equipment, net 23,249 23,889
Deferred financing costs, net 612 688
Intangible assets, net 12,686 12,834
Goodwill 21,521 21,521
Deferred income taxes 12,227 12,227
------------------
Total assets $285,113 $225,282
==================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $90,696 $59,514
Current portion of long-term debt 69 70
Accrued payroll and employee benefits 10,384 13,015
Accrued pension costs 10,174 10,174
Income taxes payable 11,843 4,235
Accrued warranty 9,012 7,878
Other current liabilities 4,159 3,885
------------------
Total current liabilities 136,337 98,771
Long-term debt, less current portion 137 154
Accrued pension costs, less current portion 11,843 11,693
Accrued postretirement benefits 22,913 22,465
------------------
Total liabilities 171,230 133,083
------------------
Commitments and contingencies
Stockholders' equity
Preferred stock
Series A voting -- --
Series B non-voting -- --
------------------
Total preferred stock -- --
Common stock 126 126
Additional paid in capital 94,621 93,932
Accumulated other comprehensive loss (5,556) (5,556)
Retained earnings 24,692 3,697
------------------
Total stockholders' equity 113,883 92,199
------------------
Total liabilities and stockholders' equity $285,113 $225,282
==================
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
---------------------
2006 2005
---------------------
(In thousands, except
share and per share
data)
Sales $292,793 $165,805
Cost of sales 251,659 152,437
---------------------
Gross profit 41,134 13,368
Selling, general and administrative expense 7,607 6,076
Stock-based compensation expense (selling,
general and administrative expense) 689 --
Provision for settlement of labor disputes
(selling, general and administrative expense) -- 370
---------------------
Operating income 32,838 6,922
Interest income (702) (103)
Related-party interest expense -- 1,907
Third-party interest expense 83 274
Interest expense and related accretion on
rights to additional acquisition consideration -- 1,559
Amortization of deferred financing costs 76 95
---------------------
Income before income taxes 33,381 3,190
Income tax provision 12,008 1,276
---------------------
Net income 21,373 1,914
Redeemable preferred stock dividends
accumulated -- 280
---------------------
Net income attributable to common stockholders $21,373 $1,634
=====================
Net income per common share attributable
to common stockholders - basic $1.71 $0.22
=====================
Net income per common share attributable
to common stockholders - diluted $1.67 $0.22
=====================
Weighted average common shares outstanding -
basic 12,534,188 7,432,700
=====================
Weighted average common shares outstanding -
diluted 12,772,000 7,432,700
=====================
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months
Ended
March 31,
----------------
2006 2005
----------------
(In thousands)
Cash flows from operating activities
Net income $21,373 $1,914
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation 1,903 1,665
Loss on disposal of equipment 5 --
Amortization of intangible assets 148 147
Amortization of deferred financing costs 76 95
Accretion of Senior Notes -- 237
Accretion of deferred revenue -- 95
PIK Notes issued for interest -- 1,670
Interest expense and related accretion on rights to
additional acquisition consideration -- 1,559
Deferred income taxes -- 1,279
Stock-based compensation expense 689 --
Changes in operating assets and liabilities:
Accounts receivable (11,024) 414
Inventories (28,837)(11,556)
Deposits and other current assets (49) (50)
Accounts payable 31,182 8,853
Accrued payroll and employee benefits (2,631) 2,404
Income tax payable/receivable 7,608 --
Accrued warranty 1,134 305
Other current liabilities 274 (1,108)
Deferred revenue, long-term -- (93)
Accrued pension costs and accrued postretirement
benefits 598 1,126
----------------
Net cash flows provided by operating activities 22,449 8,956
----------------
Cash flows from investing activities
Restricted cash withdrawals (deposits), net -- (40)
Purchases of property, plant and equipment (1,268) (2,042)
----------------
Net cash flows used in investing activities (1,268) (2,082)
----------------
Cash flows from financing activities
Payments on long-term debt (18) (500)
Deferred financing costs and deferred offering costs -- (1,262)
Cash dividends paid to common stockholders (378) --
----------------
Net cash flows used in financing activities (396) (1,762)
----------------
Net increase in cash and cash equivalents 20,785 5,112
Cash and cash equivalents at beginning of period 61,737 11,213
----------------
Cash and cash equivalents at end of period $82,522 $16,325
================
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months
Ended
March 31,
------------
2006 2005
------------
(In
thousands)
Supplemental cash flow information
Cash paid for:
Interest $178 $202
============
Income taxes paid $4,401 $--
============
Non-cash transactions:
Capital lease obligations incurred for equipment $-- $39
============
Redeemable preferred stock dividends accumulated $-- $280
============
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
March 31,
---------------
2006 2005
---------------
(In thousands,
except share
and per share
data)
Net income per common share attributable
to common stockholders - basic $1.71 $0.22
===============
Net income per common share attributable
to common stockholders - diluted $1.67 $0.22
===============
Net income attributable to common
stockholders $21,373 $1,634
Related-party interest expense -- 1,907
Third-party interest expense -- 274
Tax effects of related-party interest expense and
third-party interest expense -- (872)
Interest expense and related accretion on rights to
additional acquisition consideration -- 1,559
Redeemable preferred stock dividends accumulated -- 280
---------------
Adjusted net income attributable to common
stockholders $21,373 $4,782
===============
Pro forma earnings per share - basic $1.71 $0.38
===============
Pro forma earnings per share - diluted $1.67 $0.38
===============
Three Months Ended
March 31,
----------------------
2006 2005
----------------------
(In thousands, except
share and per share
data)
Weighted average common shares outstanding -
basic (prior to adjustments) 12,534,188 7,432,700
======================
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
----------------------
Weighted average common shares outstanding -
basic (following adjustments) 12,534,188 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 237,812 --
----------------------
Weighted average common shares outstanding -
diluted (following adjustments) 12,772,000 12,532,700
======================
(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 redemption
of the Company's preferred stock with the proceeds from the offering;
(iv) the tax effects of the removal of related-party interest expense
and third-party interest expense from the calculation of net income;
and (v) 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
March 31,
---------------
2006 2005
---------------
(In thousands)
Net income $21,373 $1,914
Income tax provision 12,008 1,276
Related-party interest expense -- 1,907
Third-party interest expense 83 274
Interest expense and related accretion on rights to
additional acquisition consideration -- 1,559
Interest income (702) (103)
Amortization of deferred financing costs 76 95
Amortization of intangible assets 148 147
Depreciation 1,903 1,665
---------------
EBITDA $34,889 $8,734
===============
(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.