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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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July 27 , 2006 8:01 AM EST
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FreightCar America,
Inc. Reports Record Performance with Second Quarter Net Income Per Diluted Share of $2.86 on Sales of $365.4 Million
FreightCar America, Inc. (Nasdaq:RAIL)
today reported financial results for the three months ended June 30, 2006. For the second quarter
of 2006, sales were $365.4 million and net income attributable to common
stockholders was $36.6 million, or $2.86 per diluted share. In comparison, for
the second quarter of 2005, the Company had sales of $230.7 million and net
income attributable to common stockholders of $9.1 million, or $0.76 per
diluted share.
After giving effect to the Company's initial public offering and the related
transactions, pro forma earnings per share were $2.86 on a fully diluted basis
for the three months ended June 30,
2006, compared to pro forma earnings per share of $0.90 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 second quarter of 2006 was $36.6 million, compared to net
income of $9.1 million for the second quarter of 2005. EBITDA was $59.0 million
in the second quarter of 2006, compared with EBITDA of $18.4 million in the
second 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.
"Our record earnings performance reflects the outstanding achievements
of our management team. We have continued to increase plant productivity at all
production facilities, which has enabled us to improve operating leverage while
maintaining high quality standards. Our strong relationships with suppliers
have allowed us to maintain timely deliveries of materials and components to
our plants," said John E. Carroll, Jr., President and CEO.
"Orders for new railcars totaled 3,763 units in the second quarter of
2006, up from 1,031 units ordered in the first quarter of 2006, compared with
orders of 5,104 units for the same period in 2005. The backlog of unfilled
orders was 16,846 units at June 30,
2006, compared with 17,794 units at March 31, 2006 and 15,867 units at June 30, 2005.
"Given our strong balance sheet and ability to generate significant
cash flow, we are diligently reviewing strategic initiatives to further enhance
shareholder value, including revenue enhancement and cost reduction
opportunities."
For the six months ended June 30,
2006, sales were $658.2 million and net income attributable to common
stockholders was $58.0 million, or $4.54 per diluted share. In comparison, for
the six months ended June 30, 2005,
the Company had sales of $396.5 million and net income attributable to common
stockholders of $10.7 million, or $1.11 per diluted share. Pro forma earnings
per share and EBITDA amounts for the six months ended June 30, 2006 and 2005,
are shown on the attached statements and schedules.
The Company will host a conference call on Thursday, July 27, 2006, at 10:00
a.m. (Eastern Daylight Time) to discuss the Company's second
quarter financial results. To participate in the conference call, please dial
888-423-3281. 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, July 27, 2006, until 11:59 p.m. (Eastern Daylight Time) on August 2, 2006. To access the replay,
please dial 800-475-6701. The replay pass code is 836292. 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)
June 30, Dec. 31,
2006 2005
---------- ----------
(In thousands)
Assets
Current assets
Cash and cash equivalents $ 143,080 $ 61,737
Accounts receivable, net 15,988 3,854
Inventories 113,101 75,089
Deposits and other current assets 4,613 4,033
Deferred income taxes 10,205 9,410
---------- ----------
Total current assets 286,987 154,123
Property, plant and equipment, net 22,597 23,889
Deferred financing costs, net 535 688
Intangible assets, net 12,539 12,834
Goodwill 21,521 21,521
Deferred income taxes 12,741 12,227
---------- ----------
Total assets $ 356,920 $ 225,282
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 119,542 $ 59,514
Current portion of long-term debt 67 70
Accrued payroll and employee benefits 13,172 13,015
Accrued pension costs 10,174 10,174
Income taxes payable 11,043 4,235
Accrued warranty 10,551 7,878
Other current liabilities 4,757 3,885
---------- ----------
Total current liabilities 169,306 98,771
Long-term debt, less current portion 56 154
Accrued pension costs, less current portion 11,119 11,693
Accrued postretirement benefits 23,565 22,465
---------- ----------
Total liabilities 204,046 133,083
---------- ----------
Commitments and contingencies
Stockholders' equity
Preferred stock -- --
Common stock 126 126
Additional paid in capital 97,389 93,932
Accumulated other comprehensive loss (5,556) (5,556)
Retained earnings 60,915 3,697
---------- ----------
Total stockholders' equity 152,874 92,199
---------- ----------
Total liabilities and stockholders' equity $ 356,920 $ 225,282
========== ==========
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ------------------------
2006 2005 2006 2005
----------- ----------- ----------- ----------
(In thousands, except share and per share data)
Sales $ 365,417 $ 230,714 $ 658,210 $ 396,519
Cost of sales 299,824 206,539 551,483 358,976
----------- ----------- ----------- ----------
Gross profit 65,593 24,175 106,727 37,543
Selling, general
and administrative
expense 8,232 7,733 16,528 13,809
Provision for
settlement of
labor disputes
(selling, general
and administrative
expense) -- -- -- 370
----------- ----------- ----------- ----------
Operating income 57,361 16,442 90,199 23,364
Interest income (1,230) (239) (1,932) (342)
Related-party
interest expense -- 1,346 -- 3,253
Third-party
interest expense 85 690 168 964
Interest expense
and related
accretion on
rights to
additional
acquisition
consideration -- 4,823 -- 6,382
Write-off of
deferred financing
costs -- 439 -- 439
Amortization of
deferred financing
costs 77 89 153 184
----------- ----------- ----------- ----------
Income before
income taxes 58,429 9,294 91,810 12,484
Income tax
provision 21,828 149 33,836 1,425
----------- ----------- ----------- ----------
Net income 36,601 9,145 57,974 11,059
Redeemable
preferred stock
dividends
accumulated -- 31 -- 311
----------- ----------- ----------- ----------
Net income
attributable to
common
stockholders $ 36,601 $ 9,114 $ 57,974 $ 10,748
=========== =========== =========== ==========
Net income per
common share
attributable to
common
stockholders -
basic $ 2.91 $ 0.76 $ 4.62 $ 1.11
=========== =========== =========== ==========
Net income per
common share
attributable to
common
stockholders -
diluted $ 2.86 $ 0.76 $ 4.54 $ 1.11
=========== =========== =========== ==========
Weighted average
common shares
outstanding -
basic 12,574,372 11,972,260 12,554,399 9,715,020
=========== =========== =========== ==========
Weighted average
common shares
outstanding -
diluted 12,787,789 11,988,740 12,779,947 9,723,306
=========== =========== =========== ==========
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
-------------------
2006 2005
-------- --------
(In thousands)
Cash flows from operating activities
Net income $ 57,974 $ 11,059
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation and amortization 3,722 3,727
Amortization and write-off of deferred financing
costs 153 623
Loss on disposal of equipment 5 --
Accretion of deferred revenue -- 513
Non-cash interest expense related to Senior Notes
and rights to additional acquisition
consideration -- 9,635
Deferred income taxes (1,309) 1,238
Stock-based compensation expense 1,217 69
Changes in operating assets and liabilities:
Accounts receivable (12,134) (1,055)
Inventories (38,012) 3,099
Deposits and other current assets (580) (2,802)
Accounts payable 60,028 (11,906)
Other accrued liabilities 4,304 7,371
Income tax payable/receivable 6,808 --
Deferred revenue, long-term -- (337)
-------- --------
Net cash flows provided by operating activities 82,176 21,234
-------- --------
Cash flows from investing activities
Restricted cash withdrawals, net -- 12,955
Purchases of property, plant and equipment (2,216) (5,330)
-------- --------
Net cash flows (used in) provided by investing
activities (2,216) 7,625
-------- --------
Cash flows from financing activities
Payments on long-term debt (101) (58,964)
Issuance of common stock, net of issuance costs 1,044 87,322
Excess tax benefit from stock-based compensation 1,196 --
Redemption of preferred stock and payment of
accumulated dividends -- (13,000)
Payments of additional acquisition consideration -- (34,963)
Cash dividends paid to stockholders (756) --
-------- --------
Net cash flows provided by (used in) financing
activities 1,383 (19,605)
-------- --------
Net increase in cash and cash equivalents 81,343 9,254
Cash and cash equivalents at beginning of period 61,737 11,213
-------- --------
Cash and cash equivalents at end of period $143,080 $ 20,467
======== ========
Supplemental cash flow information
Cash paid for:
Interest $ 270 $55,637
======= =======
Income taxes $27,141 $ --
======= =======
Non-cash transactions:
Capital lease obligations incurred for equipment $ -- $ 39
======= =======
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 Six Months Ended
June 30, June 30,
----------------- -----------------
2006 2005 2006 2005
------- ------- ------- -------
(In thousands, except share and per
share data)
Net income per common share
attributable to common
stockholders - basic $ 2.91 $ 0.76 $ 4.62 $ 1.11
======= ======= ======= =======
Net income per common share
attributable to common
stockholders - diluted $ 2.86 $ 0.76 $ 4.54 $ 1.11
======= ======= ======= =======
Net income attributable to common
stockholders $36,601 $ 9,114 $57,974 $10,748
Related-party interest expense -- 1,346 -- 3,253
Third-party interest expense -- 690 -- 964
Write-off of deferred financing
costs -- 439 -- 439
Fees for termination of management
services agreements (selling,
general and administrative
expense) -- 900 -- 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 -- (1,229) -- (2,022)
Interest expense and related
accretion on rights to additional
acquisition consideration -- 4,823 -- 6,382
Tax effect of interest expense and
related accretion on rights to
additional acquisition
consideration -- (4,820) -- (5,326)
Redeemable preferred stock
dividends accumulated -- 31 -- 311
------- ------- ------- -------
Adjusted net income attributable
to common stockholders $36,601 $11,294 $57,974 $15,649
======= ======= ======= =======
Pro forma earnings per share -
basic $ 2.91 $ 0.90 $ 4.62 $ 1.25
======= ======= ======= =======
Pro forma earnings per share -
diluted $ 2.86 $ 0.90 $ 4.54 $ 1.25
======= ======= ======= =======
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(In thousands, except share and per share data)
Weighted average
common shares
outstanding -
basic (prior to
adjustments) 12,574,372 11,972,260 12,554,399 9,715,020
=========== =========== =========== ===========
Effect of common
shares issued in the
initial public
offering, as if the
transaction occurred
on the first day of
the respective period -- 560,440 -- 2,817,680
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding - basic
(following
adjustments) 12,574,372 12,532,700 12,554,399 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 213,417 18,514 225,548 18,514
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding - diluted
(following
adjustments) 12,787,789 12,551,214 12,779,947 12,551,214
=========== =========== =========== ===========
(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 Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
------- ------- ------- -------
(In thousands)
Net income $36,601 $ 9,145 $57,974 $11,059
Income tax provision 21,828 149 33,836 1,425
Related-party interest expense -- 1,346 -- 3,253
Third-party interest expense 85 690 168 964
Interest expense and related
accretion on rights to additional
acquisition consideration -- 4,823 -- 6,382
Interest income (1,230) (239) (1,932) (342)
Amortization of deferred financing
costs 77 89 153 184
Write-off of deferred financing
costs -- 439 -- 439
Amortization of intangible assets 147 148 295 295
Depreciation 1,524 1,767 3,427 3,432
------- ------- ------- -------
EBITDA 59,032 18,357 93,921 27,091
======= ======= ======= =======
(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.