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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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October 26 , 2006
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FreightCar America, Inc. Reports Record Performance with Third Quarter Net Income
Per Diluted Share of $2.88 on Sales of $395.8 Million
FreightCar America, Inc. (NASDAQ:RAIL) today
reported financial results for the three months ended September 30, 2006. For the third quarter of
2006, sales were $395.8 million and net income attributable to common
stockholders was $36.8 million, or $2.88 per diluted share. In comparison, for
the third quarter of 2005, the Company had sales of $263.4 million and net
income attributable to common stockholders of $17.0 million, or $1.35 per
diluted share.
Net income for the third quarter of 2006 was $36.8 million, compared to net
income of $17.0 million for the third quarter of 2005. EBITDA was $57.5 million
in the third quarter of 2006, compared with EBITDA of $30.2 million in the
third quarter of 2005. The improvement in net income and 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 for the third quarter. The
performance reflects our focus on execution with an emphasis on productivity
and throughput," said John E. Carroll, Jr., President and CEO.
"Orders for new railcars totaled 357 units in the third quarter of
2006, compared with 3,763 units ordered in the second quarter of 2006 and 6,884
units for the same period in 2005. The backlog of unfilled orders was 12,176
units at September 30, 2006,
compared with 16,846 units at June 30,
2006. While our backlog declined in the third quarter of 2006,
orders in the railcar industry tend to be uneven from quarter to quarter."
"This morning, we announced an exclusive supplier agreement with TXU
Generation Development to provide up to 7,650 aluminum coal-carrying railcars
to be delivered in the second half of 2008 through 2009. Specific railcar
orders will be entered in our backlog as notice to proceed with production is
received from TXU."
"We continue to explore strategic initiatives to further enhance
shareholder value through organic growth opportunities and cost reduction
programs to improve our competitive position, including reassessing our
manufacturing capabilities."
For the nine months ended September
30, 2006, sales were $1,054.0 million and net income attributable
to common stockholders was $94.8 million, or $7.41 per diluted share. In
comparison, for the nine months ended September
30, 2005, the Company had sales of $659.9 million and net income
attributable to common stockholders of $27.8 million, or $2.59 per diluted
share. Pro forma earnings per share and EBITDA amounts for the nine months
ended September 30, 2006,
and 2005, are shown on the attached statements and schedules.
The Company will host a conference call on Thursday, October 26, 2006, at 11:00 a.m. (Eastern Daylight Time) to discuss the
Company's third quarter financial results. To participate in the conference
call, please dial 877-531-2985. 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 Daylight Time) on Thursday, October 26, 2006, until 11:59 p.m. (Eastern Standard Time) on November 1, 2006. To access the
replay, please dial 800-475-6701. The replay pass code is 843754. 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)
September 30, December 31,
2006 2005
--------------------------
(In thousands)
Assets
Current assets
Cash and cash equivalents $ 184,705 $ 61,737
Accounts receivable, net 13,353 3,854
Inventories 124,269 75,089
Deferred income taxes and other current
assets 14,655 13,443
--------------------------
Total current assets 336,982 154,123
Property, plant and equipment, net 22,468 23,889
Goodwill and intangible assets, net 33,912 34,355
Deferred income taxes and other assets 9,357 12,915
--------------------------
Total assets $ 402,719 $ 225,282
==========================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 139,085 $ 59,514
Income taxes payable 9,574 4,235
Accrued warranty 11,571 7,878
Other current liabilities 25,874 27,144
--------------------------
Total current liabilities 186,104 98,771
Long-term debt, less current portion 108 154
Accrued pension costs and postretirement
benefits, less current portion 26,762 34,158
--------------------------
Total liabilities 212,974 133,083
--------------------------
Commitments and contingencies
Stockholders' equity
Preferred stock -- --
Common stock 126 126
Additional paid in capital 97,845 93,932
Accumulated other comprehensive loss (5,556) (5,556)
Retained earnings 97,330 3,697
--------------------------
Total stockholders' equity 189,745 92,199
--------------------------
Total liabilities and stockholders' equity $ 402,719 $ 225,282
==========================
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2006 2005 2006 2005
---------------------------------------------------
(In thousands, except share and per share data)
Sales $ 395,759 $ 263,405 $ 1,053,969 $ 659,924
Cost of sales 330,542 227,774 882,025 586,750
------------------------- -------------------------
Gross profit 65,217 35,631 171,944 73,174
Selling, general
and
administrative
expense
(including non-
cash compensation
expense of $457,
$82, $1,674 and
$151,
respectively) 8,585 7,460 25,113 21,639
------------------------- -------------------------
Operating income 56,632 28,171 146,831 51,535
Interest income (1,720) (308) (3,652) (650)
Interest expense 94 388 262 10,987
Amortization and
write-off of
deferred
financing costs 76 76 229 699
------------------------- -------------------------
Income before
income taxes 58,182 28,015 149,992 40,499
Income tax
provision 21,388 10,976 55,224 12,401
------------------------- -------------------------
Net income 36,794 17,039 94,768 28,098
Redeemable
preferred stock
dividends
accumulated -- -- -- 311
------------------------- -------------------------
Net income
attributable to
common
stockholders $ 36,794 $ 17,039 $ 94,768 $ 27,787
========================= =========================
Net income per
common share
attributable to
common
stockholders -
basic $ 2.92 $ 1.36 $ 7.54 $ 2.61
========================= =========================
Net income per
common share
attributable to
common
stockholders -
diluted $ 2.88 $ 1.35 $ 7.41 $ 2.59
========================= =========================
Weighted average
common shares
outstanding -
basic 12,601,522 12,532,700 12,570,279 10,664,568
========================= =========================
Weighted average
common shares
outstanding -
diluted 12,782,562 12,667,234 12,780,828 10,715,399
========================= =========================
Dividends declared
per common share $ 0.03 $ 0.03 $ 0.09 $ 0.03
========================= =========================
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-------------------
2006 2005
-------------------
(In thousands)
Cash flows from operating activities
Net income $ 94,768 $ 28,098
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation and amortization 4,583 5,772
Non-cash interest expense related to Senior Notes
and rights to additional acquisition
consideration -- 9,635
Other non-cash items 112 1,490
Deferred income taxes 2,918 4,821
Stock-based compensation expense 1,674 151
Changes in operating assets and liabilities:
Accounts receivable (9,499) 232
Inventories (49,180) (7,737)
Accounts payable 79,571 (3,242)
Income tax payable/receivable 5,339 7,583
Other accrued liabilities (5,692) 1,235
-------------------
Net cash flows provided by operating activities 124,594 48,038
-------------------
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 (3,760) (6,381)
-------------------
Net cash flows (used in) provided by investing
activities (2,678) 6,574
-------------------
Cash flows from financing activities
Payments on long-term debt (53) (59,316)
Issuance of common stock, net of issuance costs 1,044 87,319
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 (1,135) (376)
-------------------
Net cash flows provided by (used in) financing
activities 1,052 (20,336)
-------------------
Net increase in cash and cash equivalents 122,968 34,276
Cash and cash equivalents at beginning of period 61,737 11,213
-------------------
Cash and cash equivalents at end of period $184,705 $ 45,489
===================
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 Nine Months Ended
September 30, September 30,
------------------- -----------------
2006 2005 2006 2005
---------- -------- -------- --------
(In thousands, except share and per
share data)
Net income per common share
attributable to common
stockholders - basic $ 2.92 $ 1.36 $ 7.54 $ 2.61
=================== =================
Net income per common share
attributable to common
stockholders - diluted $ 2.88 $ 1.35 $ 7.41 $ 2.59
=================== =================
Net income attributable to
common stockholders $36,794 $17,039 $94,768 $27,787
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 $36,794 $17,039 $94,768 $32,688
=================== =================
Pro forma earnings per share -
basic $ 2.92 $ 1.36 $ 7.54 $ 2.61
=================== =================
Pro forma earnings per share -
diluted $ 2.88 $ 1.35 $ 7.41 $ 2.58
=================== =================
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------------------- -----------------------
(In thousands, except share and per share data)
Weighted average
common shares
outstanding - basic
(prior to
adjustments) 12,601,522 12,532,700 12,570,279 10,664,568
======================= =======================
Effect of common
shares issued in the
initial public
offering, as if the
transaction occurred
on the first day of
the respective period -- -- -- 1,868,132
----------------------- -----------------------
Weighted average
common shares
outstanding - basic
(following
adjustments) 12,601,522 12,532,700 12,570,279 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 181,040 134,534 210,549 134,534
----------------------- -----------------------
Weighted average
common shares
outstanding - diluted
(following
adjustments) 12,782,562 12,667,234 12,780,828 12,667,234
======================= =======================
(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 Nine Months Ended
September 30, September 30,
------------------- ------------------
2006 2005 2006 2005
--------------------------------------
(In thousands)
Net income $36,794 $17,039 $ 94,768 $28,098
Income tax provision 21,388 10,976 55,224 12,401
Related-party interest expense -- -- -- 3,253
Third-party interest expense 94 388 262 1,352
Interest expense and related
accretion on rights to
additional acquisition
consideration -- -- -- 6,382
Interest income (1,720) (308) (3,652) (650)
Amortization of deferred
financing costs 76 76 229 260
Write-off of deferred financing
costs -- -- -- 439
Amortization of intangible
assets 148 147 443 442
Depreciation 713 1,898 4,140 5,330
------------------- ------------------
EBITDA 57,493 30,216 151,414 57,307
=================== ==================
(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.