Nov. 4, 2010 (Business Wire) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for its third quarter ended September 30, 2010, with revenues of $41.3 million and a net loss of $4.7 million, or $0.39 per diluted share. For the second quarter of 2010, the Company reported revenues of $31.0 million and a net loss of $1.3 million, or $0.11 per diluted share. For the third quarter of 2009, the Company generated revenues of $55.1 million and net income of $1.1 million, or $0.09 per diluted share.
The Company delivered 600 railcars to customers in the third quarter of 2010, all of which were new railcars. This compares to 614 railcars delivered in the second quarter of 2010 and 695 railcars delivered in the third quarter of 2009. There were 17 units ordered in the third quarter of 2010, compared to 14 units ordered in the second quarter of 2010 and no railcars ordered in the third quarter of 2009. Total backlog was 2,417 units at September 30, 2010 compared to 3,000 units at June 30, 2010 and 777 units at September 30, 2009.
“Our sales and order volume for the third quarter of 2010 reflects the continuation of challenging market conditions and resultant low level of demand for coal-carrying railcars. The results for the third quarter, as compared to last quarter, reflect the impact of ongoing competitive price pressures, the influence of sales mix, and additional administrative expenses incurred to support our strategic growth efforts. As we move forward, we will continue to focus on factors within our control: maximizing operational efficiency, strict cost management, preservation of our strong liquidity position and maintenance of our financial flexibility,” said Ed Whalen, President and Chief Executive Officer.
Gross margin for the third quarter of 2010 was $(0.8) million, or (2%), compared to $3.7 million or, 11.8% for the second quarter of 2010 and $6.9 million, or 12.5%, for the third quarter of 2009.
Selling, general and administrative expenses for the third quarter of 2010 were $6.5 million, compared to $5.8 million for the second quarter of 2010 and $6.6 million for the third quarter of 2009.
The Company’s effective tax rate for the third quarter of 2010 was 40.3% compared to 41.9% for the second quarter of 2010. The favorable tax treatment of certain amortization provides additional tax benefit to the Company, increasing its effective tax rate in periods of loss and reducing its effective tax rate during periods of profitability.
Cash and marketable securities on hand as of September 30, 2010 were $96.8 million, compared to $131.9 million as of June 30, 2010 and $133.7 million as of September 30, 2009. The decrease in cash reflects an increase in inventories and accounts receivable and a decrease in customer deposits. The Company’s $30 million revolving credit facility remains undrawn.
Railcars under lease totaled $65.9 million at the end of the third quarter of 2010 compared to $66.5 million at the end of the second quarter of 2010 and $61.9 million at the end of the third quarter of 2009.
“Looking forward, we continue to expect railcar pricing to be very competitive, keeping pressure on margins until volume recovers. Over the long term, we have begun to see some signs of improvement in the market that we believe could lead to increased demand for coal-carrying railcars. Positive trends in year-over-year electricity generation and coal loadings continue, coal stockpiles are down compared to the prior year, and railcars continue to come out of storage. We believe this activity will translate into increased demand for coal cars over the long term and we are well positioned to effectively meet our customers’ needs,” said Whalen.
Whalen added, “On November 2, 2010, we announced the closing of our acquisition of the business assets of DTE Rail Services, Inc., a non-regulated subsidiary of DTE Energy Resources, Inc., for $23.3 million in cash. This important acquisition furthers the Company’s strategic growth initiative to expand our presence in the railcar services sector. We will continue to evaluate similar strategic opportunities. FreightCar America’s coal car market position, strong balance sheet and strategic initiatives will enable it to emerge from the economic downturn as a more competitive company.”
The Company will host a conference call on Thursday, November 4, 2010 at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s third quarter 2010 financial results. To participate in the conference call, please dial (800) 288-8967. 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 1:00 p.m. (Eastern Daylight Time) on November 4, 2010 until 11:59 p.m. (Eastern Standard Time) on December 4, 2010. To access the replay, please dial (800) 475-6701; International dial (320) 365-3844. The replay pass code is 174781. 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, supplies railcar parts, leases freight cars through its JAIX Leasing Company subsidiary, and provides railcar maintenance, repairs and management through its FreightCar Rail Services, LLC subsidiary. In addition to coal cars, FreightCar America designs and builds bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago, Illinois and has facilities in the following locations: Clinton, Indiana; Danville, Illinois; Grand Island, Nebraska; Hastings, Nebraska; Johnstown, Pennsylvania; Lakewood, Colorado; and Roanoke, Virginia. More information about FreightCar America is available on its website at www.freightcaramerica.com.
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.