FreightCar America, Inc. Reports Fourth Quarter and Full Year 2022 Results
Fiscal year 2022 revenue up 80%, generating $11.5 million of cash from operations
Expects continued momentum and growth in fiscal 2023
Provides revenue, deliveries and Adjusted EBITDA guidance for 2023
CHICAGO, March 27, 2023 (GLOBE NEWSWIRE) — FreightCar America, Inc. (NASDAQ: RAIL) (“FreightCar America” or the “Company”), a diversified manufacturer of railroad freight cars, today reported results for the fourth quarter and full year ended December 31, 2022.
Fiscal Year 2022 Highlights
- Revenues of $364.8 million, up 79.6% year-over-year, on deliveries of 3,184 railcars, up 83.9% year-over-year
- Gross margin of 7.1% with gross profit of $25.8 million, compared to gross margin of 5.6% with gross profit of $11.5 million in fiscal year 2021
- Net loss of ($38.8) million, or ($1.56) per share and adjusted net loss of ($23.5) million, or ($0.95) per share, accounting for primarily non-cash items including $8.1 million pension settlement loss and $4.5 million impairment on leased railcars
- Adjusted EBITDA of $8.4 million, compared to adjusted EBITDA loss of ($7.2) million in fiscal year 2021
- Subsequent to year end, issued non-convertible preferred stock with its financial partner to reduce debt and provide growth capital
Fourth Quarter 2022 Highlights
- Revenues of $129.0 million, up 71.9% year-over-year, with deliveries of 1,150 railcars, up 90.4% year-over-year
- Gross margin of 3.6% with gross profit of $4.6 million, compared to gross margin of 8.8% with gross profit of $6.6 million in the fourth quarter of 2021
- Net loss of ($9.7) million, or ($0.37) per share and adjusted net loss of ($8.1) million, or ($0.31) per share, accounting for primarily non-cash items including a $4.5 million impairment on leased railcars, one-time Mexican VAT costs of $1.9 million and non-cash income of $4.7 million due to the change in fair market value of the warrant liability
- Adjusted EBITDA of $1.2 million, equivalent to the fourth quarter of 2021
- Quarter-end backlog totaled 2,445 railcars with an aggregate value of approximately $288 million
Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “FreightCar America finished another strong year of transformation as we continued to ramp-up our operations in Castaños, delivered 3,184 railcars and generated $11.5 million in positive operating cash flow. In the fourth quarter, while we were extremely pleased with the 1,150 units delivered, we continued to experience margin pressure, primarily due to supply chain issues. These dynamics will be with us through the first quarter of this year, after which we expect to see further improvement in our financial performance.”
Meyer concluded, “Demand for our railcars is strong, which gives us confidence for continued growth in 2023. Including orders received since year-end, our production schedule is essentially full for this year, and we are now focused on building our order book for 2024. I am proud of our team and the tremendous transformation that is in its final stages, and we are all very excited for our future.”
Fiscal Year 2023 Outlook
The Company has provided its outlook for fiscal year 2023 as follows:
| Fiscal 2023 Outlook |
Year-over-Year Growth at Midpoint |
|
| Revenue | $400 – $430 million | 13.8% |
| Adjusted EBITDA | $15 – $20 million | 108.1% |
| Railcar Deliveries | 3,400 – 3,700 Railcars | 11.5% |
Mike Riordan, Chief Financial Officer of FreightCar America, added, “For 2023, we believe we are equipped to execute on our well-defined growth strategy, and we have good visibility due to strong order backlog. Our transformed manufacturing footprint has provided us with the needed flexibility to align our cost structure with railcar demand, and we expect improved profitability and positive operating cash flow for the second consecutive year.”
Riordan continued, “Additionally, as was recently announced, we’ve taken the next step in reshaping our capital structure through a financing transaction with our current financial partner. This transaction improves our balance sheet and positions us to continue to invest in the future growth of our business.”
Fourth Quarter and Full Year 2022 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Tuesday, March 28, 2023 at 11:00 a.m. (Eastern Time) to discuss its fourth quarter and full year 2022 financial results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call, available at:
Event URL: https://viavid.webcasts.com/starthere.jsp?ei=1603013&tp_key=9b90395017
Please note that the webcast is listen-only and webcast participants will not be able to participate in the question and answer portion of the conference call. Interested parties may also participate in the call by dialing (877) 407-0789 or (201) 689-8562 and entering the passcode 13736892. 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 2:00 p.m. (Eastern Time) on Tuesday March 28, 2023, until 12:00 a.m. (Eastern Time) on Wednesday April 12, 2023. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13736892. An archived version of the webcast will also be available on the FreightCar America Investor Relations website.
About FreightCar America
FreightCar America, Inc. is a diversified manufacturer of railroad freight cars that also supplies railcar parts and leases freight cars through its FreightCar America Leasing Company subsidiaries. FreightCar America designs and builds high-quality railcars, including open top hopper cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, boxcars and coal cars, and also specializes in the conversion of railcars for repurposed use. FreightCar America is headquartered in Chicago, Illinois and has facilities in the following locations: Castaños, Mexico; Johnstown, Pennsylvania; and Shanghai, People’s Republic of China. More information about FreightCar America is available on its website at www.freightcaramerica.com.
Forward-Looking Statements
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: risks relating to 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 customer acceptance of orders; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings by our customers; potential financial and operational impacts of the COVID-19 pandemic; and other competitive factors. 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.
| INVESTOR & MEDIA CONTACT | Lisa Fortuna or Stephen Poe |
| RAIL@alpha-ir.com | |
| TELEPHONE | 312-445-2870 |
FreightCar America, Inc.
Consolidated Balance Sheets
(In thousands, except for share data)
| December 31, 2022 |
December 31, 2021 |
||||||
| Assets | |||||||
| Current assets | |||||||
| Cash, cash equivalents and restricted cash equivalents | $ | 37,912 | $ | 26,240 | |||
| Accounts receivable, net of allowance for doubtful accounts of $126 and $323 respectively | 9,571 | 9,571 | |||||
| VAT receivable | 4,682 | 31,136 | |||||
| Inventories, net | 64,317 | 56,012 | |||||
| Assets held for sale | 3,675 | — | |||||
| Related party asset | 3,261 | 8,680 | |||||
| Prepaid expenses | 5,470 | 5,087 | |||||
| Total current assets | 128,888 | 136,726 | |||||
| Property, plant and equipment, net | 23,248 | 18,236 | |||||
| Railcars available for lease, net | 11,324 | 20,160 | |||||
| Right of use asset operating lease | 1,596 | 16,669 | |||||
| Right of use asset finance lease | 33,093 | — | |||||
| Other long-term assets | 1,589 | 8,873 | |||||
| Total assets | $ | 199,738 | $ | 200,664 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities | |||||||
| Accounts and contractual payables | $ | 48,449 | $ | 41,185 | |||
| Related party accounts payable | 3,393 | 8,870 | |||||
| Accrued payroll and other employee costs | 4,081 | 2,912 | |||||
| Reserve for workers’ compensation | 841 | 1,563 | |||||
| Accrued warranty | 1,940 | 2,533 | |||||
| Customer deposits | — | 3,300 | |||||
| Deferred income state and local incentives, current | — | 1,291 | |||||
| Current portion of long-term debt | 40,742 | — | |||||
| Other current liabilities | 6,539 | 7,666 | |||||
| Total current liabilities | 105,985 | 69,320 | |||||
| Long-term debt, net of current portion | 51,494 | 79,484 | |||||
| Warrant liability | 31,028 | 32,514 | |||||
| Accrued pension costs | 1,040 | 35 | |||||
| Deferred income state and local incentives, long-term | — | 1,216 | |||||
| Lease liability operating lease, long-term | 1,780 | 16,617 | |||||
| Lease liability finance lease, long-term | 33,245 | — | |||||
| Other long-term liabilities | 3,750 | 3,134 | |||||
| Total liabilities | 228,322 | 202,320 | |||||
| Stockholders’ deficit | |||||||
| Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each designated as Series A voting and Series B non-voting, 0 shares issued and outstanding at December 31, 2022 and December 31, 2021) |
— | — | |||||
| Common stock, $0.01 par value, 50,000,000 shares authorized, 17,223,306 and 15,947,228 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 203 | 190 | |||||
| Additional paid-in capital | 89,104 | 83,742 | |||||
| Accumulated other comprehensive income (loss) | 1,022 | (5,522 | ) | ||||
| Accumulated deficit | (118,913 | ) | (80,066 | ) | |||
| Total stockholders’ deficit | (28,584 | ) | (1,656 | ) | |||
| Total liabilities and stockholders’ deficit | $ | 199,738 | $ | 200,664 | |||
FreightCar America, Inc.
Consolidated Statements of Operations
(In thousands, except for share and per share data)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues | $ | 128,989 | $ | 75,019 | $ | 364,754 | $ | 203,050 | |||||||
| Cost of sales | 124,367 | 68,412 | 338,931 | 191,592 | |||||||||||
| Gross profit | 4,622 | 6,607 | 25,823 | 11,458 | |||||||||||
| Selling, general and administrative expenses | 6,349 | 6,386 | 28,227 | 27,532 | |||||||||||
| Impairment on leased railcars | 4,515 | 158 | 4,515 | 158 | |||||||||||
| Loss on pension settlement | — | — | 8,105 | — | |||||||||||
| Restructuring and impairment charges | — | — | — | 6,530 | |||||||||||
| Operating income (loss) | (6,242 | ) | 63 | (15,024 | ) | (22,762 | ) | ||||||||
| Interest expense | (7,874 | ) | (4,041 | ) | (25,423 | ) | (13,317 | ) | |||||||
| Loss on change in fair market value of warrant liability | 4,744 | 4,075 | 1,486 | (14,894 | ) | ||||||||||
| Gain on extinguishment of debt | — | (7 | ) | — | 10,122 | ||||||||||
| Other income | 79 | 327 | 2,426 | 817 | |||||||||||
| Income (loss) before income taxes | (9,293 | ) | 417 | (36,535 | ) | (40,034 | ) | ||||||||
| Income tax provision (benefit) | 440 | (748 | ) | 2,312 | 1,413 | ||||||||||
| Net income (loss) | $ | (9,733 | ) | $ | 1,165 | $ | (38,847 | ) | $ | (41,447 | ) | ||||
| Net income (loss) per common share – basic | $ | (0.37 | ) | $ | 0.06 | $ | (1.56 | ) | $ | (2.00 | ) | ||||
| Net income (loss) per common share – diluted | $ | (0.37 | ) | $ | 0.06 | $ | (1.56 | ) | $ | (2.00 | ) | ||||
| Weighted average common shares outstanding – basic | 26,117,377 | 21,786,335 | 24,838,399 | 20,766,398 | |||||||||||
| Weighted average common shares outstanding – diluted | 26,117,377 | 23,197,856 | 24,838,399 | 20,766,398 | |||||||||||
FreightCar America, Inc.
Segment Data
(In thousands)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues: | |||||||||||||||
| Manufacturing | $ | 126,279 | $ | 71,731 | $ | 352,827 | $ | 192,807 | |||||||
| Corporate and Other | 2,710 | 3,288 | 11,927 | 10,243 | |||||||||||
| Consolidated revenues | $ | 128,989 | $ | 75,019 | $ | 364,754 | $ | 203,050 | |||||||
| Operating income (loss): | |||||||||||||||
| Manufacturing | $ | (1,670 | ) | $ | 4,861 | $ | 14,801 | $ | (757 | ) | |||||
| Corporate and Other | (4,572 | ) | (4,798 | ) | (29,825 | ) | (22,005 | ) | |||||||
| Consolidated operating income (loss) | $ | (6,242 | ) | $ | 63 | $ | (15,024 | ) | $ | (22,762 | ) | ||||
FreightCar America, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Year Ended December 31, | |||||||
| 2022 | 2021 | ||||||
| Cash flows from operating activities | |||||||
| Net loss | $ | (38,847 | ) | $ | (41,447 | ) | |
| Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||||
| Restructuring and impairment charges | — | 6,530 | |||||
| Depreciation and amortization | 4,135 | 4,304 | |||||
| Non-cash lease expense on right-of-use assets | 2,325 | 1,483 | |||||
| Recognition of deferred income from state and local incentives | (2,507 | ) | (2,215 | ) | |||
| (Gain) loss on change in fair market value for Warrant liability | (1,486 | ) | 14,894 | ||||
| Impairment on leased railcars | 4,515 | 158 | |||||
| Loss on pension settlement | 8,105 | — | |||||
| Stock-based compensation recognized | 2,106 | 2,977 | |||||
| Non-cash interest expense | 16,563 | 5,502 | |||||
| Gain on extinguishment of debt | — | (10,122 | ) | ||||
| Other non-cash items, net | 20 | 529 | |||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | — | (150 | ) | ||||
| VAT receivable | 24,946 | (24,675 | ) | ||||
| Inventories | (8,476 | ) | (12,369 | ) | |||
| Related party asset, net | (58 | ) | (624 | ) | |||
| Accounts and contractual payables | 8,181 | 7,878 | |||||
| Lease liability | (3,006 | ) | (2,106 | ) | |||
| Other assets and liabilities | (5,013 | ) | (5,944 | ) | |||
| Net cash flows provided by (used in) operating activities | 11,503 | (55,397 | ) | ||||
| Cash flows from investing activities | |||||||
| Maturity of restricted certificates of deposit | — | 182 | |||||
| Purchase of property, plant and equipment | (7,816 | ) | (2,290 | ) | |||
| Proceeds from sale of property, plant and equipment | — | 433 | |||||
| Net cash flows used in investing activities | (7,816 | ) | (1,675 | ) | |||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of long-term debt | — | 16,000 | |||||
| Deferred financing costs | — | (1,688 | ) | ||||
| Borrowings on revolving line of credit | 133,652 | 48,400 | |||||
| Repayments on revolving line of credit | (124,852 | ) | (33,378 | ) | |||
| Employee stock settlement | (57 | ) | (12 | ) | |||
| Payment for stock appreciation rights exercised | (20 | ) | (57 | ) | |||
| Financing lease payments | (738 | ) | — | ||||
| Net cash flows provided by financing activities | 7,985 | 29,265 | |||||
| Net increase (decrease) in cash and cash equivalents | 11,672 | (27,807 | ) | ||||
| Cash, cash equivalents and restricted cash equivalents at beginning of period | 26,240 | 54,047 | |||||
| Cash, cash equivalents and restricted cash equivalents at end of period | $ | 37,912 | $ | 26,240 | |||
| Supplemental cash flow information | |||||||
| Interest paid | $ | 8,849 | $ | 6,537 | |||
| Income tax refunds received, net of payments | $ | — | $ | 5 | |||
| Non-cash transactions | |||||||
| Change in unpaid construction in process | $ | 715 | $ | 122 | |||
| Accrued PIK interest paid through issuance of PIK Note | $ | 1,467 | $ | 1,278 | |||
| Issuance of warrants | $ | 8,560 | $ | 4,891 | |||
| Issuance of equity fee | $ | 4,000 | $ | 2,000 | |||
FreightCar America, Inc.
Reconciliation of income before taxes to EBITDA(1) and Adjusted EBITDA(2)
(In thousands)
(Unaudited)
| Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Income (loss) before income taxes | $ | (9,293 | ) | $ | 417 | $ | (36,535 | ) | $ | (40,034 | ) | ||||||
| Depreciation & Amortization | 1,025 | 1,000 | 4,135 | 4,304 | |||||||||||||
| Interest Expense, net | 7,874 | 4,041 | 25,423 | 13,317 | |||||||||||||
| EBITDA | (394 | ) | 5,458 | (6,977 | ) | (22,413 | ) | ||||||||||
| Change in Fair Value of Warrant (a) | (4,744 | ) | (4,075 | ) | (1,486 | ) | 14,894 | ||||||||||
| Restructuring and impairment charges (b) | – | – | – | 6,530 | |||||||||||||
| Impairment on leased railcars (c) | 4,515 | 158 | 4,515 | 158 | |||||||||||||
| Loss/(Gain) on Debt Extinguishment (d) | – | 7 | – | (10,122 | ) | ||||||||||||
| Alabama Grant Amortization (e) | – | (551 | ) | (1,857 | ) | (2,216 | ) | ||||||||||
| Mexican Permanent VAT (f) | 1,861 | – | 2,769 | – | |||||||||||||
| Loss on Pension Settlement (g) | – | – | 8,105 | – | |||||||||||||
| Transaction Costs (h) | 37 | – | 153 | 491 | |||||||||||||
| Startup Costs (i) | 164 | – | 1,113 | – | |||||||||||||
| Consulting Costs (j) | 85 | 129 | 1,073 | 129 | |||||||||||||
| Corporate Realignment (k) | – | – | 1,323 | – | |||||||||||||
| Legal Reserve (l) | – | 256 | – | 756 | |||||||||||||
| Plant Transition Costs (m) | – | – | – | 2,386 | |||||||||||||
| Stock Based Compensation | (201 | ) | 148 | 2,106 | 2,977 | ||||||||||||
| Other, net | (79 | ) | (327 | ) | (2,426 | ) | (817 | ) | |||||||||
| Adjusted EBITDA | $ | 1,244 | $ | 1,203 | $ | 8,411 | $ | (7,247 | ) | ||||||||
| (1) | EBITDA represents earnings before interest, taxes, depreciation and amortization. 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 performance of the 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 similar titled measures reported by other companies. | |
| (2) | Adjusted EBITDA represents EBITDA before the following charges: | |
| a) | This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability. | |
| b) | The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities. | |
| c) | During the fourth quarters of 2021 and 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | |
| d) | The Company recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. | |
| e) | The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). | |
| f) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | |
| g) | The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. | |
| h) | The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. | |
| i) | The Company incurred certain costs during 2022 related to new production lines. | |
| j) | The Company incurred certain non-recurring consulting costs during 2021 and 2022. | |
| k) | The Company incurred certain non-recurring corporate realignment costs in 2022. | |
| l) | During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. | |
| m) | The Company implemented a program to shift production originally planned for its U.S. plants to its Castaños facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaños facility in 2021. | |
We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted 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 Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.
FreightCar America, Inc.
Reconciliation of Net income (loss) and Adjusted Net income (loss)(1)
(Unaudited)
| Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Net income (loss) | $ | (9,733 | ) | $ | 1,165 | $ | (38,847 | ) | $ | (41,447 | ) | ||||||
| Change in Fair Value of Warrant (a) | (4,744 | ) | (4,075 | ) | (1,486 | ) | 14,894 | ||||||||||
| Restructuring and impairment charges (b) | – | – | – | 6,530 | |||||||||||||
| Impairment on leased railcars (c) | 4,515 | 158 | 4,515 | 158 | |||||||||||||
| Gain on Debt Extinguishment (d) | – | 7 | – | (10,122 | ) | ||||||||||||
| Alabama Grant Amortization (e) | – | (551 | ) | (1,857 | ) | (2,216 | ) | ||||||||||
| Mexican Permanent VAT (f) | 1,861 | – | 2,769 | – | |||||||||||||
| Loss on Pension Settlement (g) | – | – | 8,105 | – | |||||||||||||
| Transaction Costs (h) | 37 | – | 153 | 491 | |||||||||||||
| Startup Costs (i) | 164 | – | 1,113 | – | |||||||||||||
| Consulting Costs (j) | 85 | 129 | 1,073 | 129 | |||||||||||||
| Corporate Realignment (k) | – | – | 1,323 | – | |||||||||||||
| Legal Reserve (l) | – | 256 | – | 756 | |||||||||||||
| Plant Transition Costs (n) | – | – | – | 2,386 | |||||||||||||
| Stock Based Compensation | (201 | ) | 148 | 2,106 | 2,977 | ||||||||||||
| Other, net | (79 | ) | (327 | ) | (2,426 | ) | (817 | ) | |||||||||
| Total non-GAAP adjustments | 1,638 | (4,255 | ) | 15,388 | 15,166 | ||||||||||||
| Income tax impact on non-GAAP adjustments(m) | (5 | ) | – | (68 | ) | (234 | ) | ||||||||||
| Adjusted Net loss | $ | (8,100 | ) | $ | (3,090 | ) | $ | (23,527 | ) | $ | (26,515 | ) | |||||
| (1) | Adjusted net income (loss) represents net income (loss) before the following charges: | |
| a) | This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability. | |
| b) | The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities. | |
| c) | During the fourth quarters of 2021 and 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | |
| d) | The Company recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. | |
| e) | The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). | |
| f) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | |
| g) | The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. | |
| h) | The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. | |
| i) | The Company incurred certain costs during 2022 related to new production lines. | |
| j) | The Company incurred certain non-recurring consulting costs during 2021 and 2022. | |
| k) | The Company incurred certain non-recurring corporate realignment costs in 2022. | |
| l) | During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. | |
| m) | The Company implemented a program to shift production originally planned for its U.S. plants to its Castaños facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaños facility in 2021. | |
| n) | Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected. | |
We believe that Adjusted net income (loss) is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted net income (loss) is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted net income (loss) 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 Adjusted net income (loss) is not necessarily comparable to that of other similarly titled measures reported by other companies.
FreightCar America, Inc.
Reconciliation of EPS and Adjusted EPS(1)
(Unaudited)
| Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| EPS | $ | (0.37 | ) | $ | 0.05 | $ | (1.56 | ) | $ | (2.00 | ) | ||||||
| Adjustments per share: | |||||||||||||||||
| Change in Fair Value of Warrant (a) | (0.18 | ) | (0.19 | ) | (0.06 | ) | 0.72 | ||||||||||
| Restructuring and impairment charges (b) | – | – | – | 0.31 | |||||||||||||
| Impairment on leased railcars (c) | 0.17 | 0.01 | 0.18 | 0.01 | |||||||||||||
| Gain on Debt Extinguishment (d) | – | – | – | (0.49 | ) | ||||||||||||
| Alabama Grant Amortization (e) | – | (0.03 | ) | (0.07 | ) | (0.11 | ) | ||||||||||
| Mexican Permanent VAT (f) | 0.07 | – | 0.11 | – | |||||||||||||
| Loss on Pension Settlement (g) | – | – | 0.33 | – | |||||||||||||
| Transaction Costs (h) | – | – | 0.01 | 0.02 | |||||||||||||
| Startup Costs (i) | 0.01 | – | 0.04 | – | |||||||||||||
| Consulting Costs (j) | – | 0.01 | 0.04 | 0.01 | |||||||||||||
| Corporate Realignment (k) | – | – | 0.05 | – | |||||||||||||
| Legal Reserve (l) | – | 0.01 | – | 0.04 | |||||||||||||
| Plant Transition Costs (m) | – | – | – | 0.11 | |||||||||||||
| Stock Based Compensation | (0.01 | ) | 0.01 | 0.08 | 0.14 | ||||||||||||
| Other, net | – | (0.01 | ) | (0.10 | ) | (0.04 | ) | ||||||||||
| Total non-GAAP adjustments pre-tax per share | 0.06 | (0.19 | ) | 0.61 | 0.72 | ||||||||||||
| Income tax impact on non-GAAP adjustments per share (n) | – | – | – | (0.01 | ) | ||||||||||||
| Adjusted EPS | $ | (0.31 | ) | $ | (0.14 | ) | $ | (0.95 | ) | $ | (1.29 | ) | |||||
| (1) | Adjusted EPS represents basic EPS before the following charges: | |
| a) | This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability. | |
| b) | The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities. | |
| c) | During the fourth quarters of 2021 and 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet. | |
| d) | The Company recorded a non-cash gain on extinguishment of its PPP Loan in the third quarter of 2021. | |
| e) | The Company amortizes deferred grant income to cost of goods sold that represents a non-cash reduction to its gross margin (loss). | |
| f) | The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs. | |
| g) | The Company recorded a non-cash pre-tax pension settlement loss in the third quarter of 2022. | |
| h) | The Company incurred certain costs during 2021 and 2022 for nonrecurring professional services associated with its financing arrangements. | |
| i) | The Company incurred certain costs during 2022 related to new production lines. | |
| j) | The Company incurred certain non-recurring consulting costs during 2021 and 2022. | |
| k) | The Company incurred certain non-recurring corporate realignment costs in 2022. | |
| l) | During the first and fourth quarters of 2021, the Company recognized charges related to a legal dispute. | |
| m) | The Company implemented a program to shift production originally planned for its U.S. plants to its Castaños facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaños facility in 2021. | |
| n) | Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected. | |
We believe that Adjusted EPS is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EPS is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EPS 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 Adjusted EPS is not necessarily comparable to that of other similarly titled measures reported by other companies.
