FreightCar America, Inc. (NASDAQ:RAIL) is a diversified manufacturer of railcars and railcar components, with a long history dating back to 1901. The company designs and manufactures a broad variety of railcar types for the transportation of bulk commodities and containerized freight products primarily in North America. Additionally, FreightCar provides railcar rebody services, railcar conversions that repurpose idled rail assets back into revenue service, supplies railcar parts, and services freight cars.

Financials

In the latest fiscal year, FreightCar America reported annual revenue of $358,093,000 and a net loss of $23,589,000. The company's annual operating cash flow was $4,769,000, while its annual free cash flow stood at -$7,953,000. These financial results reflect the cyclical nature of the railcar industry and the company's ongoing transformation efforts.

During the first quarter of 2024, FreightCar America delivered a solid performance, with revenue increasing 99% year-over-year to $161,058,000. The company reported a gross profit of $11,403,000, representing a gross margin of 7.1%. Adjusted EBITDA for the quarter increased to $6,100,000, compared to $2,100,000 in the same period of the prior year. This strong quarterly performance was driven by a record 1,223 railcar deliveries, which included approximately 200 cars that were impacted by the U.S.-Mexico border closure in December 2023.

Recent Developments

The company's order activity in the first quarter of 2024 was 384 units, consisting of 275 new railcars and 109 rebuilt railcars. This compared to 1,960 orders, including 1,770 new railcars and 190 rebuilt railcars, in the same period of the prior year. The decrease in new railcar orders reflected a mixed level of confidence in the economic outlook, as customers continued to analyze their fleet needs and purchasing decisions.

FreightCar America's total backlog of unfilled orders stood at 2,075 units as of March 31, 2024, with an estimated sales value of $238 million. This compared to a backlog of 2,914 railcars, valued at $348 million, as of December 31, 2023. The company remained confident in its ability to meet customer demand and maintained its guidance for 2024, which included expected deliveries between 4,000 to 4,400 railcars and adjusted EBITDA of $32 million to $38 million.

Business Overview

The company's strategic repositioning over the past few years has enabled it to leverage the cyclical nature of the railcar industry, differentiating it from other industry participants. FreightCar America's variable cost structure allows for swift adjustments in production and operational capacity to align with fluctuating demand, reducing risk during downturns by optimizing resource allocation.

With the completion of its facility expansion and the start-up costs associated with the fourth production line now behind it, FreightCar America is focused on driving further operational efficiencies. The company's newly expanded manufacturing footprint, capable of producing over 5,000 railcars per year, positions it well to meet the anticipated increase in customer demand as the industry continues to recover.

Geographically, FreightCar America's operations are primarily focused in North America, with manufacturing facilities in the United States and Mexico. The company's Castaños Facility in Mexico plays a crucial role in its production capabilities, allowing it to leverage the country's competitive labor costs and strategic location.

In terms of revenue breakdown, FreightCar America's Manufacturing segment, which includes new railcar manufacturing, railcar repairs, complete railcar rebody services, railcar conversions, and railcar servicing, accounted for $155,728,000, or 96.7%, of the company's total revenue in the first quarter of 2024. The remaining $5,330,000, or 3.3%, was generated by the company's Parts segment.

Liquidity

The company's liquidity position remains strong, with cash, cash equivalents, and restricted cash totaling $13,977,000 as of March 31, 2024. FreightCar America also maintains a revolving credit facility with a maximum aggregate principal amount of up to $45,000,000, secured by a standby letter of credit and the company's accounts receivable.

Outlook

Looking ahead, FreightCar America remains focused on executing its operational and commercial strategies to continue building its backlog and driving profitable growth. The company's transformation efforts, coupled with its expanded manufacturing capabilities and improved operational efficiency, position it well to capitalize on the anticipated recovery in the railcar industry.

Conclusion

Overall, FreightCar America's solid first quarter performance, coupled with its strategic initiatives and positive industry outlook, suggest the company is well-positioned to navigate the ongoing transformation of the railcar industry and deliver value for its shareholders.