CHICAGO — FreightCar America Inc. reported financial results for the three months ended Dec. 31.
For the fourth quarter of 2007, sales were $137.1 million and net loss was $16.6 million, or $1.42 per diluted share. These results include special pre-tax charges of $37.2 million, primarily associated with the Company’s decision in December 2007 to end production activities at the Johnstown manufacturing facility, which accounted for $30.8 million of the special charges.
Also included in the special charges were costs related to supply chain activities, and charges for a customer claim.
On an after tax basis, the special charges was $23.4 million or $2.00 per diluted share. Impact on cash flow related to plant closure and impairment charges were approximately $2.1 million. Such measures excluding special charges are non-GAAP financial measures. A reconciliation of the Company’s net income to net income excluding special charges as a non-GAAP financial measure is set forth in the supplemental disclosure attached to this press release.
“In the current highly competitive market environment and at this point in the business cycle, it is critical for us to take full advantage of our lower-cost manufacturing facilities,” said Chris Ragot, President and Chief Executive Officer. “Our Johnstown, (Pa.), manufacturing plant was a higher-cost facility than our other locations. Although we entered into decisional bargaining with the union representing our Johnstown employees regarding labor costs at the Johnstown facility, we and the union did not reach an agreement that would have allowed us to continue to operate the facility in a cost-effective way.
“We will continue to focus on strategic initiatives and cost control to remain competitive despite a challenging railcar market. Regarding the other special charges, we have improved our processes to insure the highest commitment to quality and customer service to enhance shareholder value,” Ragot added.
Orders for new railcars totaled 2,074 units in the fourth quarter of 2007, compared with 1,262 units in the third quarter of 2007 and 2,199 units in the fourth quarter of 2006, according to FreightCar America. The backlog of unfilled orders was 5,399 units at Dec. 31 compared with 9,315 units at Dec. 31, 2006, and 4,930 units at Sept. 30.
“While the current North American railcar market has contracted, we believe that the long-term fundamental trends in our industry remain strong. We continue to focus on growth opportunities through strategic initiatives, both internationally and domestically, to enhance shareholder value,” Ragot said. “As announced earlier this month, the Company has entered into a joint venture with Titagarh Wagons Limited of Kolkata, India to develop freight railcars for the Indian market.
“Under the terms of the joint venture agreement, FreightCar America and Titagarh will initially develop prototype cars based on FreightCar America’s designs and assess the market opportunity in India,” Ragot added. “Upon the successful completion of the development and marketing phase the joint venture company will begin railcar production in India in 2009 using manufacturing methods that FreightCar America has developed.”
For the year ended Dec. 31, sales were $817.0 million and net income was $26.5 million, or $2.17 per diluted share. In comparison, for the year ended Dec. 31, 2006, the Company had sales of $1,444.8 million and net income of $128.7 million, or $10.07 per diluted share. Results for the year ended Dec. 31, include the previously described pre-tax special charges of $37.2 million, or $23.8 million or $1.96 per diluted share on an after-tax basis.
— Business Wire