UNITED STATES
証券取引委員会
ワシントンDC20549
フォーム
四半期終了日
または
報告書番号：
（会社設立時の指定名）
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（設立または組織の州または管轄区域） |
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（国税庁雇用者識別番号） |
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(主要執行オフィスの住所) |
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（郵便番号） |
(
（登録者の電話番号（市外局番を含む））
法第12条（b）に基づく登録証券
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各クラスの名称 |
取引シンボル |
登録されている各取引所の名称 |
チェックマークを付けてください：（1）12か月以内に（または発行者がそのような報告書を提出する必要があったより短い期間に）証券取引法のセクション13または15（d）によって提出する必要のあるすべての報告書を提出し、（2）過去90日間にそのような報告書提出の要件に遭遇していたかどうか。
① 12か月以内（または登録者がこのようなファイルを提出する必要があったよりも短い期間）に規則405（S-T）の下で提出する必要のあるすべてのインタラクティブデータファイルを提出したかどうかをチェックしてください。)
登録者が大型加速度ファイラ、加速度ファイラ、非加速度ファイラ、小型報告会社、または新興成長企業であるかどうかをチェックマークで示してください。規則1202の「大型加速度ファイラ」、「加速度ファイラ」、「小型報告会社」、「新興成長企業」の定義については、Exchange Actの規則1202を参照してください。
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大型加速ファイラー |
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加速ファイラー |
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レポート義務のある中小企業 |
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新興成長企業 |
本登録者が取引所法12b-2条で定義されるシェル企業である場合、はい いいえ
新興成長企業である場合、登録者が取引所法第13条（a）に基づき提供された新しいまたは改訂された財務会計基準の遵守についての延長移行期間を使用しないことを選択した場合は、チェックマークを付けて示してください。
2024年11月5日時点で、
FREIGHTCAR AMERICA, INC.
フォーム10-QのINDEX
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項目 |
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ページ |
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第I部−財務情報 |
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1. |
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3 |
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種類の縮小された連結損益計算書（未監査） |
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種類の縮小された包括（損失）利益計算書（未監査） |
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種類の縮小された中間資本と株主資本の損失計算書（未監査） |
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8 |
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9 |
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2. |
18 |
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4. |
24 |
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第II部－その他の事項 |
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25 |
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2. |
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3. |
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4. |
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5. |
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6. |
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26 |
2
第I部−財務情報
アイテム1。財務諸表。
フレイトカー・アメリカ社
簡易合算貸借対照表
(千単位で、株のデータを除く)
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9月30日、 |
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12月31日 |
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資産 |
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流動資産 |
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現金、現金同等物および制限付き現金同等物 |
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$ |
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信用損失引当金を差し引いた売掛金 $ |
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VAT債権 |
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資産、純額 |
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売却予定資産 |
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関連会社資産 |
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前払費用 |
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流動資産合計 |
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固定資産、装置及び器具、純額 |
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リース可能な貨車、純 |
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Operating Leaseの使用権資産 |
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Finance Leaseの使用権資産 |
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その他の長期資産 |
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総資産 |
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$ |
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$ |
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負債、Mezzanine株式および株主資本の赤字 |
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流動負債 |
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勘定および契約上の支払い |
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$ |
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関係者に対する支払い勘定 |
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従業員給与およびその他の従業員コストの積み立て |
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保証引当金 |
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顧客預託金 |
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長期借入金の短期部分 |
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その他の流動負債 |
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流動負債合計 |
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ワラントの負債 |
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負担された年金コスト |
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リース債務オペレーティングリース、長期 |
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リース債務ファイナンスリース、長期 |
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その他の長期負債 |
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負債合計 |
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Mezzanine equity |
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Cシリーズ優先株式、$ |
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株主資本不足 |
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优先股,每股面值为0.001美元;授权5,000,000股;未发行或未流通股份 |
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普通株式、1株当たり0.001ドルの割額株式、承認済み株式総数900,000,000株、発行済み株式577,806,659株、2023年12月31日時点での流通株式540,387,949株、発行済み株式577,805,623株、2023年3月31日時点での流通株式545,459,814株、追加資本金 |
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追加の資本金 |
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累積その他の包括利益 |
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累積赤字 |
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株主資本の赤字合計 |
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負債、中間資本、および株主資本の赤字の合計 |
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$ |
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$ |
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簡易連結財務諸表注記を参照してください（未監査）。
3
フレイトカー・アメリカ社
損益計算書
（株式と一株当たりのデータを除く）千円単位の残高
（未監査）
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終了した3カ月 |
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終了した9か月 |
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9月30日, |
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9月30日, |
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2024 |
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2023 |
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2024 |
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2023 |
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売上高 |
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$ |
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$ |
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$ |
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$ |
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売上原価 |
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粗利益 |
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販売、一般および管理費用 |
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リース可能な鉄道車両の売却益 |
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退職給付費用の損失 |
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訴訟和解 |
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営業利益 |
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利子費用 |
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ワラント pass法定災害をrustしている津波の損失益 |
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債務の償還に伴う損失 |
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その他の経費 |
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所得税前利益(損失) |
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事業税調整前当期純利益 |
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当期純利益 |
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$ |
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$ |
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$ |
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$ |
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1株当たりの純損失（基本） |
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$ |
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$ |
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$ |
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$ |
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1株当たりの純損失（希薄化後） |
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$ |
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$ |
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$ |
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$ |
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基本的な普通株式の加重平均発行株数 |
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希薄化後の普通株式の加重平均発行株数 |
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簡易連結財務諸表注記を参照してください（未監査）。
4
フレイトカー・アメリカ社
包括利益（損失）利益の要約連結計算書
（千単位）
（未監査）
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終了した3カ月 |
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終了した9か月 |
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9月30日, |
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9月30日, |
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2024 |
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2023 |
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2024 |
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2023 |
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当期純利益 |
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$ |
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$ |
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$ |
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$ |
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その他の包括的（損失）利益税引前： |
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退職給付費用の損失 |
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外国通貨デリバティブの未実現損益 |
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年金および退職手当 pass 相殺 |
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包括（損失）収益 |
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$ |
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$ |
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$ |
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簡易連結財務諸表注記を参照してください（未監査）。
5
フレイトカー・アメリカ社
準所有者資本と株主資本の連結財務諸表
(千単位で、株のデータを除く)
（未監査）
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フレイトカーアメリカの株主 |
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積算された |
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メザニン株式 |
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追加 |
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その他 |
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合計 |
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优先股（Cシリーズ） |
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普通株式 |
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出資済み |
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包括的 |
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保有 |
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株主の |
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シェア |
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金額 |
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株式 |
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金額 |
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2002年に設立されたKingSett Capitalは、機関投資家と超高純資産のクライアントとの共同投資で、持続可能でプレミアムなリスク加重リターンを提供する、カナダをリードするプライベートエクイティ不動産会社です。KingSettは、グローバル不動産サステナビリティベンチマーク（GRESB）調査において、リストに掲載されていない同業種の純財産部門で第1位、北アメリカの多様化したオフィス/リストに掲載されていない純財産部門で第2位にランクインし、持続可能性への取り組みが評価されました。業界のリーダーとして、KingSettは不動産セクターを前進させ、様々な不動産物件、開発、共同事業、住宅ローンの新しい投資機会を探し続けることに専念しています。 |
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純実現短期キャピタルゲイン |
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赤字 |
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赤字 |
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2023年6月30日のバランス |
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当期純利益 |
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その他包括的利益 |
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優先株式シリーズCの発行、発行コストの差し引き後 |
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株式付与権の行使 |
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在庫ベースの報酬の認識 |
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2023年9月30日の残高 |
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2024年6月30日の残高 |
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最終損失 |
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その他包括損失 |
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Cシリーズ優先株式発行コストの増加 |
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ストックオプションと評価権の行使 |
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認識された株式報酬 |
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2024年9月30日の残高 |
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$ |
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$ |
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$ |
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6
フレイトカー・アメリカ社
準連結株主資本及び株主資本の損失の要約連結財務諸表
(千単位で、株のデータを除く)
（未監査）
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フレイトカーアメリカの株主 |
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積算された |
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メザニン株式 |
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追加 |
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その他 |
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合計 |
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优先股（Cシリーズ） |
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普通株式 |
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出資済み |
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包括的 |
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保有 |
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株主の |
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シェア |
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金額 |
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シェア |
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金額 |
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2002年に設立されたKingSett Capitalは、機関投資家と超高純資産のクライアントとの共同投資で、持続可能でプレミアムなリスク加重リターンを提供する、カナダをリードするプライベートエクイティ不動産会社です。KingSettは、グローバル不動産サステナビリティベンチマーク（GRESB）調査において、リストに掲載されていない同業種の純財産部門で第1位、北アメリカの多様化したオフィス/リストに掲載されていない純財産部門で第2位にランクインし、持続可能性への取り組みが評価されました。業界のリーダーとして、KingSettは不動産セクターを前進させ、様々な不動産物件、開発、共同事業、住宅ローンの新しい投資機会を探し続けることに専念しています。 |
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純実現短期キャピタルゲイン |
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赤字 |
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赤字 |
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2022年12月31日の残高 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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最終損失 |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
その他包括的利益 |
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- |
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- |
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- |
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- |
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- |
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- |
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シリーズCの優先株式の発行（発行コストを控除した額） |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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制限付き株式報酬 |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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Employee stock settlement |
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- |
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- |
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( |
) |
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- |
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( |
) |
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- |
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- |
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( |
) |
Exercise of stock appreciation rights |
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- |
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- |
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- |
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- |
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- |
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|||
Stock appreciation rights classification modification |
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- |
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- |
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- |
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- |
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- |
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- |
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制限付き株式ユニットのベスト解決 |
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- |
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- |
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- |
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- |
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- |
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|||
Stock-based compensation recognized |
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- |
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- |
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- |
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- |
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- |
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- |
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Equity Fees |
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- |
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- |
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- |
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- |
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||||
2023年9月30日の残高 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
||||||
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||||||||
2023年12月の残高 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
||||||
最終損失 |
|
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- |
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|
- |
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- |
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- |
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|
|
- |
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- |
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( |
) |
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( |
) |
その他包括損失 |
|
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- |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
系列C优先股发行成本的增值 |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
|
制限付き株式報酬 |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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||
雇员股票结算 |
|
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- |
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- |
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( |
) |
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- |
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( |
) |
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- |
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- |
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( |
) |
受限制股奖的没收 |
|
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- |
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- |
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( |
) |
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( |
) |
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- |
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- |
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- |
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股票期权和增值权的行使 |
|
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- |
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- |
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- |
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- |
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|
||||
株式ベースの報酬が認識されました |
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|
- |
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- |
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- |
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|
- |
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|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
2024年9月30日の残高 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities |
|
|
|
|||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: |
|
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|
||
Depreciation and amortization |
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||
Non-cash lease expense on right-of-use assets |
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Loss on change in fair market value for Warrant liability |
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Loss on pension settlement |
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Stock-based compensation recognized |
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||
Non-cash interest expense |
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|
||
Loss on extinguishment of debt |
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|
||
Other non-cash items, net |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
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|
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|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
VAT receivable |
|
|
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|
||
Inventories |
|
|
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|
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( |
) |
|
Accounts and contractual payables |
|
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( |
) |
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|
|
Income taxes payable, net |
|
|
( |
) |
|
|
( |
) |
Lease liability |
|
|
( |
) |
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|
( |
) |
Customer deposits |
|
|
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|
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|
||
Other assets and liabilities |
|
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( |
) |
|
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|
|
Net cash flows provided by (used in) operating activities |
|
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( |
) |
|
Cash flows from investing activities |
|
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|
||
Purchase of property, plant and equipment |
|
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( |
) |
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|
( |
) |
Proceeds from sale of railcars available for lease, net of selling costs |
|
|
|
|
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|
||
Net cash flows used in investing activities |
|
|
( |
) |
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( |
) |
Cash flows from financing activities |
|
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|
||
Proceeds from issuance of preferred shares, net of issuance costs |
|
|
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|
||
Deferred financing costs |
|
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( |
) |
|
Borrowings on revolving line of credit |
|
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|
||
Repayments on revolving line of credit |
|
|
( |
) |
|
|
( |
) |
Employee stock settlement |
|
|
( |
) |
|
|
( |
) |
Payment for stock appreciation rights exercised |
|
|
|
|
|
( |
) |
|
Financing lease payments |
|
|
( |
) |
|
|
( |
) |
Net cash flows (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid |
|
$ |
|
|
$ |
|
||
Non-cash transactions |
|
|
|
|
|
|
||
Change in unpaid construction in process |
|
$ |
( |
) |
|
$ |
|
|
Accrued PIK interest paid through issuance of PIK Note |
|
$ |
|
|
$ |
|
||
Issuance of preferred shares in exchange of term loan |
|
$ |
|
|
$ |
|
||
Issuance of warrants |
|
$ |
|
|
$ |
|
||
Issuance of equity fee |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
8
FreightCar America, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except for share and per share data and unless otherwise noted)
Note 1 – Description of the Business
FreightCar America, Inc. (“FreightCar”, the “Company”, “we” or “our”) operates primarily in North America through its direct and indirect subsidiaries, and designs and manufactures a wide range of railroad freight cars, completes railcar rebody and repair services, provides railcar conversion services that repurpose idled rail assets back into revenue service, and supplies railcar parts. The Company designs and builds high-quality railcars, including bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, coal cars and boxcars. The Company is headquartered in Chicago, Illinois and has facilities in the following locations: Johnstown, Pennsylvania; Qingdao, People’s Republic of China; and Castaños, Coahuila, Mexico (the “Castaños Facility”).
Note 2 – Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of FreightCar and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The 2023 year-end balance sheet data was derived from the audited financial statements as of December 31, 2023. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. Certain prior year amounts have been reclassified, where necessary, to conform to the current year presentation. These interim financial statements should be read in conjunction with the audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Note 3 – Revenue Recognition
The following table disaggregates the Company’s revenues by major source:
|
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Three Months Ended |
|
Nine Months Ended |
|
|||||||||||
|
|
September 30, |
|
September 30, |
|
|||||||||||
|
|
2024 |
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2023 |
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|
2024 |
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|
2023 |
|
||||
Railcar sales |
|
$ |
|
|
$ |
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$ |
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$ |
|
||||
Parts sales |
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Revenues from contracts with customers |
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Leasing revenues |
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Total revenues |
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$ |
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|
$ |
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$ |
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|
$ |
|
||||
Contract Balances and Accounts Receivable
Contract assets represent the Company’s rights to consideration for performance obligations that have been satisfied but for which the terms of the contract do not permit billing at the reporting date. The Company had
Performance Obligations
9
The Company is electing not to disclose the value of the remaining unsatisfied performance obligations with a duration of one year or less as permitted by ASU 2014-09, Revenue from Contracts with Customers. The Company had remaining unsatisfied performance obligations as of September 30, 2024 with expected duration of greater than one year of $
Note 4 – Segment Information
The Company’s operations consist of
Segment operating income is an internal performance measure used by the Company’s Chief Operating Decision Maker to assess the performance of each segment in a given period. Segment operating income includes all external revenues attributable to the segments as well as operating costs and income that management believes are directly attributable to the current production of goods and services. The Company’s internal management reporting package does not include interest revenue, interest expense or income taxes allocated to individual segments and these items are not considered as a component of segment operating income. Segment assets represent operating assets and exclude intersegment accounts, deferred tax assets and income tax receivables. The Company does not allocate cash and cash equivalents and restricted cash and restricted cash equivalents to its operating segments as the Company’s treasury function is managed at the corporate level. Intersegment revenues were not material in any period presented.
|
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Three Months Ended |
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Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated revenues |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
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|
|
|
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|
||||
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing (1) |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate and Other (2) |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Consolidated operating income |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Consolidated interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
(Loss) gain on change in fair market value of Warrant liability |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Consolidated other expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Consolidated (loss) income before income taxes |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated depreciation and amortization |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated capital expenditures |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
(1)
(2)
10
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Assets: |
|
|
|
|
|
|
||
Manufacturing |
|
$ |
|
|
$ |
|
||
Corporate and Other |
|
|
|
|
|
|
||
Total operating assets |
|
|
|
|
|
|
||
Consolidated income taxes receivable |
|
|
|
|
|
|
||
Consolidated assets |
|
$ |
|
|
$ |
|
||
|
Geographic Information |
|
||||||||||||||||||||||
|
|
Revenues |
|
|
Long Lived Assets (a) |
|
||||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
December 31, |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
(a)
Note 5 – Fair Value Measurements
The following table sets forth by level within the fair value hierarchy the Company’s financial assets that were recorded at fair value on a recurring basis and the Company’s non-financial assets that were recorded at fair value on a non-recurring basis.
Recurring Fair Value Measurements |
|
As of September 30, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign currency derivative liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Recurring Fair Value Measurements |
|
As of December 31, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivative asset |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Non-recurring Fair Value Measurements |
|
During the Nine Months Ended September 30, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets held for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Non-recurring Fair Value Measurements |
|
During the Year Ended December 31, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Railcars available for lease, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair value of the Company’s Warrant (as defined in Note 10 - Warrants) liability recorded in the Company’s financial statements, determined using the quoted price of the Company’s common stock, par value $
The fair value of the Company’s foreign currency derivative (liability) asset determined using exit prices obtained from each counterparty, which are based on currency spot and forward rates at September 30, 2024 and December 31, 2023 in an active market, is a Level 2 measurement. See Note 15 - Derivatives.
11
The fair value of the Company's fleet of triple hopper aggregate railcars determined using a cost plus market approach for a portion of the assets and a market-based approach for the remainder of the assets at December 31, 2023, is a Level 3 measurement. In the first quarter of 2024, the Company gained possession of these railcars. The portion of railcars intended to be sold in their current condition were classified as assets held for sale, while the remaining railcars intended to be converted into a new car type were classified as inventory.
Note 6 – Restricted Cash
The Company establishes restricted cash balances when required by customer contracts, and to collateralize standby letters of credit or foreign currency derivatives. The carrying value of restricted cash approximates its fair value.
The Company’s restricted cash balances are as follows:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Restricted cash from customer deposit |
|
$ |
|
|
$ |
|
||
Restricted cash to collateralize standby letters of credit |
|
|
|
|
|
|
||
Restricted cash to collateralize foreign currency derivatives |
|
|
|
|
|
|
||
Total restricted cash and restricted cash equivalents |
|
$ |
|
|
$ |
|
||
Note 7 – Inventories
Inventories, net of reserve for excess and obsolete items, consist of the following:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished railcars |
|
|
|
|
|
|
||
Parts inventory |
|
|
|
|
|
|
||
Total inventories, net |
|
$ |
|
|
$ |
|
||
Inventory on the Company’s condensed consolidated balance sheets includes reserves of $
Note 8 – Product Warranties
Warranty terms are based on the negotiated railcar sale, rebody or conversion contract, as applicable.
|
|
|
For the Nine Months Ended September 30, |
|
|
||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Balance at the beginning of the year |
|
|
$ |
|
|
|
$ |
|
|
||
Current year provision |
|
|
|
|
|
|
|
|
|
||
Reductions for payments, costs of repairs and other |
|
|
|
( |
) |
|
|
|
( |
) |
|
Adjustments to prior warranties |
|
|
|
( |
) |
|
|
|
( |
) |
|
Balance at the end of the period |
|
|
$ |
|
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Adjustments to prior warranties include changes in the warranty reserve for warranties issued in prior periods due to expiration of the warranty period, revised warranty cost estimates and other factors.
Note 9 – Revolving Credit Facility
As of September 30, 2024, a revolving line of credit maturing on
12
connection with the standby letter of credit, the Company has agreed to pay an affiliate of OC III LFE (as defined below) a fee due and payable in cash of $375 per quarter.
The Company had
The standby letter of credit bears interest at the prime rate of interest (“Prime”) plus
The fair value of debt approximates its carrying value as of December 31, 2023.
Note 10 – Warrants
The Company issued warrants to OC III LFE II LP (“OC III LFE”) and various affiliates of OC III LFE (collectively, the “Warrantholder”) in previous years to purchase a number of shares of Common Stock equal to
The 2020 Warrant, issued in November 2020, was exercisable for an aggregate of
The 2020 Warrant, 2021 Warrant, 2022 Warrant and 2023 Warrant are collectively referred to herein as the “Warrant”. As of September 30, 2024, the Warrant is classified as a liability and subject to fair value remeasurement at each balance sheet date. The fair value of the Warrant at September 30, 2024 and December 31, 2023 was $
Note 11 – Mezzanine Equity
In May 2023, the Company issued to OC III LFE
The Preferred Stock ranks senior to the Common Stock with respect to payment of dividends and distribution of assets upon liquidation, dissolution and winding up. Dividends accrue at a rate of
The Company may redeem outstanding shares of Preferred Stock at any time by payment of the initial stated value plus accrued dividends. If the Company has not redeemed all of the outstanding shares of Preferred Stock on or prior to the fourth anniversary of issuance, the dividend rate will increase by
The Preferred Stock has similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock. As a result, and as the Company has the ability to redeem all of the outstanding shares of the Preferred Stock before the occurrence of a Dividend Rate Increase, the discount on outstanding shares of Preferred Stock is considered
13
an unstated dividend cost that is amortized over the period preceding commencement of the Dividend Rate Increase using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount of the outstanding shares of Preferred Stock by a corresponding amount. Accordingly, the discount is amortized over four years using the effective yield method. Issuance costs of $
Note 12 – Accumulated Other Comprehensive Income
The changes in accumulated other comprehensive income consist of the following:
|
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Three months ended September 30, 2024 |
|
|
|
|
|
|
|
|
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign currency derivative liability activity: |
|
|
|
|
|
|
|
|
|
|||
Unrealized loss on foreign currency derivatives |
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
Three months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Loss on pension settlement |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
|
|
|
|
- |
|
|
|
|
||
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign currency derivative asset activity: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on foreign currency derivatives |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Nine months ended September 30, 2024 |
|
Pre-Tax |
|
|
Tax |
|
|
After-Tax |
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign currency derivative liability activity: |
|
|
|
|
|
|
|
|
|
|||
Unrealized loss on foreign currency derivatives |
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
Nine months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Pension liability activity: |
|
|
|
|
|
|
|
|
|
|||
Loss on pension settlement |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Reclassification adjustment for amortization of net loss (pre-tax other income) |
|
|
|
|
|
- |
|
|
|
|
||
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign currency derivative asset activity: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on foreign currency derivatives |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
The components of accumulated other comprehensive income consist of the following:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Unrecognized pension income, net of tax of $ |
|
$ |
|
|
$ |
|
||
Unrealized (loss) gain on foreign currency derivatives |
|
|
( |
) |
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Note 13 – Stock-Based Compensation
Total stock-based compensation was $
14
requisite service period of
In June 2023, the Company issued
Note 14 – Employee Benefit Plans
The Company has a qualified, defined benefit pension plan (the “Plan”) that was established to provide benefits to certain employees. The Plan is frozen and participants are no longer accruing benefits. Generally, contributions to the Plan were not less than the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and not more than the maximum amount that can be deducted for federal income tax purposes. The Plan assets are held by an independent trustee and consist primarily of equity and fixed income securities.
The components of net periodic benefit cost for the three and nine months ended September 30, 2024 and 2023, are as follows:
|
|
Three Months Ended |
|
Nine Months Ended |
|
|||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Pension Benefits |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company made
The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions and employee earnings with discretionary contributions allowed.
Note 15 – Derivatives
The Company’s operations and expenditures in its normal course of business are subject to opportunities and risks related to foreign currency fluctuations. The Company currently utilizes foreign currency forward contracts to protect against downward currency exposure by hedging Mexican Peso denominated expenses against the risk of volatility in foreign currency exchange rates between the Mexican Peso and the U.S. Dollar.
During 2023 and 2024, the Company entered into forward contracts to hedge the Company’s anticipated and probable Mexican Peso denominated expenses against the foreign currency rate exposure.
The Company assesses the assumed effectiveness of the contracts at each reporting period. The foreign currency derivatives are recorded on the balance sheet at fair value. The Company records unrealized gains or losses related to changes in the fair value of the forward contracts in other comprehensive income as long as the contracts are assumed to be effective. Amounts accumulated in other comprehensive (loss) income are reclassified to the condensed consolidated statements of operations on the same line as the items being hedged when the hedged item impacts earnings or upon determination that the contract is no longer assumed to be effective.
The notional amounts of outstanding foreign currency derivatives are as follows:
|
|
September 30, |
|
|
December 31, |
|
||
Notional Amount |
|
2024 |
|
|
2023 |
|
||
Derivative instruments designated as hedges: |
|
|
|
|
|
|
||
Foreign currency derivatives |
|
$ |
|
|
$ |
|
||
15
The fair value of outstanding foreign currency derivatives designated as hedges are as follows:
|
|
September 30, |
|
|
December 31, |
|
||
Fair Value |
|
2024 |
|
|
2023 |
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Foreign currency derivatives |
|
$ |
|
|
$ |
|
||
Prepaid expenses: |
|
|
|
|
|
|
||
Foreign currency derivatives |
|
$ |
|
|
$ |
|
||
The pre-tax realized loss (gain) on foreign currency derivatives is recognized in the condensed consolidated statements of operations as follows:
|
|
|
|
Amount of Loss/(Gain) Recognized |
|
|
Amount of (Gain) Recognized |
|
||||||||||
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
Location of Realized Loss/(Gain) Recognized in the Condensed Consolidated Statements of Operations |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Derivative instruments designated as cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
Cost of sales |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Note 16 - Commitments and Contingencies
The Company is involved in various litigation matters from time to time, including intellectual property litigation, and warranty and repair claims incidental to the conduct of our business. Although the Company is taking actions to vigorously contest these matters, it is not possible to determine the outcome of these matters and proceedings. The Company does not believe these actions will have a material adverse effect on our financial position, results of operations or cash flows.
Note 17 – Loss Per Share
The net loss available to common stockholders and weighted-average common shares outstanding are as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Accretion of financing fees |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accrued dividends on Series C Preferred Stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss available to common stockholders - basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss available to common stockholders - diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Issuance of Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for Common Stock and participating securities. The Company’s participating securities are its grants of restricted stock which contain non-forfeitable rights to dividends. The Company allocates earnings between both classes; however, in periods of undistributed losses, they are only allocated to common shares as the unvested restricted stockholders do not contractually participate in losses of the Company. The Company computes basic earnings per share by dividing net income allocated to common shareholders by the weighted average number of shares outstanding during the period. Warrants issued in connection with the Company's long-term
16
debt were issued at a nominal exercise price and are considered outstanding at the date of issuance. The 2023 Warrant was issued out-of-the money and the Company will apply the treasury stock method to the 2023 Warrant when computing earnings per share. Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the period. Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and the assumed vesting of nonvested share awards. For the three months ended September 30, 2024 and 2023,
Note 18 – Related Parties
The following persons are owners of Fabricaciones y Servicios de México, S.A. de C.V. (“Fasemex”): Jesús Gil, a director of the Company; and Alejandro Gil and Salvador Gil, siblings of Jesús Gil. Fasemex owns approximately
The Company paid $
Commercial Specialty Truck Holdings, LLC (“CSTH”) is minority owned by James R. Meyer, a member of our Board, our former CEO, and beneficial owner of over
Related party asset on the condensed consolidated balance sheet of $
Note 19 – Income Taxes
The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective income tax rate was (
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements including, in particular, statements about our plans, strategies and prospects. We have used the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “likely,” “unlikely,” “intend” and similar expressions in this report to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. However, forward-looking statements inherently involve potential risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These potential risks and uncertainties relate to, among other things, the cyclical nature of our business; adverse economic and market conditions, including inflation; material disruption in the movement of rail traffic for deliveries; fluctuating costs of raw materials, including steel and aluminum; 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; and other competitive factors. The factors listed above are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could materially and adversely affect our business, financial condition and results of operations. New factors emerge from time to time and it is not possible for management to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws.
OVERVIEW
You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
We are a diversified manufacturer of railcars and railcar components. We design and manufacture a broad variety of railcar types for transportation of bulk commodities and containerized freight products primarily in North America. We also provide railcar rebody and repair services, railcar conversion services that repurpose idled rail assets back into revenue service, and supply railcar parts. We have been manufacturing railcars since 1901.
Total net railcar orders received for the nine months ended September 30, 2024 were 4,040 units, consisting of 2,645 new railcars and 1,395 rebuilt railcars, compared to orders for 3,356 units, consisting of 3,166 new railcars and 190 rebuilt railcars for the nine months ended September 30, 2023. Total backlog of unfilled orders was 3,611 units at September 30, 2024, compared to 2,914 railcars as of December 31, 2023. The estimated sales value of the backlog was $372 million and $348 million as of September 30, 2024 and December 31, 2023, respectively. The increase in the number of net railcar orders received for the nine months ended September 30, 2024 compared to the prior year period is primarily a reflection of the Company’s increased production capacity year-over-year.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023
Revenues
Our consolidated revenues for the three months ended September 30, 2024 were $113.3 million compared to $61.9 million for the three months ended September 30, 2023. Manufacturing segment revenues for the three months ended September 30, 2024 were $109.1 million compared to $58.6 million for the corresponding prior year period. The $50.5 million increase in Manufacturing segment revenues was primarily driven by an increase in the volume of railcar units delivered during the quarter. Railcar deliveries in the three months ended September 30, 2024 totaled 961 units, consisting entirely of new railcars, compared to 503 units in the same period of 2023, consisting of 382 new railcars and 121 rebuilt railcars. Corporate and Other revenues were $4.2 million for the three months ended September 30, 2024 compared to $3.3 million for the three months ended September 30, 2023.
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Gross Profit
Our consolidated gross profit was $16.2 million for the three months ended September 30, 2024 compared to $9.2 million for the three months ended September 30, 2023. Manufacturing segment gross profit was $14.3 million for the three months ended September 30, 2024 compared to $7.9 million for the three months ended September 30, 2023. The $7.0 million increase in consolidated gross profit and $6.4 million increase in Manufacturing segment gross profit reflects a favorable volume variance. Corporate and Other gross profit was $1.9 million for the three months ended September 30, 2024 compared to $1.3 million for the three months ended September 30, 2023.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses were $7.5 million for each of the three months ended September 30, 2024 and 2023. Manufacturing segment selling, general and administrative expenses were $0.5 million for the three months ended September 30, 2024, compared to $0.6 million for the three months ended September 30, 2023. Manufacturing segment selling, general and administrative expenses for the three months ended September 30, 2024 were 0.5% of revenue, compared to 1.0% of revenue for the three months ended September 30, 2023. Corporate and Other selling, general and administrative expenses were $7.0 million for the three months ended September 30, 2024 compared to $6.9 million for the three months ended September 30, 2023.
Operating Income
Our consolidated operating income for the three months ended September 30, 2024 was $8.7 million compared to $1.4 million for the three months ended September 30, 2023 driven primarily by the previously mentioned favorable volume variance, partially offset by the previously mentioned loss on pension settlement. Operating income for the Manufacturing segment was $13.8 million for the three months ended September 30, 2024 compared to $7.4 million for the three months ended September 30, 2023, reflecting the increase in railcars delivered during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Corporate and Other operating loss was $5.2 million for the three months ended September 30, 2024 compared to $6.0 million for the three months ended September 30, 2023.
(Loss) Gain on Change in Fair Market Value of Warrant Liability
Our loss on change in fair market value of Warrant liability was $110.0 million for the three months ended September 30, 2024 compared to our gain on change in fair market value of Warrant liability of $4.3 million for the three months ended September 30, 2023. The change in fair market value of Warrant liability is driven by the fluctuation of stock price used to remeasure the liability at the end of each period.
Income Taxes
Our income tax provision was $3.4 million for the three months ended September 30, 2024 compared to our income tax provision of $0.2 million for the three months ended September 30, 2023. The increase in income tax expense is primarily explained by the mix of forecasted earnings in the U.S. and Mexico, as well as the impact of permanent and discrete items predominantly in Mexico.
Net (Loss) Income
As a result of the changes discussed above, net loss was $107.0 million for the three months ended September 30, 2024 compared to net income of $3.2 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, basic and diluted net loss per share was $3.57, compared to basic and diluted net loss per share of $0.03 for the three months ended September 30, 2023.
Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023
Revenues
Our consolidated revenues for the nine months ended September 30, 2024 were $421.7 million compared to $231.5 million for the nine months ended September 30, 2023. Manufacturing segment revenues for the nine months ended September 30, 2024 were $407.3 million compared to $221.9 million for the corresponding prior year period. The $185.4 million increase in Manufacturing segment revenues was primarily driven by an increase in the volume of railcar units delivered during the current period, which includes delivery in the first quarter of 2024 of railcars that had been temporarily impacted by the closure of the U.S.-Mexico border in December 2023. Railcar deliveries in the nine months ended September 30, 2024 totaled 3,343 units, consisting of 3,233 new
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railcars and 110 rebuilt railcars, compared to 2,001 units in the same period of 2023, consisting of 1,686 new railcars and 315 rebuilt railcars. Corporate and Other revenues were $14.4 million for the nine months ended September 30, 2024 compared to $9.6 million for the nine months ended September 30, 2023.
Gross Profit
Our consolidated gross profit was $46.0 million for the nine months ended September 30, 2024 compared to $29.7 million for the nine months ended September 30, 2023. Manufacturing segment gross profit was $39.0 million for the nine months ended September 30, 2024 compared to $26.0 million for the nine months ended September 30, 2023. The $16.3 million increase in consolidated gross profit and $13.0 million increase in Manufacturing segment gross profit primarily reflects a favorable volume variance. Corporate and Other gross profit was $7.0 million for the nine months ended September 30, 2024 compared to $3.7 million for the nine months ended September 30, 2023.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses for the nine months ended September 30, 2024 were $23.5 million compared to $19.8 million for the nine months ended September 30, 2023. The $3.7 million increase in consolidated selling, general and administrative expenses for the nine months ended September 30, 2024 was primarily due to increases in stock-based compensation expenses of $1.8 million and legal expenses of $1.8 million. Manufacturing segment selling, general and administrative expenses were $1.4 million for the nine months ended September 30, 2024 compared to $1.9 million for the nine months ended September 30, 2023. The $0.5 million decrease in Manufacturing selling, general and administrative expenses for the nine months ended September 30, 2024 was primarily due to a $0.4 million decrease in consulting expenses. Manufacturing segment selling, general and administrative expenses for the nine months ended September 30, 2024 were 0.3% of revenue, compared to 0.9% of revenue for the nine months ended September 30, 2023. Corporate and Other selling, general and administrative expenses were $22.1 million for the nine months ended September 30, 2024 compared to $17.9 million for the nine months ended September 30, 2023. The $4.2 million increase in Corporate and Other selling, general and administrative expenses is primarily a result of the previously mentioned increases in stock-based compensation expenses and legal expenses in the current year.
Litigation Settlement
During the nine months ended September 30, 2024, we recorded a pre-tax litigation settlement of $3.2 million related to a dispute with a former lessee of our railcars. During the nine months ended September 30, 2023, we did not record any litigation settlements.
Operating Income
Our consolidated operating income for the nine months ended September 30, 2024 was $25.7 million compared to a $10.2 million consolidated operating income for the nine months ended September 30, 2023 driven primarily by the previously mentioned favorable volume variance, partially offset by the previously mentioned increase in selling, general and administrative expenses. Operating income for the Manufacturing segment was $40.8 million for the nine months ended September 30, 2024 compared to an operating income of $24.8 million for the nine months ended September 30, 2023, reflecting the increase in railcars delivered during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Corporate and Other operating loss was $15.1 million for the nine months ended September 30, 2024 compared to $14.6 million for the nine months ended September 30, 2023. The $0.5 million increase in operating loss is primarily a result of the previously mentioned increases in selling, general and administrative expenses.
Loss on Change in Fair Market Value of Warrant Liability
Our loss on change in fair market value of Warrant liability was $125.6 million for the nine months ended September 30, 2024, compared to our loss on change in fair market value of Warrant liability of $1.9 million for the nine months ended September 30,
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2023. The change in fair market value of Warrant liability is driven by the fluctuation of stock price used to remeasure the liability at the end of each period.
Loss on Extinguishment of Debt
There was no loss on extinguishment of debt for the nine months ended September 30, 2024. Loss on extinguishment of debt for the nine months ended September 30, 2023 was $14.9 million due to the settlement of the Credit Agreement through the issuance of Series C Preferred Stock and the termination of the M&T Credit Agreement and Forbearance Agreement (refer to our Annual Report on Form 10-K issued on March 18, 2024 for defined terms).
Income Taxes
Our income tax benefit was $3.3 million for the nine months ended September 30, 2024 compared to our income tax provision of $0.9 million for the nine months ended September 30, 2023. The increase in income tax expense is primarily explained by the mix of forecasted earnings in the U.S. and Mexico, as well as the impact of permanent and discrete items predominantly in Mexico.
Net Loss
As a result of the changes discussed above, net loss was $110.4 million for the nine months ended September 30, 2024 compared to $20.7 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, basic and diluted net loss per share was $4.07, compared to basic and diluted net loss per share of $0.94 for the nine months ended September 30, 2023.
LIQUIDITY AND CAPITAL RESOURCES
(In thousands, except for share and per share data and unless otherwise noted)
Our primary sources of liquidity are our cash and cash equivalent balances on hand and our credit and debt facilities outlined below.
Revolving Credit Facility
As of September 30, 2024, a revolving line of credit maturing on October 31, 2024 exists in the maximum aggregate principal amount of up to $45,000, secured by a standby letter of credit in the principal amount of $25,000 and the Company’s accounts receivable. In connection with the standby letter of credit, the Company has agreed to pay an affiliate of OC III LFE (as defined below) a fee due and payable in cash of $375 per quarter.
The Company had no outstanding debt and remaining availability of $41,373 under this facility as of September 30, 2024. As of December 31, 2023, the Company had $29,415 in outstanding debt and remaining availability of $10,853 under this facility.
The standby letter of credit bears interest at the prime rate of interest (“Prime”) plus 1.5%, or 9.5% as of September 30, 2024. Advances secured by the Company’s accounts receivable bear interest at Prime plus 2%, or 10% as of September 30, 2024.
The revolving line of credit was subsequently amended on October 30, 2024 to extend the maturity date from October 31, 2024 to December 31, 2024, decrease the maximum aggregate principal amount from up to $45,000 to up to $20,000, and remove the standby letter of credit in the principal amount of $25,000 along with the $375 quarterly fee in connection with the standby letter of credit.
Warrant
The Company issued warrants to OC III LFE II LP (“OC III LFE”) and various affiliates of OC III LFE (collectively, the “Warrantholder”) in previous years which are exercisable on the terms described in Note 10 - Warrants.
Preferred Shares
In May 2023, the Company issued to OC III LFE 85,412 shares of non-convertible Series C Preferred Stock, $0.01 par value per share, with an initial stated and fair value of $85,412 or $1,000 per share (the “Preferred Stock”). As of September 30, 2024, 85,412 shares of the Preferred Stock remain issued and outstanding. The Company classifies the Preferred Stock as mezzanine equity (temporary equity outside of permanent equity) since a deemed liquidation event following a change of control may require redemption of the Preferred Stock that is not solely within the control of the Company.
The Preferred Stock ranks senior to the Common Stock with respect to payment of dividends and distribution of assets upon liquidation, dissolution and winding up. Dividends accrue at a rate of 17.5% per annum on the initial stated value. Accrued dividends,
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whether or not declared, are cumulative. The Preferred Stock will not participate in any dividends paid to the holders of shares of Common Stock.
The Company may redeem the outstanding Preferred Stock at any time by payment of the initial stated value plus accrued dividends. If the Company has not redeemed on or prior to the fourth anniversary of issuance, the dividend rate will increase by 0.5% for every quarter thereafter until redeemed in full. OC III LFE has the right to request the Company redeem at any time after the sixth anniversary of issuance. If the Company does not redeem within six months after receipt of a redemption request, OC III LFE will be entitled to certain limited voting rights.
Additional Liquidity Factors
Our restricted cash, restricted cash equivalents and restricted certificates of deposit balances were $3.7 million and $0.7 million as of September 30, 2024 and December 31, 2023, respectively. Restricted deposits of $0.3 million as of each of September 30, 2024 and December 31, 2023 relate to a customer deposit for the purchase of railcars. Restricted deposits of $0.1 million as of each of September 30, 2024 and December 31, 2023 are used to collateralize standby letters of credit with respect to performance guarantees. The standby letters of credit outstanding as of September 30, 2024 are a requirement as long as the performance guarantees are in place. Restricted deposits of $3.3 million and $0.3 million as of September 30, 2024 and December 31, 2023, respectively, are used to collateralize foreign currency derivatives.
Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our cash balances will be sufficient to meet our expected liquidity needs for at least the next twelve months. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit facilities, any other indebtedness and the availability of additional financing if needed. We may also require additional capital in the future to fund working capital for various reasons, such as future railcar demand; payments for contractual obligations; organic growth opportunities, including new plant and equipment and development of railcars; joint ventures; international expansion; and acquisitions, and these capital requirements could be substantial.
Based upon our operating performance and capital requirements, we may, from time to time, be required to raise additional funds through additional offerings of our equity or debt and through long-term borrowings. There can be no assurance that long-term debt, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse effect on our results of operations and financial condition.
Cash Flows
The following table summarizes our cash flow activities for the nine months ended September 30, 2024 and 2023:
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2024 |
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2023 |
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(In thousands) |
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Net cash provided by (used in): |
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Operating activities |
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$ |
39,047 |
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$ |
(26,410 |
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Investing activities |
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(3,731 |
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(615 |
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Financing activities |
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(31,046 |
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4,492 |
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Total |
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$ |
4,270 |
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$ |
(22,533 |
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Operating Activities. Our net cash provided by (used in) operating activities reflects net loss adjusted for non-cash charges and changes in operating assets and liabilities. Cash flows from operating activities are affected by several factors, including fluctuations in business volume, contract terms for billings and collections, the timing of collections on our contract receivables, processing of payroll and associated taxes, payments to our suppliers and other operating activities. As some of our customers accept delivery of new railcars in train-set quantities, variations in our sales could lead to significant fluctuations in our operating profits and cash from operating activities.
Our net cash provided by operating activities for the nine months ended September 30, 2024 was $39.0 million compared to net cash used in operating activities of $26.4 million for the nine months ended September 30, 2023. Our net cash provided by operating activities for the nine months ended September 30, 2024 reflects changes in working capital, including a decrease in inventory of $40.9 million, offset by an increase in accounts receivable of $17.9 million. The decrease in inventory relates to raw materials on hand at December 31, 2023 used in production of railcars delivered in 2024, as well as finished goods on hand at December 31, 2023 delivered in 2024 due to the closure of the US-Mexico border in December 2023. The increase in accounts receivable relates to the timing of collections with current railcar builds based on contractual payment terms. Our net cash used in operating activities for the
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nine months ended September 30, 2023 reflects changes in working capital, primarily an increase in inventory of $57.2 million related to inventory to be used in production of railcars to be delivered during the fourth quarter of 2023, offset by an increase of $19.6 million customer deposits received during the nine months ended September 30, 2023.
Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2024 was $3.7 million and consisted of capital expenditures related to the enhancement of machinery and equipment on current production lines of our facility in Castaños, Coahuila, Mexico (the “Castaños Facility”). Net cash used in investing activities for the nine months ended September 30, 2023 was $0.6 million and consisted of $8.4 million proceeds from the sale of railcars available for lease, net of selling costs, offset by capital expenditures of $9.0 million related to the expansion of the Castaños Facility.
Financing Activities. Net cash used in financing activities for the nine months ended September 30, 2024 was $31.0 million which included net repayments on revolving line of credit of $29.4 million and principal payments on the finance lease of $1.6 million. Net cash provided by financing activities for the nine months ended September 30, 2023 was $4.5 million which primarily included $13.3 million proceeds from the issuance of Series C Preferred Stock, net of issuance costs, partially offset by net repayments on revolving line of credit of $7.9 million.
Capital Expenditures
Our capital expenditures were $3.7 million in the nine months ended September 30, 2024, compared to $9.0 million in the nine months ended September 30, 2023, a decrease primarily due to the completion of the Castaños Facility expansion in 2023. We anticipate capital expenditures during 2024 to be in the range of $5.0 million to $6.0 million, primarily related to the enhancement of machinery and equipment on current production lines at the Castaños Facility.
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Item 4. Controls and Procedures.
Management’s Report on Internal Control over Financial Reporting
The Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 30, 2024. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Information regarding legal proceedings is available in Note 16 - Commitments and Contingencies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
10.1 |
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31.1 |
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31.2 |
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32 |
101.INS |
Inline XBRL Instance Document |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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Exhibit 104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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FREIGHTCAR AMERICA, INC. |
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Date: November 12, 2024 |
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By: |
/s/ NICHOLAS J. RANDALL |
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Nicholas J. Randall, President and Chief Executive Officer (Principal Executive Officer) |
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Date: November 12, 2024 |
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By: |
/s/ MICHAEL A. RIORDAN |
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Michael A. Riordan, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer) |
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Date: November 12, 2024 |
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By: |
/s/ JUAN CARLOS FUENTES SIERRA |
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Juan Carlos Fuentes Sierra, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) |
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