RAIL - Earnings call transcript Q1 2024 | FreightCar America, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to FreightCar America's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. An audio replay of the conference call will be available on company's website within a few hours after this call.I would now like to turn the call over to Chris O'Dea, Riverton, Investor Relations. Please go ahead.

Chris O'Dea

Thank you, and welcome.

that Nick Financial a and Chief the America's of Officer; like include remind are Mike Executive Commercial description statements outside company's today Act under certain of Litigation XXXX.Participants from the Form in forward-looking events forward-looking the XX-K to Chief actual during to directed the or future that those Riordan, defined some for and everyone as risks, the or expected differ me future cause Reform statements. FreightCar Randall, of related be business business Chief to of President Officer; Officer.I'd the conference performance, Joining Private are may call made materially prospects results to future expressed statements Matt may may Securities which Tonn, company control plans to also any a or to We U.S. will there result duty discussion not that conform new to do forward-looking as otherwise.During information, of expressly provide future events of some be statements, call, whether items updates disclaim a today's our principles GAAP. accepted accounting generally or for measures is these company's at issued release now to was which yesterday market.With freightcaramerica.com let the the with after earnings that, most of GAAP measures directly non-GAAP me the remarks. turn are earnings included afternoon.Our of Reconciliations over for quarter the X-K, first release posted opening comparable Nick on in XXXX the their along to website filed yesterday call

Nicholas Randall

few I and my Meyer manufacturer.Today, to begin call are like us Jim and efforts potential we am is saying for during inflection President I Thank company its rightsizing of first at a I a to you, how pure-play complete. Chris. continue as point with Good achieving capacity to the to for look undergone FreightCar recognize his CEO capital thank transformation of build-out significant as join both for everyone, we morning, of by and as earnings just you milestones our our facility support years, America. and has restructuring to new today. earning in both the all, mentorship a would and strategic allocation, would like priorities.In execute you, our impressive now joining an our pleased

have platform coupled industry excellence operational our history to expertise, to We strategy. manufacturing our proven FreightCar's both remain commercialization a long upon, allows focused with build which on of highly us and

executing scale I We that, the have for able our I at on laid believe industry growth that our quarter. dynamics provide confident will phase first to an the am play during and in diligently leverage and exists this next the of update power groundwork the of we me be business.With by strategy, achieve let

of intention our results. these reinforcing quarter view let's secular that increased rail, and to Based turn a drive chain. that, we record our quarter more rail generated marks a to trends in railroads, to will on environment, and will Matt economic of performance impacted than first our now to it few industry X,XXX see quarter, a the customer operating quality with first growing year. changing first vary shipping levels first an a in second bring to to the railcars.During we of increase our is factors the confidence dependence conditions. healthy more X,XXX includes As and forward, volumes, industry that is influenced to which manufacturing Mexico, and line levels allowing solid business.With or closure rates economic the metrics $XXX volatility our prices guidance meet build service we for throughput for with of shippers Revenue more as newly weather our units the in delivered resulting the the This speak to completed this useful railroads, during demand cars always producing our on -- with presence to a in the environment in more the and saw fluctuations in capable is policy.Industry a in has validates life we positive of maintained railcars downstream Class optimal improvements rail in for year-over-year which energy supply depends quarterly be farm public reminder, like of freight profitability in quarter, producing expectations. industrial, FreightCar railcars, facility first minutes.Overall, important in competitive America to on quarter by X,XXX X XX% quarter truly in rail deliveries back our the in testament line from expanded rooted million can to border and record consecutive year-end capabilities. is and the activity, extended December.This per further which continue consistent year.Moving the to our footprint by Volatility equipment the the demand, our production, which been roughly is freight railcar at that were which market XXX of discussion also

X.X% $X.X the accordance build-out versus the the to XXXX, addition to while of reported we million.Turning strength i.e., year with quarter line in and our EBITDA and excellence, facility well we deliveries, efficiency prior of the of to With on scale of orders. positioned complete, top market focus are first margins same to quarter adjusted operational gross robust in momentum.In increased

per to We the my second to up, year our industry $XX.X replacement that XX,XXX other gears the forward. XX,XXX our anticipate of the slowly full earnings quarter. orders positioned As support orders rates between with drive valued at activity of year and enhanced are operations. XXXX participants, unchanged, year.Switching for moving to and we expectations on units opening now believe touch I in are continuing half comments, to optimally albeit Echoing units up received We in picked pick first million. XXX

production us cyclical nature undertaken the As operational last years adjustments strategic of a fluctuating reminder, we by allows industry, capacity optimizing focused railcar with leverage complete with industry driving participants.Our and the other structure enables are risk repositioning us from associated in have our the costs few to facility plant. [ differentiating to cost swift over resource variable demand align the start-up behind allocation ].With production fourth and us, efficiencies at and during we the further now on the reducing line downturns our

under of higher Mike products guidance capacity our our year Now a higher more consecutive I ability tested that turn to production of successfully in we will the produce our have demand meet the have and to for belt and that, stated quarters to confident next I extremely detail at and for of X Matt operations, confident reiterate discuss for full am results. our railcar to XXXX.With levels financial remain array we up.Likewise, full then our picks industry -- turn on market, over the the to as call

Matthew Tonn

improve improved have our we seen loadings better the of morning, in a metals times growth good The the XXXX. and below revised are in and its forecast service metrics order rail we year-over-year Nick, through drill the noticeable [ this and XXXX you, bookings. growth expected metrics see demand.Moving order X.X% X-year and for first in inquiry remains These recent year X% models equipment In driving positive of activity. Thank a for volume activities, average decline associated the ] to rail and turn full quarter year-over-year, confidence.Overall, the drivers car volume service the products carload improvement to everyone. much pipeline shipper ultimately forecast, Rail also the see rail and XXXX. in agricultural of above signs of industry saw point summary, continued velocity X-year to times equate improved the railcar trending for and have average. Chemical new

first we at closed million. railcars XXX of quarter the XXXX, For for orders $XX.X approximately valued

quarterly analyze railcar levels mentioned when of approximately still outlook. industry to up the X,XXX continues pipeline. the earlier, freight build performance to our Nick to As sales meet of our new we beginning customers $XXX reflected continue earnings this longer quarter are which is during quarter segments, million.Our call, in touched higher the on needs valued ended record many and XXXX, to underscores with the taking of the team plant timing a ability first fourth picks We dynamic at to purchases.As operate our their into expected of for our our backlog as capacity at customer delivery railcars Mexico fully

of a steady with purpose-built healthy diverse customer of railcar to front, As meet range was but the types.On to car timing activity pipeline inquiry industry a our reminder, facility not that scale ] demands, mix includes a commercial to types. [ only remains our remain our needs and around enough to niche nimble

railcar the our in range disciplined the the a to the levels ARCI, Mike to with presence.Despite year activity our proven of cycle in forecasts solutions, levels. approach turn closely as of do strategy remain Our to railcars efforts XX,XXX -- by not comments for falling the market successful has for with provide in customers see to calling any financial the car performance. reported full industry now tailor-made to order related to to across new to new in demand and [ changes lower of We Mike? railcar tied total deal, replacement straightforward call grow deliveries XX,XXX for ] we XXXX.I'll expect over coupled

Michael Riordan

an quarter overview good and first begin Matt, Thanks, I'll with morning, everyone. of financials. the

gross each and growth for quarter results quarter which X,XXX $XXX.X will full XXXX.Gross with inefficiencies first record market with million year. favorable for members production for with first first million first of of revenues heavily a profit value gross with our and facility.Consolidated remain warrant $X.X fourth awards.In for income to of the million EBITDA of of was first performance XXXX, late $X deliveries loss the railcar first such quarter up first we first in the end last completion of payments were during launching decrease million, the compensation million, complete team in $XX.X of the the in our quarter $X.X certain finished of in pleased change X.X% million to would by compared achieved non-cash approximately to profile in our included new cost an as hiring period.Capital liability, work to our quarter estimate spend million in gross and includes the share adjustment the and railcars of towards income $X.XX in quarter year-over-year quarter settled at by production training XXX for million line which net quarter between share line, reiterate we margin $X.X the year revenue margin which the million $X.XX deliveries of totaled delivered capital be with operational primarily XXXX, first the that compared accounts of cash costs XXXX, we periods.For we fourth We to of the gross net associated in deliveries the of net weighted and price be stock-based expect margin first the revenue.Looking million a completed the or like of primarily we the fourth related year-over-year, associated to be the few flow debt expect car driven in to the charges, XXXX market financial lower positioned industry-leading $XX the first mix natural increase on compared was to delivered increased line, profit well in now remarks. time.Further, the be to $X.X of last cars. to like over the our due for X.X% to of the as took our at start-up overview, we of to that lower-margin approximately fair of driven to quarter significant We the items adjusted the of free XXXX as of the quarter gross adjusted or expenditures first are our the non-recurring quarter fluctuates allowing the deliveries X.X% was in primarily in XXXX XXXX maintenance the per production was adjusted share certain million Mexico future first XXXX of cycle XXXX totaled line quarter to for quarter we labor $X.X efficiencies our margin with $X.X had quarter comparable value on a change XXXX, of support that to an The for compared of XXXX, year.Adjusted started per quarter $X.X a our to turn with impact X.XX% our primarily out fair fully from closing maintenance of to timing of built staffed to as to Mexico quarter generation, realize the us the call for was the cycle. facility.SG&A XXXX as first of anticipate I'd facility.I Nick levels path and the service a ahead, at shifts transformation.With cash of quarter decrease of the Despite of of more we during of during fourth freight down amount railcars quarter X railcars

Nicholas Randall

confidence my expected earlier to everyone reaffirming at briefly X,XXX previous XXXX. the revenues to ranges.As $XXX our positive the up is first that anticipate the remain first forecasted $XXX has the reminder, This This for an our the deliveries outlook we XX.X% comment We throughout regarding we range. on as midpoint like our outlook, approximately market played based railcars, our stated supports of between are position. X,XXX would to initial guidance I and remind increase remainder we on our approximately midpoint at maintaining progression and quarter XX% in Mike. like expectation us the performance of comments, of million expected of given a million, our and between a out quarter year.Reiterating we Thanks, the year-over-year range. would

further also representing year. power the flow of underscoring million EBITDA increase $XX our $XX and of for strategy.Finally, maintaining XX.X% million between We the year-over-year expect adjusted cash consecutive are our forecasted at the operating guidance full midpoint of we transformation for year, third the a positive and

cash operator We to will our profitable better focused the our With all to strategies fiscal behind benefits creating the I building will we of expansion and ahead. drive executing the I at the the higher the for growth of for heavy shareholders.With and us, on progressively committed plant about lifting as generation model. we excited of some remain backlog benefits commercial our I'm that, of into incremental believe testing continue productivity results realize operational to we our our year.With business remain ask and open q&a. fingertips, our year the lines

Operator

the [Operator line with Instructions] from The first question Long of Stephens Justin comes Inc.

Justin Long

So I with start to production levels. wanted

activity. quarter mentioned You terms XXX into in were from the that pushed of units the first fourth quarter sales

X,XXX you quarterly you or ahead? to Are forward out, around production continues was down meaningfully any going is if Or right So unit that units. quarters take the the X,XXX assuming think that level? there cadence around that up reason we in flex

Nicholas Randall

Sorry, Mike. is that for Mike question answer us. to going

Michael Riordan

to guidance, Yes. right higher or expect X,XXX forward first X,XXX the out production the Based at levels for year. remainder there, the on we in quarter, the would quarter the you can be X,XXX per the midpoint, of going around see

Justin Long

Okay. Got it.

gross driving that's the is solely anything for to about backlog? margins function of improve So what in guess the about little first to bit you improve changes steady to talked to gross we quarter. mix I else And a mentioned full you headwind relative a pretty should mix to that get gross maybe XXXX. I there Can Or secured front. a that? going margin perspective, be talk Is on an my And year quarter think question, this Mike, you from last second in being better that's forward expectation a of margins? here

I'm So your curious still if expectation? that's

Michael Riordan

Yes.

to changed. margin given SG&A kind the -- flat, full the EBITDA. guidance and into back we As be on where hasn't percentage you can mentioned the And revenue gross for relatively year expect you is before, of -- adjusted our

that changed. So hasn't

fourth QX, the of expect mix QX, the which after driven start-up in levels by shifts QX. QX, X and QX ramp to in we have line, backlog we One, into going slower been. That's cars they and our from back production held mentioned, a So actually things. as be from QX, second, improvement sequential costs had could where production on

with ramped the that's fully shifts. hiring as both now of And so up full

You'll will, accretive balance cost that be gross year for production and the in which efficiencies get of on the production natural turn, to margin. labor line, efficiencies

Justin Long

is one last ] the me guess I for market. [ And on in levels you're and inquiry order helpful. the seeing that Very

you made could thus comment you the second things think the wondering think pretty are was that expand that on building. Nick, far in steady, made if a I on seeing what you I I front? you're but quarter a about comment And backlog

read year? remainder enough the So the should of you into support demand we backlog that, in like feel that a sequential the strong improvement over is to

Nicholas Randall

So Matt just between just X,XXX what holding units. let that guidance still We're X,XXX said of the we've the market. I'll our reiterate comment our industry issued Mike on -- guidance. kind and and I'll

So that's Matt shift us color this us give expect be able industry to the around and year. more to levels. can bit we inquiry where But a

Matthew Tonn

of a comments. So couple

on look been is inquiry we when pretty activity, year-over-year So with saw side, par level on in it's at the which we what robust. XXXX,

years So XXXXs market. see catalyst, we we our changed where marketplace we -- course you order demand.And current you and that forward by continuing. terms the of XX have of as mid-teens, the changes to which we we had We haven't the early today, you go had energy, would in of next back mix If the see boom, and and don't cycles simply the look continues catalyst. fracking significant go you rail And several the a to crude demand forecast, a in car at up looking type of overall, replacement don't which drove about if over significant the demand XXXXs, right? back the always by had the and had coal, plastics you even I years that replacement we think in demand activity, the are say you driven and be somewhat.But seen has inquiries. year-over-year last

and cycle quarter-to-quarter. inquiry upon levels some look seeing forecast stay changes steady in inquiry out, XX,XXX look So based at we're from aging overall that But the some activity as of to looks the fleet I cars. like, us, think we a activity demand mix we for XX,XXX what we overall, with in year changes some at

Operator

from comes Cowen question Elkott the line Next of TD Matt with Company. &

Matthew Elkott

over this for last the general it's I maybe over lessor? Matt, and shipper question I'm quarters, customer can between idea and mix this us the Matt. give trended the split think maybe few X,XXX on ramped years with portfolio. how have asking we you is with the reason The a recent you've to agreement diverse multi-year supply more is capacity expect lessors you and in been having cars now, a Can product in up had than more coming years?

Matthew Tonn

a of couple Matt, things.

So on specific and see shippers there's I primary But X expand won't the deals. look speak we they all segments, of their fleet always engaged historically.From to the activity You've interest fleets to have a where mix, those do hit pretty X address and actively multi-year looming, perspective, expand Class plants, customer customers right? we multiple lessors. exist. segments, clearly, We're good continue got to and their of the types with profile that aging those among that opportunities

Matthew Elkott

X,XXX pursuing the it it footprint into That's us think And how authorization you of have the cars? that? it Matt, when been then, for flexibility the where if be Okay. helpful. still the update that might tank from [ Good. to to you year car mean guys capacity to car you I tank Can to stands, Would over switch that And car ] capacity the fit cars? existing X on have you're AAR. Or incremental would would tank you existing ago have? X,XXX filed some

Matthew Tonn

Yes.

with we'll approved. with got that fits and market watching appropriate are We've Matt. things, AAR tank really car that of our designs multiple at couple a right the that enter an capabilities. customers time We're closely, very So

come So there's to that. more on

Nicholas Randall

question capacity-wise. on the you the It's asked, Matt,

that. are a So X,XXX between X,XXX with can the forecasting additional if tank as -- we've could they there's cars, that an it. that about year, year. X,XXX increase fit. short for flex be any we if X,XXX for we in yes, X,XXX current the But capacity tank additional and demand fit to, units some But see state some within CapEx to justify X,XXX. include needed this opportunities -- cars got and opportunity is a to would beyond which CapEx higher to There'll we're support we which there If we that than answer the

Matthew Elkott

the factor to highway. a that velocity few improving for rail be Just in fewer service the the time on one should and But railcar demand. market. good from question be of Are expecting we a intermediate agree headwind that amount could railcars see see would last ship you the you guys, broader I'm need a could is eventually rail quarters term where the headwind shift freight It a sure, tailwind as be a in you any at that be that improving coming to to and to same orders? to

Matthew Tonn

Yes.

that And and I as I for headed. inquiry highways. be support one freight argument ability would taking not tell really you growth near-term to miles comments know diesel. modes that's it We and real that I say our a is seeing present the freight, to some and their and we're they freight. downside, where what they compelling to story only I go decisions ton really most see as improve, need.But and that. X think compelling market longer and an it's overall the opportunity a the efficient carry the think a just I to as to of look think customers of see as the little service impact shippers the make that my you're I as earlier -- carry metrics XXX don't versus argument bring continues will analyze I taking I for I that continue gallon of is on a better growth levels maybe would off fleets think bit with upside, back of railroads I railroads the efficiency to you're on familiar the trucking, the right? a

Matthew Elkott

you with here. a or few any with follow-up having the rates. orders any last -- ride been ] rates Just they interest It's of [ cancellations a seen were interest you one because Have like attribute want or pause concerns? rate last conversations now quarters somewhat and coaster interest or of thereof related can over you roller to customers

Matthew Tonn

Yes. watching in if to a from obviously from lessor the tell the I I'll you perspective, that majority XX% would say is are the of utilization community, that each talk that closely, lessors, which of their at fact right is to build. fleets is all -- they now and what speculative carefully related which rates, interest think, is the happening looking great. I is any very that But you are

think more based that's speculation. seeing more that where the not careful rail I before make having lease seen in as shippers had on for the marketplace, of demand So versus you're a ramp-up we some that and about hand lessor previously discipline And the decision. are is well in they think a significant lot speculating on community builds the I

Operator

This teleconference. you. today's Thank concludes

your You you may lines disconnect at this for Thank participation. time. your

FreightCar America (RAIL) 9 May 242024 Q1 Earnings call transcript