Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=220968
Story Retrieval Date: 12/7/2013 7:19:12 AM CST
FreightCar America Inc. shares came under pressure Thursday after the Chicago-based railcar maker, crippled by declining new orders and a slowing demand for coal, announced worse-than expected results. The stock dropped 6.6 percent on the New York Stock Exchange, closing at $18.86, down $1.34.
In its first quarter FreightCar had a net loss of $2.6 million, or 22 cents per diluted share, off sharply from the year ago quarter when it had a net income of $9.7 million, or 81 cents per diluted share. Analysts estimated earnings of 6 cents a share.
Revenues plummeted 60 percent to $87.6 million from $219.1 million.
FreightCar America specializes in manufacturing and leasing freight cars that carry coal. A sharp decline in coal demand has pinched orders. Railcar orders dramatically declined in the first quarter of 2013 to 274 from 1,244 a year ago.
The company said it's on track to begin production of non-coal car manufacturing through a subleased facility in Shoals, Ala.
“RAIL is in the early stages of transitioning to becoming a more diverse manufacturer of railcars," said Longbow Research analyst Mathew Brooklier. "However, we believe coal railcar market fundamentals have yet to bottom. And the transition is likely to take time, incremental capital, and carry risk." Brooklier had estimated first-quarter revenues of $106.6 million.
Ed Whalen, chief executive officer, stated in a release, "as I have previously stated, continued uncertainty in the freight railcar market will make 2013 a challenging year,”
Senior Vice President of Marketing and Sales Theodore Baun said in a conference call that industry-wide orders have come to a halt and backlogs have increased. Baun added that weakness in metallic ores and metals contributed to the overall decline in loadings.
Whalen said the company will remain focused on the factors it can control in 2013.
“I am confident that FreightCar America’s market position, strong balance sheet and the execution of our strategic initiatives will enable the Company to capitalize on its long-term opportunities and the eventual freight railcar market recovery,” he stated.