"Harsh winter weather" made the going tough for FreightCar America, Inc. during the first quarter, resulting in depressed earnings and revenue, FCA CEO Joe McNeely said during a teleconference Monday, May 5, 2014.
FCA last Friday reported a first-quarter net loss of $6.9 million, or 58 cents per diluted share, on revenue of $56.1 million. That compares with a net loss of $2.6 million, or 22 cents per diluted share, in the first quarter of 2013, on revenue of $87.6 million.
"We had a disappointing start to 2014 with a harsh winter weather significantly impacting operations at all of our facilities," McNeely said on the conference call. "The inclement weather led to a shutdown at our plans for more than 20 shifts and caused supply disruptions and production and efficiencies. This combined with production line changeovers resulted in railcar deliveries that were 30% lower than we had planned in the first quarter.
"This severe winter weather also had a significant unfavorable impact on our Services segment," he continued. "The harsh weather led to a higher coal train utilization which reduced the number of coal trains released for maintenance across the industry. This lowered volume through our shops and sales of repair parts. We do expect a rebound in repair and parts demand as the railroads improved our operating performance and coal trains to come available for maintenance."
McNeely did cite "a positive note" as FCA "received a significant order for new Eastern service coal cars during the quarter."
As well, FCA delivered 753 railcars in the first quarter of 2014, which included 363 new and 390 rebuilt railcars. The new car deliveries included 75 cars added to the lease fleet. This compares with 1,073 railcars delivered in the first quarter of 2013, including 448 new cars and 625 rebuilt cars. There were 1,101 railcars delivered in the fourth quarter of 2013, of which 190 were new, 99 were used, and 812 were rebuilds. Total manufacturing backlog was 7,727 units at March 31, 2014, compared with 2,082 units at March 31, 2013 and 6,826 units at December 31, 2013.
In a note to clients late Monday, KeyBanc Capital Markets Inc. analyst Steve Barger observed that FCA's rail sector performance was strong enough to merit his recommending a "Hold" rating on the company's stock, in part because "RAIL ended the quarter with a backlog of 7,727, which is the company's highest since 4Q11.
"Railcars under lease ended the quarter at $62 million vs. 4Q13 of $53 million," Barger said. "RAIL does not provide earnings guidance, but did maintain its 7,000 car delivery expectation for FY14. Overall, we remain cautious on RAIL shares given the low visibility and inconsistent operational performance."