FreightCar America(US:RAIL)2021-03-24 18:47Financial Data and Key Metrics Changes - Consolidated revenues for Q4 2020 were $60.6 million, up 35% from $44.9 million in Q4 2019 and significantly higher than $25.2 million in Q3 2020 [23] - The company delivered 477 railcars in Q4 2020, compared to 163 in Q3 2020 and 439 in Q4 2019 [23] - Gross profit improved to $5.5 million in Q4 2020, a significant recovery from a loss of $8.1 million in Q4 2019, marking the first positive gross profit since June 2019 [25] - SG&A expenses for Q4 2020 totaled $8.7 million, up from $7.59 million in Q4 2019, attributed to retention payments and bonuses [26] - The consolidated operating loss for Q4 2020 was $9.2 million, slightly worse than a loss of $9 million in Q4 2019, impacted by $19 million in impairment charges [27][28] - Adjusted EBITDA for Q4 2020 was a positive $1.7 million, while EBITDA loss was $11.6 million [33] Business Line Data and Key Metrics Changes - The company transitioned from the Shoals facility to the new Castaños facility, which began production in July 2020 and started shipping in November 2020 [11][12] - The Castaños facility is designed for flexibility and efficiency, with a capacity to produce approximately 2,000 railcars per year [15][16] - The company has removed over $25 million in fixed costs compared to 2019 and reduced breakeven production levels by two-thirds [13] Market Data and Key Metrics Changes - The railcar industry is experiencing the lowest demand cycle since 2009, but there are signs of recovery with increased rail traffic and reduced storage numbers [38][40] - Order activity for Q4 2020 was 90 railcars, down from 385 in Q4 2019, but there is optimism about new inquiries and customer sentiment improving [39][41] Company Strategy and Development Direction - The company aims to become the most cost-effective and highest quality producer in the railcar industry, focusing on growth after completing its transformation [14][48] - Plans include constructing an in-house fabrication shop to enhance capabilities and efficiencies [17] - The company is positioned to be selective in the business it pursues due to its smaller footprint and improved cost structure [18][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising steel prices and an aggressive pricing environment but remains optimistic about future profitability [18][57] - The company expects to deliver between 1,400 and 1,600 railcars in 2021, which is double the deliveries in 2020 but still below historical averages [20][43] - Management is encouraged by customer feedback and the positive morale at the new facility [19][46] Other Important Information - The company completed its exit from the Shoals facility without significant cost overruns and returned the facility to its owner as planned [9][10] - The transition to the Castaños facility has exceeded internal expectations in terms of efficiency and production capabilities [60][61] Q&A Session Summary Question: Can you help bridge the difference in gross margins from Q4 2019 to Q4 2020? - Management attributed the improvement to a well-priced order and a more efficient cost structure [56] Question: What are the expectations for gross margins going forward? - Management refrained from providing specific guidance but expressed confidence in a more attractive cost structure despite steel price pressures [57] Question: Have any orders been received in 2021? - Management did not disclose specific orders but noted a broader range of inquiries compared to the previous year [58] Question: Why hasn't order activity picked up more significantly? - Management indicated that order processes take time and that improved customer sentiment is expected to lead to increased activity [66][70] Question: Is there a change in the target customer profile? - Management emphasized a focus on being a pure-play manufacturer and maintaining efficiency in model changeovers to meet customer needs [76][78]