Tuesday, September 22, 2009

Big beat by FreightCar America (RAIL)

AlphaNinja - I note enough bad news from the economic "frontlines," why not share some good news.
This morning, FreightCar America (RAIL) announced second quarter earnings per share of 59cents, trouncing the 10cent estimate. Hell, that trounces the FULL YEAR estimate, standing at 42cents. This was truly a "high-quality" earnings beat, led by a huge increase in gross margin. The stock is up 18% on the news. Conference call starts in less than an hour.

Notable from the release - by far the tripling in gross margin is the most important, as it allowed the company to increase earnings by $7million despite sales down nearly a third. Also note that net orders are up from the year-ago quarter, signalling better results up ahead.

-->> "The gross margin rate for the second quarter of 2009 was 15.3% compared to 5.2% for the second quarter of 2008. The increase in the rate was driven by the favorable mix of new car sales and an increase in parts sales and leasing revenues."

-->>Net orders for new railcars totaled 694 units in the second quarter of 2009 compared to 538 units ordered (new orders of 1,438 units less cancelled orders of 900 units) in the second quarter of 2008 and orders of 339 units for the first quarter 2009. Railcar deliveries totaled 1,207 units in the quarter, compared to 2,326 units delivered in the second quarter of 2008 and 974 units delivered in the first quarter of 2009. Total backlog of unfilled orders was 1,472 units at the end of the quarter, compared with 1,985 units at the end of the first quarter of 2009.

-->>“We continue to focus on cash and preserving our strong balance sheet, recognizing how critical liquidity is in this market. The success of this initiative is reflected in our continuing strong cash position, with cash on hand of approximately $150 million at both the end of June and the end of August. Additionally, our two credit facilities, with a total capacity of $110 million, remain undrawn.”
-->> Mr. Ragot closed by stating, “We continue to execute on several initiatives to broaden and strengthen our revenue sources, including refurbishment, after-market parts and international expansion. We expect that other strategic alternatives will present themselves as this market downturn continues and our strong financial position will allow us to take advantage of the best opportunities to improve our business.”

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