FreightCar America Profit Dives 89 Percent

Profit at rail equipment maker FreightCar America fell 89 percent from a year earlier to $1.1 million in the July-September period as sales fell 77 percent to $55 million.

Since FreightCar got no new orders in the third quarter to build freight-hauling cars, future production trends tightened as well. In the 2008 third quarter, FreightCar received customer orders to build 2,329 new units, and even this year’s second quarter – in the worst of the freight traffic plunge – saw the company book 694 more cars to build.

“The decline in order activity in the quarter illustrates that the market for new railcars remains very challenging. However, I believe we are performing well in a difficult environment,” said President and CEO Chris Ragot.

The manufacturer delivered 695 railcars to customers in the third quarter, down from 1,207 units in the prior three months and 3,082 in last year’s third quarter. At the end of September, its backlog of unfilled orders was 777 units, compared with 1,472 units at the end of June and 4,401 at the end of the 2008 third quarter.

The $55 million in quarterly revenue is down from $104.3 million in this year’s April-June quarter, when it had net income of $7 million.

“We continue to pursue several strategic initiatives to broaden and strengthen our revenue sources,” Ragot said, “including refurbishment, after-market parts and services and international expansion. We believe that patience will be rewarded as the railcar market continues to be soft, and we will be prudent in investing in opportunities as they present themselves.”

Chicago-based FreightCar specializes in coal-hauling cars, but with plants in Illinois and Virginia it also builds other types of bulk commodity cars, flat cars, mill gondolas, intermodal platform, coil steel cars and motor vehicle carriers.

With demand flattened for new railcars in the overstocked North American market, where hundreds of thousands of units have been idled over the last two years, Ragot said the company is closely tending to its finances.

“The preservation of cash and our strong balance sheet continues to be a high priority for us. Cash and investments on-hand at the end of the quarter were approximately $134 million. Additionally, our two credit facilities are still undrawn,” he said.