FreightCar America says moving production to Mexico is paying off
FreightCar America Inc. said its business is booming since it moved production to Mexico.
The Chicago rail car company (Nasdaq: RAIL) announced in September 2020 that it would move production from a Shoals production plant in Cherokee, Alabama, to Castaños, Mexico. That move is paying off, company officials said Tuesday.
Jim Meyer, president and CEO, said in an earnings statement, “2021 was a year of many accomplishments for FreightCar America, most notably building a strong foundation for the future with the successful transition of our manufacturing footprint to Castaños, Mexico. We have already begun to see the benefits of the transition, as evidenced by positive gross margin for the fifth consecutive quarter and manufacturing operating income for the third consecutive quarter, despite persistent supply chain challenges and inflationary pressures."
In the latest quarter, FreightCar America reported fourth-quarter revenues increased nearly 24%, up to $75 million from a year earlier, and it delivered 604 railcars. The company reported earnings per share of 6 cents, up from a loss of 87 cents per share a year earlier.
Analysts polled by Thomson Reuters First Call expected revenues of $67 million and expected a loss of 15 cents per share.
In early Tuesday trading, shares in FreightCar America were up more than 11%, rising around 50 cents to about $4.90.
For the fiscal year, FreightCar America reported that revenues rose more than 87% to $203 million from $108 million a year earlier. In 2021, the company said it delivered more than 1,700 railcars, which included 1,350 new railcars and nearly 380 rebuilt ones. The year before, the company delivered more than 750 railcars, including 600 new railcars and 150 rebuilt ones.
The company said it cut its fiscal-year loss per share to $2 from a loss of $6.29 a year earlier. Analysts were expecting fiscal year revenues of $195 million and a loss of $1.35 per share.
“The company is on track to double its annual railcar production capacity to between 4,000 to 5,000 railcars during 2023, which we expect to be well timed with an increase in the railcar demand cycle," Meyer added.