FreightCar America, Inc. Announces Additional Steps in Manufacturing and Operational Realignment

Company in discussions to acquire its partner’s 50% interest in the Castaños, Mexico joint venture

Production expected to be fully consolidated at new Castaños, Mexico plant starting in January

CHICAGO, Sept. 10, 2020 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) (“FreightCar America” or the “Company”) today announced additional steps in its manufacturing and operational realignment as it plans to acquire its partner’s 50% interest in the joint venture in Castaños, Mexico and consolidate all of its production there by January. As part of this decision, the Company has started the process to permanently close its manufacturing facility in Cherokee, Alabama (“Shoals”).

Highlights:

• Aggressive footprint consolidation will establish a much more flexible business structure, allowing the Company to realign costs to the near-term demand environment.
• Company has initiated the process to permanently close the Shoals manufacturing facility with production to cease by approximately year-end.
• The state-of-the-art Castaños, Mexico facility is scalable over time and will be able to accommodate significantly greater volume when industry conditions improve.
• When completed, the Company expects to save more than $20 million in annual fixed costs, and further lower its production breakeven to less than 2,000 cars per annum.
• The Company has signed a letter of intent and is engaged in negotiations to acquire the remaining 50% ownership in the Castaños, Mexico joint venture, and intends to complete the transaction later this year.

Shoals Facility Closure

The closure of the Shoals manufacturing facility will further align costs and manufacturing capacity with the current realities of depressed railcar demand, which have been magnified by the ongoing COVID-19 pandemic. Additionally, the closure of Shoals will accelerate the Company’s goal to achieve profitability on significantly lower railcar volumes. The Company will continue to produce railcars at Shoals through approximately the end of 2020, with the full closure expected by the end of the first quarter of 2021.

Jim Meyer, President and Chief Executive Officer of FreightCar America said, “Today we have announced the difficult, but necessary, decision to exit our Shoals manufacturing facility by early 2021. As part of our ‘Back-to-Basics’ multi-year plan, we have taken significant cost out of our business, while making significant investments in our products, people and processes.  The efforts of our Shoals’ team helped us to reduce our breakeven production levels by roughly one-third since the start of the plan.  However, the ongoing impact of the industry downturn has been further intensified by the COVID-19 pandemic and required an additional and significant response to both protect our franchise and reposition the business for immediate success post-downturn.”