FreightCar America, Inc. - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended March 31, 2022

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-51237

FREIGHTCAR AMERICA, INC.

(Exact name of registrant as specified in its charter)



Delaware		25-1837219
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 South Wacker Drive, Suite 1500 Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(800) 458-2235

(Registrant’s telephone number, including area code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	RAIL	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

As of May 1, 2022, there were 16,535,266 shares of the registrant’s common stock outstanding.

FREIGHTCAR AMERICA, INC.

INDEX TO FORM 10-Q



Item Number		Page Number
	PART I – FINANCIAL INFORMATION
1.	Financial Statements:
	Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
4.	Controls and Procedures	29
	PART II – OTHER INFORMATION
1.	Legal Proceedings	30
2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
3.	Defaults Upon Senior Securities	30
4.	Mine Safety Disclosures	30
5.	Other Information	30
6.	Exhibits	30
	Signatures	31

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FreightCar America, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


	March 31, 2022			December 31, 2021
Assets	(in thousands, except for share and per share data)
Current assets
Cash, cash equivalents and restricted cash equivalents	$	41,011		$	26,240
Accounts receivable, net of allowance for doubtful accounts of $475 and $323 respectively		22,088			9,571
VAT receivable		32,941			31,136
Inventories, net		58,476			56,012
Related party asset		5,259			8,680
Prepaid expenses		8,203			5,087
Total current assets		167,978			136,726
Property, plant and equipment, net		18,515			18,236
Railcars available for lease, net		20,007			20,160
Right of use asset		16,353			16,669
Other long-term assets		7,897			8,873
Total assets	$	230,750		$	200,664
Liabilities and Stockholders’ Equity
Current liabilities
Accounts and contractual payables	$	46,482		$	41,185
Related party accounts payable		6,815			8,870
Accrued payroll and other employee costs		1,941			2,912
Reserve for workers' compensation		1,594			1,563
Accrued warranty		5,639			2,533
Customer deposits		22,006			3,300
Deferred income state and local incentives, current		649			1,291
Lease liability, current		1,980			1,955
Other current liabilities		4,798			5,711
Total current liabilities		91,904			69,320
Long-term debt, net of current portion		88,572			79,484
Warrant liability		53,244			32,514
Accrued pension costs		—			35
Deferred income state and local incentives, long-term		—			1,216
Lease liability, long-term		16,116			16,617
Other long-term liabilities		6,942			3,134
Total liabilities		256,778			202,320
Stockholders’ (deficit) equity
Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each designated as Series A voting and Series B non-voting, 0 shares issued and outstanding at March 31, 2022 and December 31, 2021)	-			-
Common stock, $0.01 par value, 50,000,000 shares authorized, 16,525,266 and 15,947,228 shares issued at March 31, 2022 and December 31, 2021, respectively		196			190
Additional paid in capital		85,127			83,742
Accumulated other comprehensive loss		(5,438	)		(5,522	)
Accumulated deficit		(105,913	)		(80,066	)
Total stockholders' (deficit) equity		(26,028	)		(1,656	)
Total liabilities and stockholders’ (deficit) equity	$	230,750		$	200,664

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
	March 31,
	2022			2021

Revenues	$	93,236		$	32,370
Cost of sales		83,178			31,054
Gross profit		10,058			1,316
Selling, general and administrative expenses		10,713			9,151
Restructuring and impairment charges		-			6,650
Operating loss		(655	)		(14,485	)
Interest expense		(5,705	)		(2,502	)
Loss on change in fair market value of warrant liability		(20,730	)		(22,128	)
Other income		1,496			115
Loss before income taxes		(25,594	)		(39,000	)
Income tax provision		253			132
Net loss	$	(25,847	)	$	(39,132	)
Net loss per common share- basic	$	(1.11	)	$	(1.96	)
Net loss per common share - diluted	$	(1.11	)	$	(1.96	)
Weighted average common shares outstanding – basic		23,218,647			20,001,505
Weighted average common shares outstanding – diluted		23,218,647			20,001,505

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


	Three Months Ended March 31,
	2022			2021


Net loss	$	(25,847	)	$	(39,132	)
Other comprehensive loss net of tax:
Pension and postretirement liability adjustments, net of tax		84			156
Comprehensive loss	$	(25,763	)	$	(38,976	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except for share data)



	FreightCar America Shareholders
															Accumulated						Total
						Additional									Other						Stockholders'
	Common Stock					Paid In			Treasury Stock						Comprehensive			Retained			Equity
	Shares			Amount		Capital			Shares			Amount			Loss			(Deficit)			(Deficit)
Balance, December 31, 2020		15,861,406		$	159	$	82,064			(327,577	)	$	(1,344	)	$	(11,763	)	$	(38,619	)		30,497
Net loss		-			-		-			-			-			-			(39,132	)		(39,132	)
Other comprehensive income		-			-		-			-			-			156			-			156
Restricted stock awards		177,953			2		(2	)		-			-			-			-			-
Employee stock settlement		(1,378	)		-		(5	)		(2,215	)		(7	)		-			-			(12	)
Forfeiture of restricted stock awards		(4,500	)		-		431			(116,795	)		(431	)		-			-			-
Stock-based compensation recognized		-			-		31			-			-			-			-			31
Balance, March 31, 2021		16,033,481		$	161	$	82,519			(446,587	)	$	(1,782	)	$	(11,607	)	$	(77,751	)	$	(8,460	)

Balance, December 31, 2021		15,947,228			190		83,742			-			-			(5,522	)		(80,066	)		(1,656	)
Net loss		-			-		-			-			-			-			(25,847	)		(25,847	)
Other comprehensive income		-			-		-			-			-			84			-			84
Restricted stock awards		296,857			3		(3	)		-			-			-			-			-
Employee stock settlement		(3,438	)		-		(13	)		-			-			-			-			(13	)
Forfeiture of restricted stock awards		(500	)		-		-			-			-			-			-			-
Stock-based compensation recognized		-			-		404			-			-			-			-			404
Equity Fees		285,119			3		997			-			-			-			-			1,000
Balance, March 31, 2022		16,525,266		$	196	$	85,127			-		$	—		$	(5,438	)	$	(105,913	)	$	(26,028	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities	(in thousands)
Net loss	$	(25,847	)	$	(39,132	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Restructuring and impairment charges		—			6,650
Depreciation and amortization		1,024			1,197
Non-cash lease expense on right-of-use assets		316			440
Recognition of deferred income from state and local incentives		(1,858	)		(555	)
Loss on change in fair market value for warrant liability		20,730			22,128
Stock-based compensation recognized		4,244			2,662
Non-cash interest expense		3,721			982
Other non-cash items, net		—			(36	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(12,517	)		3,204
VAT receivable		(1,853	)		(8,754	)
Inventories		(2,154	)		4,824
Other assets		(3,839	)		(7,658	)
Related party asset, net		1,366			334
Accounts and contractual payables		4,798			1,594
Accrued payroll and employee benefits		(971	)		(1,166	)
Income taxes payable		252			131
Accrued warranty		3,106			(1,208	)
Lease liability		(476	)		(577	)
Customer deposits		18,706			—
Other liabilities		(1,124	)		(7,114	)
Accrued pension costs and accrued postretirement benefits		21			(222	)
Net cash flows provided by (used in) operating activities		7,645			(22,276	)
Cash flows from investing activities
Purchase of property, plant and equipment		(960	)		(542	)
Proceeds from sale of property, plant and equipment and railcars available for lease		—			373
Net cash flows used in investing activities		(960	)		(169	)
Cash flows from financing activities
Borrowings on revolving line of credit		10,013			165
Repayments on revolving line of credit		(1,910	)		(165	)
Employee stock settlement		(13	)		(7	)
Payment for stock appreciation rights exercised		(4	)		(39	)
Net cash flows provided by (used in) financing activities		8,086			(46	)
Net increase (decrease) in cash and cash equivalents		14,771			(22,491	)
Cash, cash equivalents and restricted cash equivalents at beginning of period		26,240			54,047
Cash, cash equivalents and restricted cash equivalents at end of period	$	41,011		$	31,556
Supplemental cash flow information
Interest paid	$	1,984		$	1,180
Income tax refunds received, net of payments	$	—		$	5
Non-cash transactions
Change in unpaid construction in process	$	190		$	114
Accrued PIK interest paid through issuance of PIK Note	$	364		$	256
Issuance of equity fee	$	1,000		$	—

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except for share and per share data and unless otherwise noted)

Note 1 – Description of the Business

FreightCar America, Inc. (“FreightCar”) operates primarily in North America through its direct and indirect subsidiaries, and manufactures a wide range of railroad freight cars, supplies railcar parts and leases freight cars. The Company designs and builds high-quality railcars, including coal cars, bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and boxcars, and also specializes in the conversion of railcars for re-purposed use. The Company is headquartered in Chicago, Illinois and has facilities in the following locations: Johnstown, Pennsylvania; Shanghai, People’s Republic of China, and Castaños, Coahuila, Mexico (“Castaños”).

On September 10, 2020, the Company announced its plan to permanently close its manufacturing facility in Cherokee, Alabama (the “Shoals Facility”). The closure reduced costs and aligned the Company’s manufacturing capacity with the current railcar market. The Company ceased production at the Shoals Facility in February 2021. See Note 14–Restructuring and Impairment Charges.

Note 2 – Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of FreightCar America, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The 2021 year-end balance sheet data was derived from the audited financial statements as of December 31, 2021. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These interim financial statements should be read in conjunction with the audited financial statements contained in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Note 3 – Revenue Recognition

The following table disaggregates the Company’s revenues by major source:


	Three Months Ended
	March 31,
	2022		2021
Railcar sales	$	89,308	$	28,929
Parts sales		3,111		2,366
Revenues from contracts with customers		92,419		31,295
Leasing revenues		817		1,075
Total revenues	$	93,236	$	32,370

Contract Balances and Accounts Receivable

Accounts receivable payments for railcar sales are typically due within 5 to 10 business days of invoicing, while payments from parts sales are typically due within 30 to 45 business days of invoicing. The Company has not experienced significant historical credit losses.

Contract assets represent the Company’s rights to consideration for performance obligations that have been satisfied but for which the terms of the contract do not permit billing at the reporting date. The Company had no contract assets as of each of March 31, 2022 and December 31, 2021. The Company may receive cash payments from customers in advance of the Company satisfying performance obligations under its sales contracts resulting in deferred revenue or customer deposits, which are considered contract liabilities. Deferred revenue and customer deposits are classified as either current or long-term in the Consolidated Balance Sheet

based on the timing of when the Company expects to recognize the related revenue. Deferred revenue and customer deposits are included in customer deposits, other current liabilities and other long-term liabilities in the Company’s Condensed Consolidated Balance Sheet and were $23,101 and $4,807 as of March 31, 2022 and December 31, 2021, respectively.

Performance Obligations

The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by ASU 2014-09, Revenue from Contracts with Customers. The Company had remaining unsatisfied performance obligations as of March 31, 2022 with expected duration of greater than one year of $14,850.

Note 4 – Segment Information

The Company’s operations comprise two operating segments, Manufacturing and Parts, and one reportable segment, Manufacturing. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar conversions and rebuilds. The Company’s Parts operating segment is not significant for reporting purposes and has been combined with corporate and other non-operating activities as Corporate and Other.

Segment operating income is an internal performance measure used by the Company’s Chief Operating Decision Maker to assess the performance of each segment in a given period. Segment operating income includes all external revenues attributable to the segments as well as operating costs and income that management believes are directly attributable to the current production of goods and services. The Company’s internal management reporting package does not include interest revenue, interest expense or income taxes allocated to individual segments and these items are not considered as a component of segment operating income. Segment assets represent operating assets and exclude intersegment accounts, deferred tax assets and income tax receivables. The Company does not allocate cash and cash equivalents and restricted cash and restricted cash equivalents to its operating segments as the Company’s treasury function is managed at the corporate level. Intersegment revenues were not material in any period presented.


	Three Months Ended
	March 31,
	2022			2021
Revenues:
Manufacturing	$	90,124		$	30,019
Corporate and Other		3,112			2,351
Consolidated revenues	$	93,236		$	32,370

Operating income (loss):
Manufacturing (1)	$	8,516		$	(6,018	)
Corporate and Other		(9,171	)		(8,467	)
Consolidated operating loss		(655	)		(14,485	)
Consolidated interest expense		(5,705	)		(2,502	)
Loss on change in fair market value of warrant liability		(20,730	)		(22,128	)
Consolidated other income		1,496			115
Consolidated loss before income taxes	$	(25,594	)	$	(39,000	)

Depreciation and amortization:
Manufacturing	$	867		$	1,067
Corporate and Other		157			130
Consolidated depreciation and amortization	$	1,024		$	1,197

Capital expenditures:
Manufacturing	$	960		$	345
Corporate and Other		-			197
Consolidated capital expenditures	$	960		$	542

(1) Results for the three months ended March 31, 2022 and 2021, include restructuring and impairment charges of $0 and $6,650, respectively.


	March 31,		December 31,
	2022		2021
Assets:
Manufacturing	$	169,096	$	154,068
Corporate and Other		61,572		46,417
Total operating assets		230,668		200,485
Consolidated income taxes receivable		82		179
Consolidated assets	$	230,750	$	200,664


Geographic Information
	Revenues				Long Lived Assets(a)
	Three Months Ended
	March 31,				March 31,		December 31,
	2022		2021		2022		2021
United States	$	93,236	$	32,370	$	24,446	$	24,967
Mexico		-		-		30,429		30,098
Total	$	93,236	$	32,370	$	54,875	$	55,065

(a) Long lived assets include property plant and equipment, net, railcars available for lease, and ROU assets.

Note 5 – Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets that were recorded at fair value on a recurring basis and the Company’s non-financial assets that were recorded at fair value on a non-recurring basis.


Recurring Fair Value Measurements	As of March 31, 2022
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability	$	-	$	53,244	$	-	$	53,244


Recurring Fair Value Measurements	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability	$	-	$	32,514	$	-	$	32,514


Non-recurring Fair Value Measurements	During the Year Ended December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Railcars available for lease, net	$	-	$	-	$	6,638	$	6,638

The fair value of the Company’s warrant liability recorded in the Company’s financial statements, determined using the quoted price of the Company’s common stock in an active market, exercise price ($0.01/share) and number of shares exercisable at March 31, 2022 and December 31, 2021, is a Level 2 measurement.

Note 6 – Restricted Cash

The Company establishes restricted cash balances when required by customer contracts and to collateralize standby letters of credit. The carrying value of restricted cash approximates fair value.

The Company’s restricted cash balances are as follows:


	March 31,		December 31,
	2022		2021
Restricted cash from customer deposit	$	282	$	282
Restricted cash to collateralize standby letters of credit		103		1,133
Restricted cash equivalents to collateralize standby letters of credit		3,542		3,542
Restricted cash equivalents - other		438		-
Total restricted cash and restricted cash equivalents	$	4,365	$	4,957

Note 7 – Inventories

Inventories, net of reserve for excess and obsolete items, consist of the following:


	March 31,		December 31,
	2022		2021
Raw materials		40,392		34,885
Work in process		10,961		11,306
Finished railcars		2,133		4,696
Parts inventory		4,990		5,125
Total inventories, net	$	58,476	$	56,012

Inventory on the Company’s Condensed Consolidated Balance Sheets includes reserves of $1,734 and $1,621 relating to excess or slow-moving inventory for parts and work in process at March 31, 2022 and December 31, 2021, respectively.

Note 8 – Debt Financing and Revolving Credit Facilities

Term Loan Credit Agreement

On October 13, 2020, the Company entered into a Credit Agreement (the “Term Loan Credit Agreement”) by and among the Company, as guarantor, FreightCar North America (“Borrower” and together with the Company and certain other subsidiary guarantors, collectively, the “Loan Parties”), CO Finance LVS VI LLC, as lender (the “Lender”), and U.S. Bank National Association, as disbursing agent and collateral agent (“Agent”). Pursuant to the Term Loan Credit Agreement, the Lender committed to the extension of a term loan credit facility in the principal amount of $40,000, consisting of a single term loan to be funded upon the satisfaction of certain conditions precedent set forth in the Term Loan Credit Agreement, including stockholder approval of the issuance of the common stock underlying the Warrant described below (the funding date of such term loan, the “Closing Date”). FreightCar America, Inc. stockholders approved the issuance of the common stock underlying the Warrant at a special stockholders’ meeting on November 24, 2020. The $40,000 term loan closed and was funded on November 24, 2020. The Company incurred $2,872 in deferred financing costs related to the Term Loan Agreement. The deferred financing costs are presented as a reduction of the long-term debt balance and amortized to interest expense over the term of the Term Loan Agreement.

The Term Loan Credit Agreement has a term ending five years following the Closing Date. The term loan outstanding under the Term Loan Credit Agreement bears interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin (as defined in the Term Loan Credit Agreement) for each such interest rate set forth in the Term Loan Credit Agreement. As of March 31, 2022, the interest rate on the original advance under the Term Loan Credit Agreement was 14.0%.

The Term Loan Credit Agreement has both affirmative and negative covenants, including, without limitation, minimum liquidity, limitations on indebtedness, liens and investments. The Term Loan Credit Agreement also provides for customary events of default. Pursuant to the terms and conditions set forth in the Term Loan Credit Agreement and the related loan documents, each of the Loan Parties granted to Agent a continuing lien upon all of such Loan Parties’ assets to secure the obligations of the Loan Parties under the Term Loan Credit Agreement.

On May 14, 2021, the Loan Parties entered into an Amendment No. 2 to the Term Loan Credit Agreement (the “Second Amendment” and together with the Term Loan Credit Agreement, the “Term Loan Credit Agreement”) with Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $16,000 to a total of $56,000, with such additional $16,000 (the “Additional Loan”) to be funded upon the satisfaction of certain conditions precedent set forth in the Second Amendment. The Additional Loan closed and was funded on May 17, 2021. The Company incurred $480 in deferred financing costs

related to the Amendment which are presented as a reduction of the long-term debt balance and amortized on a straight-line basis to interest expense over the term of the Second Amendment.

The Additional Loan bears interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin (as defined in the Term Loan Credit Agreement) for each such interest rate set forth in the Term Loan Credit Agreement. As of March 31, 2022, the interest rate on the Additional Loan was 14.0%.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company shall issue to the Lender and/or an affiliate of the Lender a warrant (the “March 2022 Warrant”) to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 5% of the Company’s outstanding common stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). Because the Company believed that it was probable that the Additional Warrant would be issued the Company recorded an additional warrant liability of $7,351 during the third quarter of 2021. The Additional Warrant was issued on April 4, 2022. (see Note 16 Subsequent Event).

Pursuant to the Second Amendment, the Company was required to, among other things, i) obtain a term sheet for additional financing of no less than $15,000 by July 31, 2021 and ii) file a registration statement on Form S-3 registering Company securities, including the shares of Company common stock issuable upon exercise of the March 2022 Warrant, by no later than August 31, 2021. The Company has met each of the aforementioned obligations. The Form S-3 registering Company securities, including the shares of Company common stock issuable upon exercise of the March 2022 Warrant, was filed with the Securities and Exchange Commission on August 27, 2021 and became effective on September 9, 2021.

On July 30, 2021, the Loan Parties entered into an Amendment No. 3 to Credit Agreement (the “Third Amendment” and together with the Credit Agreement, as amended, the “Term Loan Credit Agreement”) with the Lender and the Agent, pursuant to which, among other things, Lender obtained a standby letter of credit (as may be amended from time to time, the “Third Amendment Letter of Credit”) from Wells Fargo Bank, N.A., in the principal amount of $25,000 for the account of the Company and for the benefit of Siena Lending Group LLC (the “Revolving Loan Lender”).

On December 30, 2021, the Loan Parties entered into an Amendment No. 4 to Credit Agreement (the “Fourth Amendment” and together with the Credit Agreement, the “Term Loan Credit Agreement”) with the Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $15,000 to a total of $71,000, with such additional $15,000 (the “Delayed Draw Loan”) to be funded, at the Borrower’s option, upon the satisfaction of certain conditions precedent set forth in the Fourth Amendment. The Borrower has the option to draw on the Delayed Draw Loan through January 31, 2023 and may choose not to do so.

The Delayed Draw Loan, if funded, will bear interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at the Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin (as defined in the Term Loan Credit Agreement) for each such interest rate set forth in the Term Loan Credit Agreement.

Reimbursement Agreement

Pursuant to the Third Amendment, on July 30, 2021, the Company, the Lender, Alter Domus (US) LLC, as calculation agent, and the Agent entered into a reimbursement agreement (the “Reimbursement Agreement”), pursuant to which, among other things, the Company agreed to reimburse the Agent, for the account of the Lender, in the event of any drawings under the Third Amendment Letter of Credit by the Revolving Loan Lender.

In addition, pursuant to the Reimbursement Agreement, the Company shall make certain other payments as set forth below, so long as the Third Amendment Letter of Credit remains outstanding:

Letter of Credit Fee

The Company shall pay to Agent, for the account of Lender, an annual fee of $500, which shall be due and payable quarterly beginning on August 2, 2021, and every three months thereafter.

Equity Fee

Every three months (the “Measurement Period”), commencing on August 6, 2021, the Company shall pay to the Lender (or, so long as Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if Lender has timely notified the

Company in writing of such designation) a fee (the “Equity Fee”) payable in shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”). The Equity Fee shall be calculated by dividing $1,000 by the volume weighted average price of the Company’s Common Stock on the Nasdaq Capital Market for the ten (10) trading days ending on the last business day of the applicable Measurement Period. The Company can opt to pay the Equity Fee in cash, in the amount of $1,000, if, and only if, (x) the Company has already issued as Equity Fees a number of shares of its Common Stock equal to (I) 5.0% multiplied by (II) the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock, and (y) the Company has at least $15,000 of Repayment Liquidity after giving effect to such payment. The term Repayment Liquidity, as defined in the Term Loan Credit Agreement, means (a) all unrestricted and unencumbered cash and cash equivalents of the Loan Parties, plus (b) the undrawn and available portion of the commitments under that certain Amended and Restated Loan and Security Agreement by and among the Loan Parties and the Revolving Loan Lender (as described below), minus (c) all accounts payable of the Loan Parties that are more than 30 days past due.

The Equity Fee shall no longer be paid once the Company has issued to Lender and/or OC III LVS XII LP Equity Fees in an amount of Common Stock equal to 9.99% multiplied by the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock (the “Maximum Equity”). Through March 31, 2022, the Company has paid Equity Fees totaling 693,077 shares of the Company's Common Stock.

The issuance of each Equity Fee under the Reimbursement Agreement will be made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act for offers and sales of securities that do not involve a “public offering.”

Cash Fee

The Company shall pay to the Agent, for the account of the Lender (or, so long as the Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if the Lender has timely notified the Company in writing of such designation) a cash fee (the “Cash Fee”) which shall be due and payable in cash quarterly beginning on the date that the Maximum Equity has been issued and thereafter on the business day immediately succeeding the last business day of the applicable Measurement Period. The Cash Fee shall be equal to $1,000, provided that, in the quarter in which the Maximum Equity is issued, such fee shall be equitably reduced by the value of any Equity Fee issued by the Company that quarter.

Warrant

In connection with the entry into the Term Loan Credit Agreement, the Company issued to an affiliate of the Lender (the “Warrantholder”) a warrant (the “Warrant”), pursuant to that certain warrant acquisition agreement, dated as of October 13, 2020 (the “Warrant Acquisition Agreement”), by and between the Company and the Lender to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 23% of the outstanding common stock on a fully-diluted basis at the time the Warrant is exercised (after giving effect to such issuance). The Warrant is exercisable for a term of ten years from the date of the issuance of the Warrant. The Warrant was issued on November 24, 2020 after the Company received stockholder approval of the issuance of the common stock issuable upon exercise of the Warrant by the Warrantholder. In connection with the issuance of the Warrant, the Company and the Lender entered into a registration rights agreement (the “Registration Rights Agreement”) as of the Closing Date of November 24, 2020. As of March 31, 2022 and December 31, 2021, the Warrant was exercisable for an aggregate of 6,289,754 and 6,098,217 shares, respectively, of common stock of the Company with a per share exercise price of $0.01. The Company determined that the Warrant should be accounted for as a derivative instrument and classified as a liability on its Consolidated Balance Sheets primarily due to the instrument obligating the Company to settle the Warrant in a variable number of shares of common stock. The Warrant was recorded at fair value and is treated as a discount on the term loan. The discount on the associated debt is amortized over the life of the Term Loan Credit Agreement and included in interest expense.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company shall issue to the Lender and/or an affiliate of the Lender the March 2022 Warrant to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 5% of the Company’s outstanding common stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). Because the Company believed that it was probable that the March 2022 Warrant would be issued the Company recorded an additional warrant liability of $7,351 during the third quarter of 2021. The Additional Warrant was issued on April 4, 2022. (see Note 16 Subsequent Event).

Pursuant to the Fourth Amendment and a warrant acquisition agreement, dated as of December 30, 2021 (the “Warrant Acquisition Agreement”), the Company issued to the Lender a warrant (the “December 2021 Warrant”) to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 5% of the Company’s outstanding common stock on a fully-diluted basis at the time the December 2021 Warrant is exercised (after giving effect to such issuance). The December 2021 Warrant has an exercise price of $0.01 and a term of ten years. As of March 31, 2022 and December 31, 2021, the December 2021 Warrant was

exercisable for an aggregate of 1,367,337 and 1,325,699 shares of common stock of the Company, respectively with a per share exercise price of $0.01.

In addition, to the extent the Delayed Draw Loan is funded, the Company has agreed to issue to the Lender a warrant (the “3% Additional Warrant”) to purchase up to a number of shares of the Company’s common stock, par value $0.01 per share, equal to 3% of the Company’s outstanding common stock on a fully-diluted basis at the time the 3% Additional Warrant is exercised (after giving effect to such issuance). The 3% Additional Warrant, if issued, will have an exercise price of $0.01 and a term of ten years.

The following schedule shows the change in fair value of the Warrant as of March 31, 2022.


Warrant liability as of December 31, 2021	$	32,514
Change in fair value		20,730
Warrants issued		-
Warrant liability as of March 31, 2022	$	53,244

The change in fair value of the Warrant is reported on a separate line in the consolidated statement of operations. The Term Loan Credit Agreement is presented net of the unamortized discount and unamortized deferred financing costs.

Siena Loan and Security Agreement

On October 8, 2020, the Company entered into a Loan and Security Agreement (the “Siena Loan Agreement”) by and among the Company, as guarantor, and certain of its subsidiaries, as borrowers (together with the Company, the “Loan Parties”), and Siena Lending Group LLC, as lender (“Siena”). Pursuant to the Siena Loan Agreement, Siena provided an asset backed credit facility, in the maximum aggregate principal amount of up to $20,000, (the "Maximum Revolving Facility Amount") consisting of revolving loans (the Revolving Loans").

The Siena Loan Agreement provided for a revolving credit facility with maximum availability of $20,000, subject to borrowing base requirements set forth in the Siena Loan Agreement, which generally limited availability under the revolving credit facility to (a) 85% of the value of eligible accounts and (b) up to the lesser of (i) 50% of the lower of cost or market value of eligible inventory and (ii) 85% of the net orderly liquidation value of eligible inventory, and as reduced by reserves established by Siena from time to time in accordance with the Siena Loan Agreement.

On July 30, 2021, the Loan Parties and Siena Lending Group LLC ( the "Revolving Loan Lender") entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan and Security Agreement”), which amended and restated the terms and conditions of the Siena Loan Agreement in its entirety.

Pursuant to the Amended and Restated Loan and Security Agreement, the Maximum Revolving Facility Amount was increased to $25,000, provided, however, that the outstanding balance of all Revolving Loans may not exceed the lesser of (A) the Maximum Revolving Facility Amount minus the Availability Block and (B) an amount equal to the issued and undrawn portion of the Third Amendment Letter of Credit (as defined above) minus the Availability Block. The term “Availability Block”, as defined in the Amended and Restated Loan and Security Agreement, means 3.0% of the issued and undrawn amount under the Third Amendment Letter of Credit.

The Amended and Restated Loan and Security Agreement has a term ending on October 8, 2023. Revolving Loans outstanding under the Amended and Restated Loan and Security Agreement bear interest, subject to the provisions of the Amended and Restated Loan and Security Agreement, at an interest rate of 2% per annum in excess of the Base Rate (as defined in the Siena Loan Agreement).

The Amended and Restated Loan and Security Agreement contains affirmative and negative covenants, including, without limitation, limitations on future indebtedness, liens and investments. The Amended and Restated Loan and Security Agreement also provides for customary events of default. Pursuant to the terms and conditions set forth in the Amended and Restated Loan and Security Agreement, each of the Loan Parties granted Siena a continuing lien upon certain assets of the Loan Parties to secure the obligations of the Loan Parties under the Amended and Restated Loan and Security Agreement.

likely to become due in connection therewith) will not exceed the lesser of (x) the Maximum Revolving Facility Amount and (y) the Borrowing Base (as defined in the First Amendment to Amended and Restated Loan and Security Agreement), and (B) none of the other Loan Limits (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) for Revolving Loans will be exceeded.

Revolving Loans outstanding under the First Amendment to Amended and Restated Loan and Security Agreement bear interest, subject to the provisions of the First Amendment to Amended and Restated Loan and Security Agreement, at a rate of 2% per annum in excess of the Base Rate (as defined in the Amended and Restated Loan and Security Agreement). Notwithstanding the foregoing, Revolving Loans made in respect of Excess Availability (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) arising from clause (b) of the definition of “Borrowing Base” bear interest, subject to the provisions of the First Amendment to Amended and Restated Loan and Security Agreement, at a rate of 1.5% per annum in excess of the Base Rate (as defined in the Amended and Restated Loan and Security Agreement). As of March 31, 2022, the interest rate on outstanding debt under the First Amendment to Amended and Restated Loan and Security Agreement was 5.0%.

As of March 31, 2022, the Company had $32,339 in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of 1,074. As of December 31, 2021, the Company had $24,026 in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $122. The Company incurred $1,101 in deferred financing costs related to the Siena Loan Agreement and incurred $1,037 in additional deferred financing costs related to the Amended and Restated Loan and Security Agreement. The deferred financing costs are presented as an asset and amortized to interest expense on a straight-line basis over the term of the Siena Loan Agreement.

M&T Credit Agreement

On April 16, 2019, FreightCar America Leasing 1, LLC, an indirect wholly-owned subsidiary of the Company (“Freightcar Leasing Borrower”), entered into a Credit Agreement (the “M&T Credit Agreement”) with M & T Bank, N.A., as lender (“M&T”). Pursuant to the M&T Credit Agreement, M&T extended a revolving credit facility to Freightcar Leasing Borrower in an aggregate amount of up to $40,000 for the purpose of financing railcars which will be leased to third parties.

On April 16, 2019, Freightcar Leasing Borrower also entered into a Security Agreement (the “M&T Security Agreement”) pursuant to which it granted a security interest in all of its assets to M&T to secure its obligations under the M&T Credit Agreement.

On April 16, 2019, FreightCar America Leasing, LLC, a wholly-owned subsidiary of the Company and parent of Freightcar Leasing Borrower (“Freightcar Leasing Guarantor”), entered into (i) a Guaranty Agreement (the “M&T Guaranty Agreement”) pursuant to which Freightcar Leasing Guarantor guarantees the repayment and performance of certain obligations of Freightcar Leasing Borrower and (ii) a Pledge Agreement (the “M&T Pledge Agreement”) pursuant to which Freightcar Leasing Guarantor pledged all of the equity of Freightcar Leasing Borrower held by Freightcar Leasing Guarantor.

The loans under the M&T Credit Agreement are non-recourse to the assets of the Company or its subsidiaries other than the assets of Freightcar Leasing Borrower and Freightcar Leasing Guarantor.

The M&T Credit Agreement had a term ending on April 16, 2021 (the “Term End”). Loans outstanding thereunder will bear interest, accrued daily, at the Adjusted LIBOR Rate (as defined in the M&T Credit Agreement) or the Adjusted Base Rate (as defined in the M&T Credit Agreement). The M&T Credit Agreement has both affirmative and negative covenants, including, without limitation, maintaining an Interest Coverage Ratio (as defined in the M&T Credit Agreement) of not less than 1.25:1.00, measured quarterly, and limitations on indebtedness, loans, liens and investments. The M&T Credit Agreement also provides for customary events of default.

On April 20, 2021, FreightCar Leasing Borrower received a notice from M&T that an Event of Default had occurred due to all amounts outstanding under the M&T Credit Agreement having not be paid by the Term End.

On December 28, 2021 (the “Execution Date”), FreightCar Leasing Borrower, FreightCar Leasing Guarantor (together with FreightCar Leasing Borrower, the “Obligors”), the Company, FreightCar America Railcar Management, LLC, a Delaware limited liability company (“FCA Management”), and M&T, entered into a Forbearance and Settlement Agreement (the “Forbearance Agreement”) with respect to the M&T Credit Agreement and its related Credit Documents (as defined in the M&T Credit Agreement), as well as certain intercompany services agreements related thereto.

Pursuant to the Forbearance Agreement, the Obligors will continue to perform and comply with all of their performance obligations (as opposed to payment obligations) under certain provisions of the M&T Credit Agreement (primarily related to information obligations and the preservation of the collateral pledged by the Borrower to M&T pursuant to the M&T Security Agreement (the “Collateral”)) and all the provisions of the M&T Security Agreement. During the period from Execution Date until the termination of the Forbearance

Agreement, M&T may not take any action against the Obligors or exercise or enforce any rights or remedies provided for in the Credit Documents or otherwise available to it.

On December 1, 2023, or sooner if requested by the Lender (the “Turnover Date”), the Borrower shall execute and deliver to M&T documents required to deliver and assign to the Lender all the leased railcars and related leases serving as Collateral for the M&T Credit Agreement.

Upon the Turnover Date and the Obligors’ performance of their respective obligations under the Forbearance Agreement, including the delivery of certain Collateral to M&T upon the Turnover Date, all Obligations (as defined in the M&T Credit Agreement) shall be deemed satisfied in full, M&T shall no longer have any further claims against the Obligors under the Credit Documents and the Credit Documents shall automatically terminate and be of no further force or effect except for the provisions thereof that expressly survive termination.

The Forbearance Agreement contains customary releases at execution for all affiliates of the Company (other than the Obligors) and agreements to deliver final releases with respect to the Obligors upon their performance under the Forbearance Agreement. The Company also agreed to turn over to M&T on the Effective Date certain rents in the amount of $715 that it had previously collected as servicing agent for the Borrower, and to continue to provide such services through the Turnover Date without a service fee, and after the Turnover Date through the return of the railcars serving as Collateral, for a service fee.

As of March 31, 2022 and December 31, 2021, FreightCar Leasing Borrower had $7,707 and $7,917, respectively, in outstanding debt under the M&T Credit Agreement, which was collateralized by leased railcars with a carrying value of $6,594 and $6,638, respectively. As of March 31, 2022, the interest rate on outstanding debt under the M&T Credit Agreement was 4.50%.

Long-term debt consists of the following as of March 31, 2022 and December 31, 2021:


	March 31,			December 31,
	2022			2021
M&T Credit Agreement outstanding	$	7,707		$	7,917
Siena Loan Agreement outstanding		32,339			24,026
Term Loan Credit Agreement outstanding		57,641			57,278
Total debt		97,687			89,221
Less Term Loan Credit Agreement discount		(6,623	)		(7,077	)
Less Term Loan Credit Agreement deferred financing costs		(2,492	)		(2,660	)
Total debt, net of discount and deferred financing costs		88,572			79,484
Less amounts due within one year		-			-
Long-term debt, net of current portion	$	88,572		$	79,484

The fair value of long-term debt approximates its carrying value as of March 31, 2022 and December 31, 2021.

Note 9 – Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss consist of the following:


	Pre-Tax		Tax		After-Tax
Three months ended March 31, 2022
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)	$	84	$	-	$	84


	Pre-Tax		Tax		After-Tax
Three months ended March 31, 2021
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income (expense))	$	156	$	-	$	156

The components of accumulated other comprehensive loss consist of the following:


	March 31,			December 31,
	2022			2021
Unrecognized pension cost, net of tax of $6,282 and $6,282, respectively	$	(5,438	)	$	(5,522	)

Note 10 – Stock-Based Compensation

Total stock-based compensation was $4,244 and $2,662 for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was $1,626 of unearned compensation expense related to restricted stock awards, which will be recognized over the remaining weighed average requisite service period of 21 months. As of March 31, 2022, there was $2,063 of unearned compensation related to time-vested stock options, which will be recognized over the remaining requisite service period of 29 months.

2020 and 2021 Grants of Stock Appreciation Rights

During 2020 and 2021, the Company granted 1,139,464 and 1,735,500 cash settled stock appreciation rights to certain employees. Each stock appreciation right represents the right to receive a payment measured by the increase in the fair market value of one share of the Company’s stock from the date of grant of the stock appreciation right to the date of exercise of the stock appreciation right. The cash settled stock appreciation rights vest ratably over three years and have a contractual life of 10 years. Cash settled stock appreciation rights are classified as liabilities Vesting of the 2021 cash settled stock appreciation rights was contingent upon the achievement of a thirty-day trailing average fair market value of a share of the Company’s common stock of 133.3% ($3.17) or more of the exercise price per share ($2.38). When vesting of an award of stock-based compensation is dependent upon the attainment of a target stock price, the award is considered to be subject to a market condition. . During the first quarter of 2021, the market condition for the 2021 cash settled stock appreciation rights was met. The Company measures the fair value of unvested cash settled stock appreciation rights using the Black-Scholes option valuation model and remeasures the fair value of the award each reporting period until the award is vested. Once vested the Company immediately recognizes compensation cost for any changes in fair value of cash settled stock appreciation rights until settlement. Fair value of vested cash settled stock appreciation rights represents the fair market value of one share of the Company’s stock on the measurement date less the exercise price per share. Compensation cost for cash settled stock appreciation rights is trued up each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.

The estimated fair value of the cash settled stock appreciation rights as of March 31, 2022 was $6,163. Stock-based compensation for cash settled stock appreciation rights was $3,759 and $2,553 for the three months ended March 31, 2022 and 2021, respectively.

The fair value of unvested cash settled stock appreciation rights as of March 31, 2022 was estimated using the Black-Scholes option valuation model with the following assumptions:


				Expected	Risk Free
			Expected	Dividend	Interest	Fair Value
Grant Year	Grant Date	Expected Life	Volatility	Yield	Rate	Per Award

2020	1/24/2020	4.3 years	83.63%	0.00%	2.39%	$	4.92
2020	9/14/2020	4.7 years	81.13%	0.00%	2.41%	$	4.79
2020	11/30/2020	4.9 years	80.14%	0.00%	2.42%	$	4.62
2021	1/5/2021	5.0 years	79.52%	0.00%	2.11%	$	4.70

Note 11 – Employee Benefit Plans

The Company has a qualified, defined benefit pension plan that was established to provide benefits to certain employees. The plan is frozen and participants are no longer accruing benefits. Generally, contributions to the plan are not less than the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and not more than the maximum amount that can be deducted for federal income tax purposes. The plan assets are held by an independent trustee and consist primarily of equity and fixed income securities.

The components of net periodic benefit cost (benefit) for the three months ended March 31, 2022 and 2021, are as follows:


	Three Months Ended
	March 31,
Pension Benefits	2022			2021
Interest cost	$	276		$	236
Expected return on plan assets		(617	)		(584	)
Amortization of unrecognized net loss		84			156
	$	(257	)	$	(192	)

The Company made no contributions to the Company’s defined benefit pension plan for the three months ended March 31, 2022 and 2021. The Company expects to make no contributions to its pension plan in 2022.

The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions and employee earnings with discretionary contributions allowed.

Note 12 – Contingencies and Legal Settlements

The Company is involved in various warranty and repair claims and, in certain cases, related pending and threatened legal proceedings with its customers in the normal course of business. In the opinion of management, the Company’s potential losses in excess of the accrued warranty and legal provisions, if any, are not expected to be material to the Company’s consolidated financial condition, results of operations or cash flows.

As part of a settlement agreement reached with one of its customers during 2019, the Company agreed to pay $7,500 to settle all claims related to a prior year’s commercial dispute. During the first quarter of 2022, the Company paid the remaining $1,000 of the settlement amount.

In addition to the foregoing, the Company is involved in certain other pending and threatened legal proceedings, including commercial disputes and workers’ compensation and employee matters arising out of the conduct of its business. The Company has reserved $0.4 million to cover probable and estimable liabilities with respect to these matters.

Note 13 – Loss Per Share

The weighted-average common shares outstanding are as follows:


	Three Months Ended March 31,
	2022		2021

Weighted average common shares outstanding		15,678,143		14,702,964
Issuance of warrants		7,540,504		5,298,541
Weighted average common shares outstanding - basic		23,218,647		20,001,505
Weighted average common shares outstanding - diluted		23,218,647		20,001,505

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. The Company’s participating securities are its grants of restricted stock which contain non-forfeitable rights to dividends. The Company allocates earnings between both classes; however, in periods of undistributed losses, they are only allocated to common shares as the unvested restricted stockholders do not contractually participate in losses of the Company. The Company computes basic earnings per share by dividing net income allocated to common shareholders by the weighted average number of shares outstanding during the period. Warrants issued in connection with the Company's long-term debt were issued at a nominal exercise price and are considered outstanding at the date of issuance. Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the period. Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and the assumed vesting of nonvested share awards. For the three months ended March 31, 2022 and 2021, 1,694,483 and 1,383,191 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive.

Note 14 – Restructuring and Impairment Charges

On September 10, 2020, the Company announced its plan to permanently close its Shoals Facility in light of the ongoing cyclical industry downturn, which has been magnified by the COVID-19 pandemic. On October 8, 2020, the Company reached an agreement with the Shoals facility owner and landlord, to shorten the Shoals lease term by amending the expiration date to the end of February 2021. In addition, the landlord agreed to waive the base rent payable under the original lease for the months of October 2020 through February 2021. Property, plant and equipment with an estimated fair value of $10,148 was sold or transferred to the Shoals landlord during the three months ended March 31, 2021 as consideration for the landlord’s entry into the lease amendment and the aforementioned rent waiver. Restructuring and impairment charges related to the plant closure for the three months March 31, 2021 primarily represented costs related to relocating some of the facility’s equipment to Castaños.

Restructuring and impairment charges are reported as a separate line item on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021, and are detailed below:


	Three Months Ended
	March 31,
	2022		2021
Impairment and loss on disposal of machinery and equipment	$	-	$	269
Employee severance and retention		-		(57	)
Other charges related to facility closure		-		6,438
Total restructuring and impairment costs	$	-	$	6,650


	Accrued as of December 31, 2021		Cash Charges		Non-cash charges		Cash payments			Accrued as of March 31, 2022

Impairment and loss on right of use asset	$	-								$	-
Employee severance and retention		163				-		(90	)		73
Other charges related to facility closure		-									-
Total restructuring and impairment costs	$	163	$	-	$	-	$	(90	)	$	73


	Accrued as of December 31, 2020		Cash Charges		Non-cash charges			Cash payments			Accrued as of March 31, 2021

Impairment and loss on right of use asset	$	-			$	269					$	-
Employee severance and retention		1,596				(57	)		(1,075	)		464
Other charges related to facility closure		251		6,438					(4,897	)		1,792
Total restructuring and impairment costs	$	1,847	$	6,438	$	212		$	(5,972	)	$	2,256

Note 15 – Related Parties

The following persons are owners of Fasemex: Jesus Gil, VP Operations and director of the Company; Alejandro Gil and Salvador Gil, siblings of Jesus Gil. Fasemex provides steel fabrication services to the Company and is the lessor for the Company’s leased facility in Castaños. The Company paid $12,209 and $4,673 to Fasemex during the three months ended March 31, 2022 and 2021, respectively, related to rent payment, security deposit, fabrication services and royalty payments. Distribuciones Industriales JAS S.A. de C.V. (“Distribuciones Industriales”) is owned by Alejandro Gil and Salvador Gil. The Company paid $508 and $334 to Distribuciones Industriales related to material and safety supplies during the three months ended March 31, 2022 and 2021, respectively. Maquinaria y equipo de transporte Jova S.A. de C.V is owned by Jorge Gil, sibling of Jesus Gil. The Company paid $599 and $112 to Maquinaria y equipo de transporte Jova S.A. de C.V related to trucking services during the three months ended March 31, 2022 and 2021, respectively. Related party asset on the condensed consolidated balance sheet of $5,259 as of March 31, 2022 includes prepaid inventory of $713 and other receivables of $4,546 from Fasemex. Related party accounts payable on the condensed consolidated balance sheet of $6,815 as of March 31, 2022 includes $6,017 payable to Fasemex, $301 payable to Distribuciones Industriales and $497 payable to Maquinaria y equipo de transporte Jova S.A. de C.V. Related party asset on the condensed consolidated balance sheet of $8,680 as of December 31, 2021 includes prepaid inventory of $4,134 and other receivables of $4,546 from Fasemex. Related party accounts payable on the condensed consolidated balance sheet of $8,870 as of December 31, 2021 includes $8,291 payable to Fasemex, $291 payable to Distribuciones Industriales and $288 payable to Maquinaria y equipo de transporte Jova S.A. de C.V.

The Company paid $2,037 to the Warrantholder during the three months ended March 31, 2022, for term loan interest of which $1,673 was paid in cash and $364 was payment in kind. Additionally, the Company paid $1,000 in equity fees and $122 in cash fees to the Warrantholder related to the standby letter of credit described in Note 8 Debt Financing and Revolving Credit Facilities during the three months ended March 31, 2022.

Note 16 – Subsequent Event

As previously disclosed on May 14, 2021, the Loan Parties entered into an Amendment No. 2 to the Term Loan Credit Agreement (the “Second Amendment” and together with the Term Loan Credit Agreement, the “Term Loan Credit Agreement”) with Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $16,000 to a total of $56,000, with such additional $16,000 (the “Additional Loan”) to be funded upon the satisfaction of certain conditions precedent set forth in the Second Amendment. The Additional Loan closed and was funded on May 17, 2021. As of March 31, 2022, the Additional Loan was not repaid in full and, therefore, on April 4, 2022, pursuant to the Amendment and a warrant acquisition agreement, dated as of April 4, 2022 (the “Warrant Acquisition Agreement”), the Company issued the Additional Warrant to the Lender. The Additional Warrant has an exercise price of $0.01 and a term of ten (10) years.

The issuance of the Additional Warrant was, and the potential issuance of the common stock issuable upon exercise of the Additional Warrant will be, made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act, because the offer and sale of such securities do not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act.

In connection with the issuance of the Additional Warrant, on April 4, 2022, the Company and the Lender entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Lender may deliver to the Company a written notice (a “Demand”) requiring the Company as soon as reasonably practicable after receiving the Demand, but not more than sixty calendar days following the receipt of the Demand, to file a registration statement (the “Demand Registration Statement”) with the Securities and Exchange Commission with respect to all or a portion of the Registrable Shares (as defined in the Registration Rights Agreement). The Company will use commercially reasonable efforts to keep the Demand Registration Statement continuously effective (including the preparation and filing of any amendments and supplements necessary for that purpose) until the date on which all of the Registrable Shares registered for resale under the Demand Registration Statement have been sold or such earlier date on which all Registrable Shares are freely tradeable in a single transaction pursuant to Rule 144.

In certain circumstances described in the Registration Rights Agreement, the Lender will have (i) piggyback registration rights with respect to the Registrable Shares and (ii) the right to request that the Company initiate an Underwritten Offering (as defined in the Registration Rights Agreement) of Registrable Shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains certain forward-looking statements including, in particular, statements about our plans, strategies and prospects. We have used the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “likely,” “unlikely,” “intend” and similar expressions in this report to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. However, forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties relate to, among other things, risks relating to the potential financial and operational impacts of the COVID-19 pandemic, the cyclical nature of our business, the competitive nature of our industry, our reliance upon a small number of customers that represent a large percentage of our sales, the variable purchase patterns of our customers and the timing of completion, delivery and customer acceptance of orders, fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials, the risk of lack of acceptance of our new railcar offerings by our customers, risks relating to our relationship with our unionized employees and their unions and other competitive factors. The factors listed above are not exhaustive. Other sections of this quarterly report on Form 10-Q include additional factors that could materially and adversely affect our business, financial condition and results of operations. New factors emerge from time to time and it is not possible for management to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws.

OVERVIEW

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

We are a diversified manufacturer of railcars and railcar components. We design and manufacture a broad variety of railcar types for transportation of bulk commodities and containerized freight products primarily in North America. We rebuild and convert railcars and sell forged, cast and fabricated parts for all of the railcars we produce, as well as those manufactured by others. We also lease freight cars. Our primary customers are financial institutions, railroads and shippers.

On September 10, 2020, we announced our plan to permanently close the Shoals Facility in light of the cyclical industry downturn, which was magnified by the global pandemic. The closure will reduce costs and align our manufacturing capacity with the current railcar market. We ceased production at the Shoals Facility in February 2021.

Total new orders received for railcars for the three months ended March 31, 2022 were 855 units, consisting of 657 new railcars and 198 rebuilt railcars, compared to orders for 300 units, consisting of 200 new railcars and 100 rebuilt railcars for the three months ended March 31, 2021. Total backlog of unfilled orders was 2,395 units at March 31, 2022, compared to 2,323 railcars as of December 31, 2021. The estimated sales value of the backlog was $250 million and $240 million, respectively, as of March 31, 2022, and December 31, 2021. The increase in the number of orders for new railcars for the three months ended March 31, 2022 compared to the prior year period is a reflection of improvement in the railcar equipment market.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021

Revenues

Our consolidated revenues for the three months ended March 31, 2022 were $93.2 million compared to $32.4 million for the three months ended March 31, 2021. Manufacturing segment revenues for the three months ended March 31, 2022 were $90.1 million compared to $30.0 million for the corresponding prior year quarter. The $60.1 million increase in Manufacturing segment revenues was largely driven by an increase in the volume of railcar units delivered, Railcar deliveries totaled 783 units for the first quarter of 2022, consisting of 437 new railcars and 346 rebuilt railcars, compared to 309 units, consisting of 160 new railcars and 149 rebuilt

railcars, in the first quarter of 2021. Corporate and Other revenues were $3.1 million for the three months ended March 31, 2022 compared to $2.4 million for the three months ended March 31, 2021.

Gross Profit

Our consolidated gross profit was $10.1 million for the three months ended March 31, 2022 compared to $1.3 million for the three months ended March 31, 2021. Manufacturing segment gross profit was $9.3 million for the three months ended March 31, 2022 compared to $1.1 million for the three months ended March 31, 2021. The $8.7 million increase in consolidated gross profit and $8.2 million increase in Manufacturing segment gross profit reflect a favorable volume variance.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the three months ended March 31, 2022 were $10.7 million compared to $9.2 million for the three months ended March 31, 2021. The increase in consolidated selling, general and administrative expenses for the three months ended March 31, 2022 was primarily due to increases in stock-based compensation related to cash-settled stock appreciation rights awarded to employees in prior periods. Manufacturing segment selling, general and administrative expenses were $0.8 million for the three months ended March 31, 2022, compared to $0.5 million for the three months ended March 31, 2021. Manufacturing segment selling, general and administrative expenses for the three months ended March 31, 2022 were 0.9% of revenue, compared to 1.7% of revenue for the three months ended March 31, 2021. Corporate and Other selling, general and administrative expenses were $9.9 million for the three months ended March 31, 2022 compared to $8.6 million for the three months ended March 31, 2021. Corporate and Other selling, general and administrative expenses for the three months ended March 31, 2022 included increases in stock-based compensation of $1.6 million.

Restructuring and Impairment Charges

There were no restructuring and impairment charges for the three months ended March 31, 2022. Restructuring and impairment charges of $6.6 million for the three months ended March 31, 2021 primarily represented costs related to relocating some of the Shoals facility’s equipment to Castaños.

Operating Loss

Our consolidated operating loss for the three months ended March 31, 2022 was $0.7 million compared to $14.5 million for the three months ended March 31, 2021. Operating income for the Manufacturing segment was $8.5 million for the three months ended March 31, 2022 compared to an operating loss of $6.0 million for the three months ended March 31, 2021, reflecting the increase in railcars delivered during the three months ended March 31, 2022 compared to the 2021 period. Manufacturing segment operating income for the three months ended March 31, 2021 included restructuring and impairment charges of $6.6 million while there were no restructuring and impairment charges for the three months ended March 31, 2022. Corporate and Other operating loss was $9.2 million for the three months ended March 31, 2022 compared to $8.5 million for the three months ended March 31, 2021. The increase in operating loss is primarily a result of the previously described increases in Corporate and Other stock-based compensation costs.

Income Taxes

Our income tax provision was $0.3 million for the three months ended March 31, 2022 compared to $0.1 million for the three months ended March 31, 2021 .

Net Income (Loss)

As a result of the changes and results discussed above, net loss was $25.8 million for the three months ended March 31, 2022 compared to $39.1 million for the three months ended March 31, 2021. For the three months ended March 31, 2022, basic and diluted net loss per share was $1.11 compared to $1.96 for the three months ended March 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are our cash and cash equivalent balances on hand and our credit and debt facilities outlined below.

Term Loan Credit Agreement

guarantors, collectively, the “Loan Parties”), CO Finance LVS VI LLC, as lender (the “Lender”), and U.S. Bank National Association, as disbursing agent and collateral agent (“Agent”). Pursuant to the Term Loan Credit Agreement, the Lender committed to the extension of a term loan credit facility in the principal amount of $40.0 million, consisting of a single term loan to be funded upon the satisfaction of certain conditions precedent set forth in the Term Loan Credit Agreement, including stockholder approval of the issuance of the common stock underlying the Warrant described below (the funding date of such term loan, the “Closing Date”). FreightCar America, Inc. stockholders approved the issuance of the common stock underlying the Warrant at a special stockholders’ meeting on November 24, 2020. The $40.0 million term loan closed and was funded on November 24, 2020. The Company incurred $2.9 million in deferred financing costs related to the Term Loan Agreement. The deferred financing costs are presented as a reduction of the long-term debt balance and amortized to interest expense over the term of the Term Loan Agreement.

On May 14, 2021, the Loan Parties entered into an Amendment No. 2 to the Term Loan Credit Agreement (the “Second Amendment” and together with the Term Loan Credit Agreement, the “Term Loan Credit Agreement”) with Lender and the Agent pursuant to which the principal amount of the term loan credit facility was increased by $16.0 million to a total of $56.0 million, with such additional $16.0 million (the “Additional Loan”) to be funded upon the satisfaction of certain conditions precedent set forth in the Second Amendment. The Additional Loan closed and was funded on May 17, 2021. The Company incurred $0.5 million in deferred financing costs related to the Second Amendment which are presented as a reduction of the long-term debt balance and amortized on a straight-line basis to interest expense over the term of the Second Amendment.

The Additional Loan bears interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at the Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin (as defined in the Term Loan Credit Agreement) for each such interest rate set forth in the Term Loan Credit Agreement. As of March 31, 2022, the interest rate on the Additional Loan was 14.0%.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company shall issue to the Lender and/or an affiliate of the Lender a warrant (the “March 2022 Warrant”) to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 5% of the Company’s outstanding common stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). The Additional Warrant was issued on April 4, 2022. (see Note 16 Subsequent Event).

Pursuant to the Second Amendment, the Company was required to among other things, i) obtain a term sheet for additional financing of no less than $15.0 million by July 31, 2021 and ii) file a registration statement on Form S-3 registering Company securities, including the shares of Company common stock issuable upon exercise of the March 2022 Warrant, by no later than August 31, 2021. The Company has met each of the aforementioned obligations. The Form S-3 registering Company securities, including the shares of Company stock issuable upon exercise of the March 2022 Warrant, was filed with the Securities and Exchange Commission on August 27, 2021 and became effective on September 9, 2021.

On July 30, 2021, the Loan Parties entered into an Amendment No. 3 to Credit Agreement with Lender and the Agent, pursuant to which, among other things, Lender obtained a standby letter of credit (as may be amended from time to time, the “Third Amendment Letter of Credit”) from Wells Fargo Bank, N.A., in the principal amount of $25,000 for the account of the Company and for the benefit of Siena Lending Group LLC (the “Revolving Loan Lender”).

On December 30, 2021, the Loan Parties entered into an Amendment No. 4 to Credit Agreement (the “Fourth Amendment” and together with the Credit Agreement, as amended, the “Term Loan Credit Agreement”) with Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $15.0 million to a total of $71.0 million, with such additional $15.0 million (the “Delayed Draw Loan”) to be funded, at the Borrower’s option, upon the satisfaction of certain conditions precedent

set forth in the Fourth Amendment. The Borrower has the option to draw on the Delayed Draw Loan through January 31, 2023 and may choose not to do so.

Pursuant to the Reimbursement Agreement, the Company shall make certain other payments as set forth below, so long as the Third Amendment Letter of Credit remains outstanding:

Letter of Credit Fee

The Company shall pay to Agent, for the account of Lender, an annual fee of $0.5 million, which shall be due and payable quarterly beginning on August 2, 2021, and every three months thereafter.

Equity Fee

Every three months (the “Measurement Period”), commencing on August 6, 2021, the Company shall pay to the Lender (or, so long as Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if Lender has timely notified the Company in writing of such designation) a fee (the “Equity Fee”) payable in shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”). The Equity Fee shall be calculated by dividing $1.0 million by the volume weighted average price of the Company’s Common Stock on the Nasdaq Capital Market for the ten (10) trading days ending on the last business day of the applicable Measurement Period. The Company can opt to pay the Equity Fee in cash, in the amount of $1.0 million, if, and only if, (x) the Company has already issued as Equity Fees a number of shares of its Common Stock equal to (I) 5.0% multiplied by (II) the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock, and (y) the Company has at least $15.0 million of Repayment Liquidity after giving effect to such payment. The term Repayment Liquidity, as defined in the Term Loan Credit Agreement, means (a) all unrestricted and unencumbered cash and cash equivalents of the Loan Parties, plus (b) the undrawn and available portion of the commitments under that certain Amended and Restated Loan and Security Agreement by and among the Loan Parties and the Revolving Loan Lender (as described below), minus (c) all accounts payable of the Loan Parties that are more than 30 days past due.

The Equity Fee shall no longer be paid once the Company has issued to Lender and/or OC III LVS XII LP Equity Fees in an amount of Common Stock equal to 9.99% multiplied by the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock (the “Maximum Equity”). Through March 31, 2022, the Company has paid Equity Fees totaling 693,077 shares of the Company's Common Stock.

The issuance of each Equity Fee under the Reimbursement Agreement will be made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act for offers and sales of securities that do not involve a “public offering.”

Cash Fee

The Company shall pay to the Agent, for the account of the Lender (or, so long as the Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if the Lender has timely notified the Company in writing of such designation) a cash fee (the “Cash Fee”) which shall be due and payable in cash quarterly beginning on the date that the Maximum Equity has been issued and thereafter on the business day immediately succeeding the last business day of the applicable Measurement Period. The Cash Fee shall be equal to $1.0 million, provided that, in the quarter in which the Maximum Equity is issued, such fee shall be equitably reduced by the value of any Equity Fee issued by the Company that quarter.

Warrant

Closing Date of November 24, 2020. As of March 31, 2022 and December 31, 2021, the Warrant was exercisable for an aggregate of 6,289,754 and 6,098,217 shares, respectively, of common stock of the Company with a per share exercise price of $0.01.The Company determined that the Warrant should be accounted for as a derivative instrument and classified as a liability on its Consolidated Balance Sheets primarily due to the instrument obligating the Company to settle the Warrant in a variable number of shares of common stock. The Warrant was recorded at fair value and is treated as a discount on the term loan. The discount on the associated debt is amortized over the life of the Term Loan Credit Agreement and included in interest expense.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company shall issue to the Lender and/or an affiliate of the Lender the March 2022 Warrant to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 5% of the Company’s outstanding common stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). Because the Company believed that it was probable that the March 2022 Warrant would be issued the Company recorded an additional warrant liability of $7.4 million during the third quarter of 2021. The Additional Warrant was issued on April 4, 2022. (see Note 16 Subsequent Event).

Siena Loan and Security Agreement

On October 8, 2020, the Company entered into a Loan and Security Agreement (the “Siena Loan Agreement”) by and among the Company, as guarantor, and certain of its subsidiaries, as borrowers (together with the Company, the “Loan Parties”), and Siena Lending Group LLC, as lender (“Siena”). Pursuant to the Siena Loan Agreement, Siena provided an asset backed credit facility, in the maximum aggregate principal amount of up to $20.0 million, (the "Maximum Revolving Facility Amount") consisting of revolving loans (the "Revolving Loans").

The Siena Loan Agreement provided for a revolving credit facility with maximum availability of $20.0 million, subject to borrowing base requirements set forth in the Siena Loan Agreement, which generally limited availability under the revolving credit facility to (a) 85% of the value of eligible accounts and (b) up to the lesser of (i) 50% of the lower of cost or market value of eligible inventory and (ii) 85% of the net orderly liquidation value of eligible inventory, and as reduced by reserves established by Siena from time to time in accordance with the Siena Loan Agreement.

On July 30, 2021, the Loan Parties and Siena entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan and Security Agreement”), which amended and restated the terms and conditions of the Siena Loan Agreement in its entirety.

Pursuant to the Amended and Restated Loan and Security Agreement, the Maximum Revolving Facility Amount was increased to $25.0 million, provided, however, that the outstanding balance of all Revolving Loans may not exceed the lesser of (A) the Maximum Revolving Facility Amount minus the Availability Block and (B) an amount equal to the issued and undrawn portion of the Third Amendment Letter of Credit (as defined above) minus the Availability Block. The term “Availability Block”, as defined in the Amended and Restated Loan and Security Agreement, means 3.0% of the issued and undrawn amount under the Third Amendment Letter of Credit.

Agreement, each of the Loan Parties granted Siena a continuing lien upon certain assets of the Loan Parties to secure the obligations of the Loan Parties under the Amended and Restated Loan and Security Agreement.

On February 23, 2022, the Loan Parties and the Revolving Loan Lender entered into a First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment to Amended and Restated Loan and Security Agreement”), pursuant to which, among other things, the Maximum Revolving Facility Amount was increased to $35 million; provided, however, that after giving effect to each Revolving Loan and each letter of credit made available to the Loan Parties, (A) the outstanding balance of all Revolving Loans and the Letter of Credit Balance (which is defined in the Amended and Restated Loan and Security Agreement as the sum of (a) the aggregate undrawn face amount of all outstanding Letters of Credit and (b) all interest, fees and costs due or, in Lender’s estimation, likely to become due in connection therewith) will not exceed the lesser of (x) the Maximum Revolving Facility Amount and (y) the Borrowing Base (as defined in the First Amendment to Amended and Restated Loan and Security Agreement), and (B) none of the other Loan Limits (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) for Revolving Loans will be exceeded.

As of March 31, 2022, the Company had $32.3 million in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $1.1 million. As of December 31, 2021, the Company had $24.0 million in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $0.1 million .The Company incurred $1.1 million in deferred financing costs related to the Siena Loan Agreement and incurred $1.0 million in additional deferred financing costs related to the Amended and Restated Loan and Security Agreement. The deferred financing costs are presented as an asset and amortized to interest expense on a straight-line basis over the term of the Siena Loan Agreement.

M&T Credit Agreement

On April 16, 2019, FreightCar America Leasing 1, LLC, an indirect wholly-owned subsidiary of the Company (“Freightcar Leasing Borrower”), entered into a Credit Agreement (the “M&T Credit Agreement”) with M & T Bank, N.A., as lender (“M&T”). Pursuant to the M&T Credit Agreement, M&T extended a revolving credit facility to Freightcar Leasing Borrower in an aggregate amount of up to $40.0 million for the purpose of financing railcars which will be leased to third parties.

On April 16, 2019, Freightcar Leasing Borrower also entered into a Security Agreement with M&T (the “M&T Security Agreement”) pursuant to which it granted a security interest in all of its assets to M&T to secure its obligations under the M&T Credit Agreement.

On April 16, 2019, FreightCar America Leasing, LLC, a wholly-owned subsidiary of the Company and parent of Freightcar Leasing Borrower (“Freightcar Leasing Guarantor”), entered into (i) a Guaranty Agreement with M&T (the “M&T Guaranty Agreement”) pursuant to which Freightcar Leasing Guarantor guarantees the repayment and performance of certain obligations of Freightcar Leasing Borrower and (ii) a Pledge Agreement with M&T (the “M&T Pledge Agreement”) pursuant to which Freightcar Leasing Guarantor pledged all of the equity of Freightcar Leasing Borrower held by Freightcar Leasing Guarantor.

The loans under the M&T Credit Agreement are non-recourse to the assets of the Company or its subsidiaries other than the assets of Freightcar Leasing Borrower and Freightcar Leasing Guarantor.

On August 7, 2020, FreightCar Leasing Borrower received notice (the “First Notice”) from M&T that, based on an appraisal (the “Appraisal”) conducted by a third party at the request of M&T with respect to the railcars in FreightCar Leasing Borrower’s Borrowing Base (as defined in the M&T Credit Agreement) under the M&T Credit Agreement, the unpaid principal balance under the M&T Credit Agreement exceeded the availability under the M&T Credit Agreement as of the date of the Appraisal by $5.1 million

(the “Payment Demand Amount”). In the First Notice, M&T Bank: (a) asserted that an Event of Default under the M&T Credit Agreement has occurred because FreightCar Leasing Borrower did not pay the Payment Demand Amount to M&T within five days of the asserted change in availability; (b) demanded payment of the amount within five days of the date of the First Notice; and (c) terminated the commitment to advance additional loans under the M&T Credit Agreement.

On December 18, 2020, FreightCar Leasing Borrower received a revised notice (the “Second Notice,” and together with the First Notice, the “Notices”) from M&T asserting that: (a) as a result of the continuing Event of Default that M&T alleged to have occurred under the M&T Credit Agreement, M&T has declared a default and accelerated and demands immediate payment by FreightCar Leasing Borrower of $10.1 million (the “Outstanding Amount”); (b) FreightCar Leasing Borrower is liable for all interest that continues to accrue on the Outstanding Amount; and (c) FreightCar Leasing Borrower is liable for all attorneys’ fees, costs and expenses as set forth in the M&T Credit Agreement.

On April 20, 2021, FreightCar Leasing Borrower received a notice from M&T that an Event of Default had occurred due to all amounts outstanding under the M&T Credit Agreement not having been paid by the Term End.

On December 28, 2021 (the “Execution Date”), FreightCar Leasing Borrower, FreightCar Leasing Guarantor (together with the FreightCar Leasing Borrower, the “Obligors”), the Company, FreightCar America Railcar Management, LLC, a Delaware limited liability company (“FCA Management”), and M&T, entered into a Forbearance and Settlement Agreement (the “Forbearance Agreement”) with respect to the M&T Credit Agreement and its related Credit Documents (as defined in the M&T Credit Agreement), as well as certain intercompany services agreements related thereto.

Pursuant to the Forbearance Agreement, the Obligors will continue to perform and comply with all of their performance obligations (as opposed to payment obligations) under certain provisions of the M&T Credit Agreement (primarily related to information obligations and the preservation of the collateral pledged by the Borrower to M&T pursuant to the M&T Security Agreement, between the Borrower and M&T (the “Collateral”)) and all the provisions of the M&T Security Agreement. During the period from Execution Date until the termination of the Forbearance Agreement, M&T may not take any action against the Obligors or exercise or enforce any rights or remedies provided for in the Credit Documents or otherwise available to it.

On December 1, 2023, or sooner if requested by M&T (the “Turnover Date”), the Borrower shall execute and deliver to M&T documents required to deliver and assign to M&T all the leased railcars and related leases serving as Collateral for the M&T Credit Agreement.

Upon the Turnover Date and the Obligors’ performance of their respective obligations under the Forbearance Agreement, including the delivery of certain Collateral to M&T upon the Turnover Date, all Obligations (as defined in the M&T Credit Agreement) shall be deemed satisfied in full, M&T shall no longer have any further claims against the Obligors under the M&T Credit Documents and the Credit Documents shall automatically terminate and be of no further force or effect except for the provisions thereof that expressly survive termination.

The Forbearance Agreement contains customary releases at execution for all affiliates of the Company (other than the Obligors) and agreements to deliver final releases with respect to the Obligors upon their performance under the Forbearance Agreement. The Company also agreed to turn over to M&T on the Effective Date certain rents in the amount of $0.7 million that it had previously collected as servicing agent for the Borrower, and to continue to provide such services through the Turnover Date without a service fee, and after the Turnover Date through the return of the railcars serving as Collateral, for a service fee.

As of March 31, 2022 and December 31, 2021, FreightCar Leasing Borrower had $7.7 million and $7.9 million, respectively, in outstanding debt under the M&T Credit Agreement, which was collateralized by leased railcars with a carrying value of $6.6 million and $6.6 million, respectively. As of March 31, 2022, the interest rate on outstanding debt under the M&T Credit Agreement was 4.50%.

Additional Liquidity Factors

Our restricted cash, restricted cash equivalents and restricted certificates of deposit balances were $4.4 million and $5.0 million as of March 31, 2022 and December 31, 2021, respectively. Restricted deposits of $0.3 million as of each of March 31, 2022 and December 31, 2021, relate to a customer deposit for purchase of railcars. Restricted deposits of $3.6 million and $4.7 million as of March 31, 2022 and December 31, 2021, respectively, are used to collateralize standby letters of credit with respect to performance guarantees. The standby letters of credit outstanding as of March 31, 2022 are scheduled to expire at various dates through December 10, 2022.

Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our cash balances will be sufficient to meet our expected liquidity needs for at least the next twelve months. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit

facilities, our Term Loan Credit Agreement and any other indebtedness and the availability of additional financing if needed. We may also require additional capital in the future to fund working capital as demand for railcars increases, payments for contractual obligations, organic growth opportunities, including new plant and equipment and development of railcars, joint ventures, international expansion and acquisitions, and these capital requirements could be substantial. Additionally, our Value Added Tax ("VAT") receivable has grown over the past year and has become a significant part of the Company’s working capital structure. We continue to work through the return process and have made progress in recovering VAT refunds.

Based upon our operating performance and capital requirements, we may, from time to time, be required to raise additional funds through additional offerings of our common stock and through long-term borrowings such as the $40.0 million term loan under the Term Loan Credit Agreement. There can be no assurance that long-term debt, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse effect on our results of operations and financial condition.

Cash Flows

The following table summarizes our net cash provided by (used in) operating activities, investing activities and financing activities for the three months ended March 31, 2022 and 2021:


	2022			2021
	(In thousands)
Net cash (used in) provided by:
Operating activities	$	7,645		$	(22,276	)
Investing activities		(960	)		(169	)
Financing activities		8,086			(46	)
Total	$	14,771		$	(22,491	)

Operating Activities. Our net cash provided by or used in operating activities reflects net loss adjusted for non-cash charges and changes in operating assets and liabilities. Cash flows from operating activities are affected by several factors, including fluctuations in business volume, contract terms for billings and collections, the timing of collections on our contract receivables, processing of bi-weekly payroll and associated taxes, payments to our suppliers and other operating activities. As some of our customers accept delivery of new railcars in train-set quantities, variations in our sales lead to significant fluctuations in our operating profits and cash from operating activities. We do not usually experience business credit issues, although a payment may be delayed pending completion of closing documentation.

Our net cash provided by operating activities for the three months ended March 31, 2022 was $7.6 million compared to net cash used in operating activities of $21.9 million for the three months ended March 31, 2021 . Our net cash provided by operating activities for the three months ended March 31, 2022 reflects changes in working capital, including increases in customer deposits of $18.7 million which were partially offset by increases in accounts receivable of $12.5 million. Increases in customer deposits for the three months ended March 31, 2022 represented customer prepayments for inventory to be used in production of railcars to be delivered during 2022. Our net cash used in operating activities for the three months ended March 31, 2021 reflects changes in working capital, including increases in VAT receivable of $8.8 million and decreases in customer deposits and deferred revenue of $6.9 million. Decreases in customer deposits and deferred revenue for the three months ended March 31, 2021 reflected delivery of railcars and recognition of revenue during the period.

Investing Activities. Net cash used in investing activities for the three months ended March 31, 2022 was $1.0 million and consisted of capital expenditures related to the construction in progress for our Mexico operations. Net cash used in investing activities for the three months ended March 31, 2021 was $0.2 million and included capital expenditures of $0.6 million related to the construction in progress for our Mexico operations and the $0.4 million proceeds from sale of equipment from our Shoals facility.

Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2022 was $8.1 million and primarily consisted of net borrowings on our revolving line of credit. Net cash used in financing activities for the three months ended March 31, 2021 was not material.

Capital Expenditures

Our capital expenditures were $1.0 million in the three months ended March 31, 2022, compared to $0.5 million in the three months ended March 31, 2021. We anticipate capital expenditures during 2022 to be in the range of $7 million to $8 million, primarily related to the construction of our Mexico facility.

Item 4. Controls and Procedures.

Management’s Report on Internal Control over Financial Reporting

The Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange At of 1934, as amended (the “Exchange Act”)), as of March 31, 2022. Based on their evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2022.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The information in response to this item is included in Note 12 – Contingencies to our condensed consolidated

financial statements included in Part I, Item 1 of this Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a)

Exhibits filed as part of this Form 10-Q:


10.1	FreightCar America, Inc. Executive Severance Plan (As Amended and Restated January 17, 2022)
10.2	First Amendment to Amended and Restated Loan and Security Agreement dated as of February 23, 2022, by and among the Company and certain of its subsidiaries and Siena Lending Group, LLC.
10.3	Amended Royalty Agreement, dated as of February 8, 2022, by and among the Company and Fabricaciones y Servicios de México, S.A. de C.V., Agben de Mexico, S.A. de C.V. and Fasemex, Inc..
10.4	Amended and Restated Warrant to Purchase Common Stock of FreightCar America, Inc. dated as of March 1, 2022, by and between the Company and OC III LVS XII LP
10.5	Amended and Restated Warrant to Purchase Common Stock of FreightCar America, Inc. dated as of March 1, 2022, by and between the Company and OC III LVS XXVIII LP
10.6	Amendment No. 5 to the Term Loan Credit Agreement
10.7	Letter agreement regarding Terms of Employment dated March 21, 2022 by and between FreightCar America, Inc. and Michael A. Riordan.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




	FREIGHTCAR AMERICA, INC.

Date: May 10, 2022	By:	/s/ JAMES R. MEYER
		James R. Meyer, President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ MICHAEL A. RIORDAN
		Michael A. Riordan, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)