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FreightCar America (NASDAQ:RAIL) is a turnaround story trading below net cash. Historically, RAIL specialized in manufacturing coal railcars, but got into trouble when they diversified into building other types of railcars. They are having operational issues producing a wider range of railcars with the right cost structure.
Two years ago, the company hired James Meyer, a CEO with operational expertise and extensive experience manufacturing vehicles, yachts, and recreational vehicles. He was the Chief Operating Officer at Allied Specialty Vehicles, a manufacturer of specialty vehicles for the fire and emergency market, held various leadership potions at Brunswick, an RV manufacturer, and spent 16 years at Ford holding various executive positions. His background manufacturing various vehicles has many parallels to railcars because they involve efficient production on an assembly line.
Progress has been underwhelming, and as a result, the stock has fallen from $18 to $4 over the last year. The stock is currently trading below net cash per share of $4.83 and has an additional $3.83 per share in railcars on lease, which can be converted to cash. Their net cash position is made up of $70 million in cash and $10 million in debt backed by their leasing fleet, equating to a net-cash position of $60 million. The company does screen for higher leverage due to recently adopted accounting standards for leases, which creates a liability line item on their balance sheet for operating leases, but also an offsetting asset. These changes are cosmetic in nature, and doesn't take away from their net-cash position.
