RAIL 8-K
FreightCar America, Inc. (RAIL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
_______________________________
(Exact name of registrant as specified in its charter)
_______________________________
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
(
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by 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. ☐
On August 16, 2021, FreightCar America, Inc. issued a press release announcing its financial results for the second quarter of 2021. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in Exhibit 99.1 is being furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
(d) Exhibits
| Exhibit 99.1 | Press release of FreightCar America, Inc., dated August 16, 2021. | |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
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 hereunto duly authorized.
| FREIGHTCAR AMERICA, INC. | ||
| Date: August 16, 2021 | By: | /s/ TERENCE R. ROGERS |
| Terence R. Rogers | ||
| Vice President, Finance, Chief Financial Officer, Treasurer and Corporate Secretary | ||
EXHIBIT 99.1
FreightCar America, Inc. Reports Second Quarter 2021 Results
Third consecutive quarter of positive gross margin and first quarter of manufacturing operating income since 2018
Company raises 2021 delivery outlook for second time and announces plan to add two additional production lines within a year
CHICAGO, Aug. 16, 2021 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) today reported results for the second quarter ended June 30, 2021.
Business Highlights
- Second quarter revenue of $37.4 million, up 114% year-over-year, on deliveries of 313 railcars
- Gross margin of $3.6 million, positive for the third consecutive quarter
- Manufacturing operating income was $1.9 million, the first positive result in three years
- Second quarter net loss of ($2.6) million, or ($0.13) per share, included $3.5 million non-cash income related to the change in fair market value of warrant liability
- Adjusted EBITDA loss was ($1.5) million, which excludes the previously mentioned non-cash income
- Quarter-end backlog totaled 2,200 railcars with an aggregate value of approximately $224 million
- 2021 delivery outlook raised to between 1,750 and 1,850 railcars, up from between 1,600 and 1,750 railcars
- Subsequent to quarter end, approved plans to build additional manufacturing lines, increasing Castaños plant capacity
- Subsequent to quarter end, entered into an amended financing agreement with current partner, opening up a $25 million line of credit to support working capital needs
“We are pleased to have achieved the majority of our goals for the quarter, which included our third consecutive quarter of positive gross margin, positive operating income at the manufacturing level, and a solid mix of new business awarded,” said Jim Meyer, President and Chief Executive Officer of FreightCar America. “For the first half of fiscal 2021, our Adjusted EBITDA loss decreased to $2.0 million compared to a loss of $23.2 million in the same period of 2020. This improvement, in the face of multiple supply chain constraints and significant raw material inflation, truly highlights the potential of our new footprint.”
Meyer continued, “We remain encouraged by signs of an improving demand environment across our end-markets. Sales inquiries remain positive, and we have raised our 2021 outlook again for railcar deliveries. Additionally, we are thrilled to share that our Board of Directors has approved plans to add two more production lines at the Castaños manufacturing facility, which will double our capacity within a year. This planned expansion is an essential next step to driving incremental volumes and significantly improving our long-term earnings profile.”
Meyer concluded, “We are also benefiting from the relationship with our financial partner, including the recently amended agreement which provides for a $25 million line of credit. This new line of credit, combined with cash and equivalents of $21 million, will support our working capital and growth needs for the foreseeable future. We still have much work to do but remain confident that we are on the right path to create significant value for all of our stakeholders.”
Second Quarter Results
- Consolidated revenues were $37.4 million in the second quarter of 2021, compared to $32.4 million in the first quarter of 2021 and $17.5 million in the second quarter of 2020. The Company delivered 313 railcars in the second quarter of 2021, compared to 309 railcars in the first quarter of 2021 and 100 railcars in the second quarter of 2020.
- Both consolidated operating loss and net loss for the current and prior periods included non-operating items that impacted results, including:
- Non-cash income of $3.5 million related to the change in the fair market value of warrant liability in the second quarter of 2021 reflecting the Company’s share price depreciation during the period. In the first quarter 2021, there was a non-cash charge of ($22.1) million, reflecting the Company’s share price appreciation during the period; and
- Restructuring and impairment gains of $0.1 million in the second quarter of 2021, compared to restructuring and impairment charges of ($6.7) million in the first quarter of 2021 and ($0.3) million in the second quarter of 2020.
- Non-cash income of $3.5 million related to the change in the fair market value of warrant liability in the second quarter of 2021 reflecting the Company’s share price depreciation during the period. In the first quarter 2021, there was a non-cash charge of ($22.1) million, reflecting the Company’s share price appreciation during the period; and
- Consolidated operating loss for the second quarter of 2021 was ($2.5) million, compared to operating loss of ($13.2) million in the first quarter of 2021 and operating loss of ($12.9) million in the second quarter of 2020.
- Net loss in the second quarter of 2021 was ($2.6) million, or ($0.13) per share, compared to net loss of ($37.9) million, or ($1.89) per share, in the first quarter of 2021, and net loss of ($12.8) million, or ($0.97) per share, in the second quarter of 2020.
- Adjusted EBITDA loss for the second quarter of 2021 was ($1.5) million, compared to Adjusted EBITDA loss of ($0.5) million for the first quarter of 2021 and ($10.3) million for the second quarter of 2020. The Adjusted EBITDA excludes the non-cash income mentioned above and those reflected in the table below.
- Total cash, cash equivalents, restricted cash equivalents, marketable securities and restricted certificates of deposit (“total cash”) was $20.7 million as of June 30, 2021, compared to $31.7 million as of March 31, 2021. The decrease was due to an increase in the Company’s VAT receivable and other working capital to support higher production levels. The VAT receivable in Mexico was $21.3 million as of June 30, 2021.
Second Quarter 2021 Conference Call & Webcast Information
The Company will host a conference call and live webcast on Monday, August 16, 2021, at 11:00 a.m. (Eastern Daylight Time) to discuss the Company’s second quarter 2021 financial results. The Company’s earnings release for the second quarter of 2021 will be available on the Investor Relations page of the Company’s website at www.freightcaramerica.com.
Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call which can be accessed at:
Event URL: http://public.viavid.com/index.php?id=146143
Please note that the webcast is listen-only and webcast participants will not be able to participate in the question and answer portion of the conference call. Interested parties may also participate in the call by dialing (877) 407-0789 or (201) 689-8562 and entering the passcode 13722175. Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call.
An audio replay of the conference call will be available beginning at 2:00 p.m. (Eastern Daylight Time) on August 16, 2021, until 12:00 a.m. (Eastern Daylight Time) on Monday August 30, 2021. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13722175. An audio replay of the call will be available on the Company’s website within two days following the earnings call.
About FreightCar America
FreightCar America, Inc. is a diversified manufacturer of railroad freight cars that also supplies railcar parts and leases freight cars through its FreightCar America Leasing Company subsidiaries. FreightCar America designs and builds high-quality railcars, including open top hopper cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, boxcars and coal cars, and also specializes in the conversion of railcars for repurposed use. FreightCar America is headquartered in Chicago, Illinois and has facilities in the following locations: Castaños, Mexico; Johnstown, Pennsylvania; and Shanghai, People’s Republic of China. More information about FreightCar America is available on its website at www.freightcaramerica.com.
Forward-Looking Statements
This press release may contain statements relating to our expected financial performance and/or future business prospects, events and plans that are “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. These potential risks and uncertainties include, among other things: risks relating to the potential financial and operational impacts of the COVID-19 pandemic; the cyclical nature of our business; adverse economic and market conditions; fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials; our ability to maintain relationships with our suppliers of railcar components; 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; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings by our customers; and other competitive factors. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.
| INVESTOR & MEDIA CONTACT | Lisa Fortuna or Stephen Poe |
| [email protected] | |
| TELEPHONE | 312-445-2870 |
FreightCar America, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| June 30, 2021 | December 31, 2020 | |||||||
| Assets | (in thousands, except for share and per share data) | |||||||
| Current assets | ||||||||
| Cash, cash equivalents and restricted cash equivalents | $ | 20,730 | $ | 54,047 | ||||
| Restricted certificates of deposit | - | 182 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $880 and $1,235 respectively | 8,505 | 9,421 | ||||||
| VAT receivable | 21,276 | 4,462 | ||||||
| Inventories, net | 48,783 | 38,831 | ||||||
| Assets held for sale | - | 10,383 | ||||||
| Prepaid expenses | 10,547 | 3,652 | ||||||
| Total current assets | 109,841 | 120,978 | ||||||
| Property, plant and equipment, net | 19,790 | 19,642 | ||||||
| Railcars available for lease, net | 20,633 | 20,933 | ||||||
| Right of use asset | 17,265 | 18,152 | ||||||
| Other long-term assets | 2,529 | 3,037 | ||||||
| Total assets | $ | 170,058 | $ | 182,742 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts and contractual payables | $ | 34,612 | $ | 18,654 | ||||
| Accrued payroll and other employee costs | 1,622 | 2,505 | ||||||
| Reserve for workers' compensation | 2,389 | 2,645 | ||||||
| Accrued warranty | 2,850 | 5,216 | ||||||
| Customer deposits | - | 4,351 | ||||||
| Deferred income state and local incentives, current | 1,465 | 2,219 | ||||||
| Lease liability, current | 1,904 | 11,635 | ||||||
| Current portion of long-term debt | 20,518 | 17,605 | ||||||
| Other current liabilities | 4,169 | 6,319 | ||||||
| Total current liabilities | 69,529 | 71,149 | ||||||
| Long-term debt, net of current portion | 48,187 | 37,668 | ||||||
| Warrant liability | 31,406 | 12,730 | ||||||
| Accrued pension costs | 6,350 | 7,046 | ||||||
| Deferred income state and local incentives, long-term | 2,148 | 2,503 | ||||||
| Lease liability, long-term | 17,594 | 18,549 | ||||||
| Other long-term liabilities | 4,282 | 2,600 | ||||||
| Total liabilities | 179,496 | 152,245 | ||||||
| Stockholders’ 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 June 30, 2021 and December 31, 2020) | - | - | ||||||
| Common stock, $0.01 par value, 50,000,000 shares authorized, 15,980,742 and 15,861,406 shares issued at June 30, 2021 and December 31, 2020, respectively | 160 | 159 | ||||||
| Additional paid in capital | 82,682 | 82,064 | ||||||
| Treasury stock, at cost, 446,587 and 327,577 shares at June 30, 2021 and December 31, 2020, respectively | (1,782 | ) | (1,344 | ) | ||||
| Accumulated other comprehensive loss | (11,451 | ) | (11,763 | ) | ||||
| Accumulated deficit | (79,047 | ) | (38,619 | ) | ||||
| Total stockholders' (deficit) equity | (9,438 | ) | 30,497 | |||||
| Total liabilities and stockholders’ equity | $ | 170,058 | $ | 182,742 | ||||
FreightCar America, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| (In thousands, except for share and per share data) | |||||||||||||||||||||||||||
| Revenues | $ | 37,354 | $ | 17,458 | $ | 69,724 | $ | 22,655 | |||||||||||||||||||
| Cost of sales | 33,716 | 23,602 | 63,496 | 37,602 | |||||||||||||||||||||||
| Gross margin (loss) | 3,638 | (6,144 | ) | 6,228 | (14,947 | ) | |||||||||||||||||||||
| Selling, general and administrative expenses | 6,294 | 6,537 | 15,445 | 13,947 | |||||||||||||||||||||||
| Restructuring and impairment charges | (120 | ) | 267 | 6,530 | 1,147 | ||||||||||||||||||||||
| Operating loss | (2,536 | ) | (12,948 | ) | (15,747 | ) | (30,041 | ) | |||||||||||||||||||
| Interest expense | (3,212 | ) | (167 | ) | (5,714 | ) | (463 | ) | |||||||||||||||||||
| Gain (loss) on change in fair market value of warrant liability | 3,452 | - | (18,676 | ) | - | ||||||||||||||||||||||
| Other income | 230 | 134 | 345 | 358 | |||||||||||||||||||||||
| Loss before income taxes | (2,066 | ) | (12,981 | ) | (39,792 | ) | (30,146 | ) | |||||||||||||||||||
| Income tax (benefit) provision | 504 | (1 | ) | 636 | (3 | ) | |||||||||||||||||||||
| Net loss | (2,570 | ) | (12,980 | ) | (40,428 | ) | (30,143 | ) | |||||||||||||||||||
| Less Net loss attributable to noncontrolling interest in JV | - | (189 | ) | - | (405 | ) | |||||||||||||||||||||
| Net loss attributable to FreightCar America | $ | (2,570 | ) | $ | (12,791 | ) | $ | (40,428 | ) | $ | (29,738 | ) | |||||||||||||||
| Net loss per common share attributable to FreightCar America- basic | $ | (0.13 | ) | $ | (0.97 | ) | $ | (2.01 | ) | $ | (2.26 | ) | |||||||||||||||
| Net loss per common share attributable to FreightCar America- diluted | $ | (0.13 | ) | $ | (0.97 | ) | $ | (2.01 | ) | $ | (2.26 | ) | |||||||||||||||
| Weighted average common shares outstanding - basic | 20,160,410 | 12,405,011 | 20,084,199 | 12,385,946 | |||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | 20,160,410 | 12,405,011 | 20,084,199 | 12,385,946 | |||||||||||||||||||||||
| Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
FreightCar America, Inc.
Segment Data
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Manufacturing | $ | 35,158 | $ | 15,129 | $ | 65,177 | $ | 18,069 | |||||||||||||||||||||
| Corporate and Other | 2,196 | 2,329 | 4,547 | 4,586 | |||||||||||||||||||||||||
| Consolidated Revenues | $ | 37,354 | $ | 17,458 | $ | 69,724 | $ | 22,655 | |||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||
| Manufacturing | $ | 1,878 | $ | (8,348 | ) | $ | (2,866 | ) | $ | (20,148 | ) | ||||||||||||||||||
| Corporate and Other | (4,414 | ) | (4,600 | ) | (12,881 | ) | (9,893 | ) | |||||||||||||||||||||
| Consolidated Operating Loss | $ | (2,536 | ) | $ | (12,948 | ) | $ | (15,747 | ) | $ | (30,041 | ) | |||||||||||||||||
FreightCar America, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | (in thousands) | |||||||
| Net loss | $ | (40,428 | ) | $ | (30,143 | ) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
| Restructuring and impairment charges | 6,530 | 352 | ||||||
| Depreciation and amortization | 2,196 | 5,884 | ||||||
| Non-cash lease expense on right-of-use assets | 887 | 3,065 | ||||||
| Recognition of deferred income from state and local incentives | (1,110 | ) | (1,110 | ) | ||||
| Loss on change in fair market value for warrant liability | 18,676 | - | ||||||
| Stock-based compensation recognized | 2,961 | 94 | ||||||
| Non-cash interest expense | 1,981 | 140 | ||||||
| Other non-cash items, net | 96 | 13 | ||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable | 916 | 508 | ||||||
| VAT receivable | (16,814 | ) | (306 | ) | ||||
| Inventories | (8,058 | ) | (22,024 | ) | ||||
| Other assets | (6,263 | ) | (7,188 | ) | ||||
| Accounts and contractual payables | 6,193 | 6,456 | ||||||
| Accrued payroll and employee benefits | (802 | ) | (941 | ) | ||||
| Income taxes receivable/payable | (360 | ) | (13 | ) | ||||
| Accrued warranty | (2,366 | ) | (485 | ) | ||||
| Lease liability | (1,180 | ) | (5,391 | ) | ||||
| Customer deposits | - | 27,889 | ||||||
| Other liabilities | (6,749 | ) | 2,548 | |||||
| Accrued pension costs and accrued postretirement benefits | (415 | ) | (131 | ) | ||||
| Net cash flows used in operating activities | (44,109 | ) | (20,783 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of restricted certificates of deposit | - | (3,855 | ) | |||||
| Maturity of restricted certificates of deposit | 182 | 3,769 | ||||||
| Purchase of property, plant and equipment | (1,433 | ) | (7,009 | ) | ||||
| Proceeds from sale of property, plant and equipment and railcars available for lease | 433 | 170 | ||||||
| Net cash flows used in investing activities | (818 | ) | (6,925 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of long-term debt | 16,000 | 10,000 | ||||||
| Deferred financing costs | (480 | ) | - | |||||
| Borrowings on revolving line of credit | 7,220 | - | ||||||
| Repayments on revolving line of credit | (11,068 | ) | - | |||||
| Employee stock settlement | (7 | ) | (9 | ) | ||||
| Payment for stock appreciation rights exercised | (55 | ) | - | |||||
| Net cash flows provided by financing activities | 11,610 | 9,991 | ||||||
| Net decrease in cash and cash equivalents | (33,317 | ) | (17,717 | ) | ||||
| Cash, cash equivalents and restricted cash equivalents at beginning of period | 54,047 | 66,257 | ||||||
| Cash, cash equivalents and restricted cash equivalents at end of period | $ | 20,730 | $ | 48,540 | ||||
| Supplemental cash flow information | ||||||||
| Interest paid | $ | 2,813 | $ | 217 | ||||
| Income tax refunds received, net of payments | $ | 5 | $ | - | ||||
| Non-cash transactions | ||||||||
| Change in unpaid construction in process | $ | 530 | $ | (115 | ) | |||
| Accrued PIK interest paid through issuance of PIK Note | $ | 553 | $ | - | ||||
FreightCar America, Inc.
Reconciliation of income before taxes to EBITDA(1) and Adjusted EBITDA(2)
(Unaudited)
| Three Months Ended June 30, | Three Months Ended March 31, | Six Months Ended June 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
| Loss before income taxes | $ | (2,066 | ) | $ | (12,981 | ) | $ | (37,726 | ) | $ | (39,792 | ) | $ | (30,146 | ) | |||
| Depreciation & Amortization | 999 | 2,871 | 1,197 | 2,196 | 5,884 | |||||||||||||
| Interest Expense, net | 3,212 | 167 | 2,502 | 5,714 | 463 | |||||||||||||
| EBITDA | 2,145 | (9,943 | ) | (34,027 | ) | (31,882 | ) | (23,799 | ) | |||||||||
| Change in Fair Value of Warrant (a) | (3,452 | ) | - | 22,128 | 18,676 | - | ||||||||||||
| Restructuring and impairment (b) charges (b) | (120 | ) | 267 | 6,650 | 6,530 | 1,147 | ||||||||||||
| Alabama Grant Amortization (c) | (555 | ) | (555 | ) | (555 | ) | (1,110 | ) | (1,110 | ) | ||||||||
| Transaction Costs (d) | 296 | - | - | 296 | - | |||||||||||||
| Retention & Success Bonuses (e) | - | 169 | - | - | 600 | |||||||||||||
| Legal Reserve (f) | - | - | 500 | 500 | - | |||||||||||||
| Plant Transition Costs (g) | 140 | 5 | 2,246 | 2,386 | 179 | |||||||||||||
| Stock Based Compensation | 299 | (156 | ) | 2,662 | 2,961 | 94 | ||||||||||||
| Other, net | (230 | ) | (134 | ) | (115 | ) | (345 | ) | (358 | ) | ||||||||
| Adjusted EBITDA | $ | (1,477 | ) | $ | (10,347 | ) | $ | (511 | ) | $ | (1,988 | ) | $ | (23,247 | ) | |||
| (1) | EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall performance of the company’s business. EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similar titled measures reported by other companies. | |
| (2) | Adjusted EBITDA represents EBITDA before the following charges: | |
| a) This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability. | ||
| b) The Company incurred certain restructuring costs related to severance and other costs related to its shut-down of the Shoals and Roanoke facilities during 2019 and 2020. | ||
| c) The Company amortizes deferred grant income to cost of goods sold that represent a non-cash reduction to its gross margin (loss). | ||
| d) The Company incurred certain costs in the second quarter of 2021 for nonrecurring professional services associated with its Second Amendment to its Term Loan. | ||
| e) During 2019, the Company implemented retention and success bonus programs for certain employees during its restructuring. | ||
| f) During the first quarter of 2021, the Company recognized a charge related to a legal dispute. | ||
| g) During 2020, the Company implemented a program to shift production originally planned for its US plants to its Castaños facility. This adjustment represents non-recurring costs associated with moving inventory and equipment to its Castaños facility. | ||
We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.