First Quarter 2013 Highlights
- Consolidated Revenues totaled $195.1
million
- Adjusted EBITDA of $42.8 million
- Net earnings of $0.84 per share
- Railcar shipments of approximately 1,900
railcars
American Railcar Industries, Inc. (ARI or the Company)
(Nasdaq:ARII) today reported its first quarter 2013 financial
results. "We are pleased with another strong quarter of operating
results, driven by strong shipments of tank railcars, which
provided us with a favorable sales mix and good earnings," said
James Cowan, President and CEO of ARI.
First Quarter Summary
Total consolidated revenues were $195.1 million for the first
quarter of 2013, up 7% when compared to $181.6 million for the same
period in 2012. Revenues increased primarily due to an increase in
revenues for the manufacturing and leasing segments.
Manufacturing segment revenues were $228.4 million for the first
quarter of 2013, an increase of 8% over the $211.9 million for the
same period in 2012. The primary reason for the increase was a
shift in the sales mix to more tank railcars, partially offset by a
decrease in the volume of hopper railcar shipments. Manufacturing
segment revenues for the first quarter of 2013 included estimated
revenues of $55.4 million related to railcars built for the
Company's lease fleet, compared to estimated revenues of $47.5
million in the first quarter of 2012 related to railcars built for
the lease fleet. Such revenues are based on an estimated fair
market value of the leased railcars as if they had been sold to a
third party, and are eliminated in consolidation. Revenues for
railcars built for the Company's lease fleet are not recognized in
consolidated revenues as a railcar sale, but are recognized over
the term of the lease in accordance with the monthly lease
revenues. Railcars built for the lease fleet represented 28% of
ARI's railcar shipments during the first quarter of 2013 compared
to 21% for the same period in 2012.
Leasing segment revenues were $6.5 million for the first quarter
of 2013, an increase of $5.1 million over the $1.4 million for the
same period in 2012. The primary reason for the increase in revenue
was an increase in the number of railcars on lease. We had
approximately 3,120 railcars in the Company's lease fleet at the
end of the first quarter of 2013, compared to approximately 950
railcars at the end of the same period in 2012.
Consolidated earnings from operations for the first quarter of
2013 were $31.2 million, an increase of 31% over the $23.8 million
for the same period in 2012. Operating margins were 16% for the
first quarter of 2013 compared to 13% for the comparable quarter of
2012. The increase in consolidated earnings was primarily due to an
increase in the Company's manufacturing earnings from operations,
partially offset by an increase in the Company's selling, general
and administrative expenses driven by an increase in our
share-based compensation expense, as a result of a significant
increase in our stock price. The Company's share-based compensation
fluctuates with our stock price. In the first quarter of 2013, our
stock price increased approximately $15 per share compared to the
stock price remaining flat during the same period in 2012.
Manufacturing earnings from operations were $43.8 million for
the first quarter of 2013 compared to $34.1 million for the same
period in 2012. This increase was due primarily to a higher mix of
tank railcars as well as operating leverage and efficiencies
achieved as a result of strong tank railcar production volumes,
partially offset by lower hopper railcar shipments. The Company
also continued to benefit from cost savings achieved by the
vertical integration projects put in place during the past several
years. Manufacturing earnings from operations for the first quarter
of 2013 included $9.8 million of estimated profit on railcars built
for the Company's lease fleet, which is eliminated in consolidation
and is based on an estimated fair market value of revenues as if
the railcars had been sold to a third party, less the cost to
manufacture.
EBITDA, adjusted to exclude share-based compensation and other
income on short term investments (Adjusted EBITDA), was $42.8
million for the first quarter of 2013 compared to $30.3 million for
the comparable quarter of 2012. The increase resulted primarily
from increased earnings from operations, partially offset by losses
incurred by the Company's joint ventures. The joint venture loss is
largely due to softer railcar demand for railcar types other than
tank railcars, which adversely impacted demand for the Company's
domestic joint venture products. A reconciliation of the Company's
net earnings to EBITDA and Adjusted EBITDA (both non-GAAP financial
measures) is set forth in the supplemental disclosure attached to
this press release.
Cash Flow and Liquidity
The Company's strong earnings have contributed to cash flow from
operations in the first quarter of 2013 of $18.6 million. As a
result of continued growth of the Company's lease fleet and
redemption of the remaining $175 million of senior unsecured notes
during the first quarter of 2013, the Company's cash balance was
$56.0 million at March 31, 2013. The Company anticipates making the
final draw of $50 million in May 2013 under the lease fleet
financing put in place in December 2012.
At the board meeting in April, the Company's board of directors
declared a cash dividend of $0.25 per share of common stock of the
Company to shareholders of record as of June 17, 2013 that will be
paid on June 27, 2013.
Backlog
ARI's backlog as of March 31, 2013 was approximately 6,400
railcars, including approximately 2,080 railcars for lease. ARI had
approximately 7,060 railcars in its backlog as of December 31,
2012, including approximately 1,810 railcars for lease.
Conference Call and Webcast
ARI will host a webcast and conference call on Thursday, April
25, 2013 at 10:00 am (Eastern Time) to discuss the Company's first
quarter 2013 financial results. To participate in the webcast,
please log-on to ARI's investor relations page through the ARI
website at www.americanrailcar.com. To participate in the
conference call, please dial 877-745-9389. Participants are asked
to log-on to the ARI website or dial in to the conference call
approximately 10 to 15 minutes prior to the start time. An audio
replay of the call will also be available on the Company's website
promptly following the earnings call.
About ARI
ARI is a leading North American designer and manufacturer of
hopper and tank railcars. ARI and its subsidiaries sell and lease
railcars manufactured by the Company to certain markets. In
addition, ARI repairs and refurbishes railcars, provides fleet
management services and designs and manufactures certain railcar
and industrial components. ARI provides its railcar customers with
integrated solutions through a comprehensive set of high quality
products and related services. More information about American
Railcar Industries, Inc. is available on its website at
www.americanrailcar.com.
Forward Looking Statement Disclaimer
This press release contains statements relating to expected
financial performance and/or future business prospects, events and
plans that are forward-looking statements. Forward-looking
statements represent the Company's estimates and assumptions only
as of the date of this press release. Such statements include,
without limitation, statements regarding industry trends, customer
demand for the Company's products, the Company's strategic
objectives and long-term strategies, the growth of the Company's
leasing business, anticipated future production rates, the
Company's plans regarding future dividends, the Company's joint
ventures, the Company's backlog and any implication that the
Company's backlog may be indicative of future revenues. These
forward-looking statements are subject to known and unknown risks
and uncertainties that could cause actual results to differ
materially from the results described in or anticipated by the
Company's forward-looking statements. The payment of future
dividends, if any, and the amount thereof, will be at the
discretion of ARI's board of directors and will depend upon the
Company's operating results, strategic plans, capital requirements,
financial condition, provisions of its borrowing arrangements,
applicable law and other factors the Company's board of directors
considers relevant. Other potential risks and uncertainties
include, among other things: basing financial or other information
on judgments or estimates based on future performance or events;
the impact of an economic downturn, adverse market conditions and
restricted credit markets; ARI's reliance upon a small number of
customers that represent a large percentage of revenues and
backlog; the health of and prospects for the overall railcar
industry; prospects in light of the cyclical nature of the railcar
manufacturing business; the highly competitive nature of the
railcar manufacturing industry; the conversion of ARI's railcar
backlog into revenues; anticipated trends relating to shipments,
leasing, railcar services, revenues, financial condition or results
of operations; the Company's ability to manage overhead and
variations in production rates; fluctuating costs of raw materials,
including steel and railcar components and delays in the delivery
of such raw materials and components; fluctuations in the supply of
components and raw materials that ARI uses in railcar
manufacturing; the risk of being unable to market or remarket
railcars for sale or lease at favorable prices or on favorable
terms or at all; the anticipated financing needs, the ongoing
benefits and risks related to the Company's relationship with
Mr. Carl Icahn (the chairman of the Company's board of
directors and, through his holdings of Icahn Enterprises L.P., the
Company's principal beneficial stockholder) and certain of his
affiliates; the anticipated production schedules for our products
and the anticipated financing needs, construction and production
schedules of our joint ventures; the risks associated with
potential joint ventures, potential acquisitions or new business
endeavors; the implementation, integration with other systems or
ongoing management of the Company's new enterprise resource
planning system; the international economic and political risks
related to ARI's joint ventures' current and potential
international operations; the risk of the lack of acceptance of new
railcar offerings by ARI's customers and the risk of initial
production costs for the Company's new railcar offerings being
significantly higher than expected; the sufficiency of the
Company's liquidity and capital resources; compliance with
covenants contained in the Company's Lease Fleet Financing; the
impact and anticipated benefits of any acquisitions ARI may
complete; the impact and costs and expenses of any litigation ARI
may be subject to now or in the future; and the additional risk
factors described in ARI's filings with the Securities and Exchange
Commission. The Company expressly disclaims 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.
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands, except share and
per share amounts) |
|
|
|
|
March 31, |
December 31, |
|
2013 |
2012 |
|
(unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 56,004 |
$ 205,045 |
Short-term investments -
available for sale securities |
-- |
12,557 |
Accounts receivable,
net |
32,348 |
36,100 |
Accounts receivable, due
from related parties |
13,659 |
3,539 |
Income taxes
receivable |
1,581 |
-- |
Inventories, net |
86,263 |
110,075 |
Deferred tax assets |
9,126 |
4,114 |
Prepaid expenses and
other current assets |
5,149 |
3,917 |
Total current assets |
204,130 |
375,347 |
|
|
|
Property, plant and equipment, net |
157,376 |
155,893 |
Railcars on operating lease, net |
261,845 |
220,282 |
Deferred debt issuance costs |
2,032 |
2,374 |
Goodwill |
7,169 |
7,169 |
Investments in and loans to joint
ventures |
43,179 |
44,536 |
Other assets |
7,774 |
4,157 |
Total assets |
$ 683,505 |
$ 809,758 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 44,526 |
$ 64,971 |
Accounts payable, due to
related parties |
770 |
2,831 |
Accrued expenses and
taxes |
8,728 |
8,432 |
Accrued compensation |
17,261 |
17,940 |
Accrued interest
expense |
271 |
4,465 |
Short-term debt,
including current portion of long-term debt |
4,995 |
2,755 |
Total current liabilities |
76,551 |
101,394 |
|
|
|
Long-term debt, net of current portion |
144,677 |
272,245 |
Deferred tax liability |
68,141 |
53,466 |
Pension and post-retirement liabilities |
9,151 |
9,518 |
Other liabilities |
4,335 |
3,670 |
Total liabilities |
302,855 |
440,293 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
Common stock, $0.01 par value, 50,000,000
shares authorized, 21,352,297 shares issued and outstanding as of
both March 31, 2013 and December 31, 2012 |
213 |
213 |
Additional paid-in capital |
239,609 |
239,609 |
Retained earnings |
142,629 |
130,030 |
Accumulated other comprehensive loss |
(1,801) |
(387) |
Total stockholders' equity |
380,650 |
369,465 |
Total liabilities and
stockholders' equity |
$ 683,505 |
$ 809,758 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except per share
amounts, unaudited) |
|
|
|
|
For the Three Months
Ended |
|
March 31, |
|
2013 |
2012 |
|
|
Revenues: |
|
|
Manufacturing (including revenues from
affiliates of $63,078 and $0 for the three months ended March 31,
2013 and 2012, respectively) |
$ 172,975 |
$ 164,313 |
Railcar leasing |
6,543 |
1,380 |
Railcar services (including revenues from
affiliates of $4,608 and $5,171 for the three months ended March
31, 2013 and 2012, respectively) |
15,592 |
15,906 |
Total revenues |
195,110 |
181,599 |
|
|
|
Cost of revenues: |
|
|
Manufacturing |
(137,123) |
(137,561) |
Railcar leasing |
(2,904) |
(741) |
Railcar services |
(12,589) |
(12,928) |
Total cost of
revenues |
(152,616) |
(151,230) |
Gross profit |
42,494 |
30,369 |
|
|
|
Selling, general and administrative
(including costs to related parties of $380 and $145 for the three
months ended March 31, 2013 and 2012, respectively) |
(11,265) |
(6,564) |
Earnings from
operations |
31,229 |
23,805 |
|
|
|
Interest income (including income from
related parties of $681 and $745 for the three months ended March
31, 2013 and 2012, respectively) |
691 |
778 |
Interest expense |
(3,000) |
(5,126) |
Loss on debt extinguishment |
(392) |
-- |
Other income (including income from a related
party of $4 and $3 for the three months ended March 31, 2013 and
2012, respectively) |
1,996 |
3 |
Earnings (loss) from joint ventures |
(973) |
414 |
Earnings before income taxes |
29,551 |
19,874 |
Income tax expense |
(11,614) |
(7,870) |
Net earnings |
$ 17,937 |
$ 12,004 |
|
|
|
Net earnings per common share - basic and
diluted |
$ 0.84 |
$ 0.56 |
Weighted average common shares outstanding -
basic and diluted |
21,352 |
21,352 |
|
|
|
Cash dividends paid per common share |
$ 0.25 |
$ -- |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
SEGMENT
DATA |
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
Revenues |
Earnings (Loss)
from Operations |
|
External |
Intersegment |
Total |
External |
Intersegment |
Total |
For the Three Months Ended
March 31, 2013 |
|
|
|
|
|
|
Manufacturing |
$ 172,975 |
$ 55,408 |
$ 228,383 |
$ 33,979 |
$ 9,782 |
$ 43,761 |
Railcar Leasing |
6,543 |
-- |
6,543 |
2,163 |
4 |
2,167 |
Railcar Services |
15,592 |
49 |
15,641 |
2,305 |
43 |
2,348 |
Corporate |
-- |
-- |
-- |
(7,218) |
-- |
(7,218) |
Eliminations |
-- |
(55,457) |
(55,457) |
-- |
(9,829) |
(9,829) |
Total Consolidated |
$ 195,110 |
$ -- |
$ 195,110 |
$ 31,229 |
$ -- |
$ 31,229 |
For the Three Months Ended
March 31, 2012 |
|
|
|
|
|
|
Manufacturing |
$ 164,313 |
$ 47,549 |
$ 211,862 |
$ 25,152 |
$ 8,922 |
$ 34,074 |
Railcar Leasing |
1,380 |
-- |
1,380 |
596 |
6 |
602 |
Railcar Services |
15,906 |
29 |
15,935 |
2,343 |
(6) |
2,337 |
Corporate |
-- |
-- |
-- |
(4,286) |
-- |
(4,286) |
Eliminations |
-- |
(47,578) |
(47,578) |
-- |
(8,922) |
(8,922) |
Total Consolidated |
$ 181,599 |
$ -- |
$ 181,599 |
$ 23,805 |
$ -- |
$ 23,805 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands, unaudited) |
|
|
|
|
For the Three Months
Ended |
|
March
31, |
|
2013 |
2012 |
|
|
Operating activities: |
|
|
Net earnings |
$ 17,937 |
$ 12,004 |
Adjustments to reconcile net earnings to net
cash provided by operating activities: |
|
|
Depreciation |
6,535 |
5,402 |
Amortization of deferred costs |
183 |
175 |
Gain on disposal of property, plant and
equipment |
-- |
(34) |
Share-based compensation |
6,008 |
696 |
(Earnings) loss from joint ventures |
973 |
(414) |
Provision for deferred income taxes |
10,287 |
7,705 |
Adjustment to provision for losses on
accounts receivable |
(12) |
(17) |
Items related to investing
activities: |
|
|
Realized again on sale of short-term
investments - available for sale securities |
(2,008) |
-- |
Items related to financing
activities: |
|
|
Loss on debt extinguishment |
392 |
-- |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable, net |
3,754 |
(11,184) |
Accounts receivable, due from related
parties |
(10,128) |
1,651 |
Income taxes receivable |
(1,645) |
-- |
Inventories, net |
23,793 |
(9,153) |
Prepaid expenses and other current
assets |
(1,232) |
(633) |
Accounts payable |
(20,441) |
4,571 |
Accounts payable, due to related
parties |
(2,061) |
(329) |
Accrued expenses and taxes |
(9,939) |
(2,225) |
Other |
(3,820) |
(566) |
Net cash provided by operating
activities |
18,576 |
7,649 |
Investing activities: |
|
|
Purchases of property, plant and
equipment |
(6,141) |
(1,337) |
Capital expenditures - leased
railcars |
(43,619) |
(40,072) |
Proceeds from the sale of property, plant
and equipment |
-- |
38 |
Proceeds from the sale of short-term
investments - available for sale securities |
12,699 |
-- |
Proceeds from repayments of loans by
joint ventures |
500 |
-- |
Investments in and loans to joint
ventures |
(136) |
(583) |
Net cash used in investing activities |
(36,697) |
(41,954) |
Financing activities: |
|
|
Repayment of long-term debt |
(175,328) |
-- |
Proceeds from long-term debt |
50,000 |
-- |
Payment of common stock dividends |
(5,338) |
-- |
Debt issuance costs |
(212) |
-- |
Net cash used in financing activities |
(130,878) |
-- |
Effect of exchange rate changes on cash and
cash equivalents |
(42) |
20 |
Decrease in cash and cash equivalents |
(149,041) |
(34,285) |
Cash and cash equivalents at beginning of
period |
205,045 |
307,172 |
Cash and cash equivalents at end of
period |
$ 56,004 |
$ 272,887 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NET
EARNINGS TO EBITDA AND ADJUSTED EBITDA |
(In thousands, unaudited) |
|
|
|
|
For the Three Months
Ended |
|
March 31, |
|
2013 |
2012 |
|
|
|
|
|
|
Net earnings |
$ 17,937 |
$ 12,004 |
Income tax expense |
11,614 |
7,870 |
Interest expense |
3,000 |
5,126 |
Loss on debt extinguishment |
392 |
-- |
Interest income |
(691) |
(778) |
Depreciation |
6,535 |
5,402 |
EBITDA |
$ 38,787 |
$ 29,624 |
Other income related to short-term
investments |
(2,008) |
-- |
Expense related to stock appreciation rights
compensation 1 |
6,008 |
696 |
Adjusted EBITDA |
$ 42,787 |
$ 30,320 |
|
|
|
1 SARs are cash settled at time of
exercise |
|
|
EBITDA represents net earnings before income tax expense,
interest expense (income), loss on debt extinguishment and
depreciation of property, plant and equipment. The Company believes
EBITDA is useful to investors in evaluating ARI's operating
performance compared to that of other companies in the same
industry. In addition, ARI's management uses EBITDA to evaluate
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 operating performance of a
company's business. EBITDA is not a financial measure presented in
accordance with U.S. generally accepted accounting principles (U.S.
GAAP). Accordingly, when analyzing the Company's operating
performance, investors should not consider EBITDA in isolation or
as a substitute for net earnings, cash flows provided by operating
activities or other statement of operations or cash flow data
prepared in accordance with U.S. GAAP. The calculation of EBITDA is
not necessarily comparable to that of other similarly titled
measures reported by other companies.
Adjusted EBITDA represents EBITDA before share-based
compensation expense related to stock appreciation rights (SARs)
and other income related to our short-term investments. Management
believes that Adjusted EBITDA is useful to investors in evaluating
the Company's operating performance, and therefore uses Adjusted
EBITDA for that purpose. The Company's SARs, which settle in cash,
are revalued each period based primarily upon changes in ARI's
stock price. Management believes that eliminating the expense
associated with share-based compensation and income associated with
short-term investments allows management and ARI's investors to
understand better the operating results independent of financial
changes caused by the fluctuating price and value of the Company's
common stock and short-term investments. Adjusted EBITDA is
not a financial measure presented in accordance with U.S. GAAP.
Accordingly, when analyzing operating performance, investors should
not consider Adjusted EBITDA in isolation or as a substitute for
net earnings, cash flows provided by (used in) operating activities
or other statements of operations or cash flow data prepared in
accordance with U.S. GAAP. The Company's calculation of Adjusted
EBITDA is not necessarily comparable to that of other similarly
titled measures reported by other companies.
CONTACT: Dale C. Davies
Michael Obertop
636.940.6000
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