American Railcar Industries, Inc. (�ARI� or the �Company�) (NASDAQ:
ARII) today reported its second quarter financial results. �We
continue to experience strong financial and operational performance
in the tank railcar market and high levels of tank railcar
shipments in 2008, which included shipments from our new flexible
railcar facility at Marmaduke, Arkansas,� said James J. Unger,
President and CEO of ARI.��Our railcar manufacturing locations
continue to generate strong labor efficiencies, which have had a
positive effect on earnings throughout 2008. Offsetting the strong
tank railcar shipments were lower shipments and selling prices in
2008 compared to 2007 for many of our hopper railcars due to market
conditions. Our backlog was 8,219 railcars as of June 30, 2008.�
For the three months ended June 30, 2008, revenues were $204.5
million and net earnings attributable to common shareholders were
$6.2 million or $0.29 per diluted share. In comparison, for the
three months ended June 30, 2007, the Company had revenues of
$209.0 million and net earnings attributable to common shareholders
of $11.0 million or $0.52 per diluted share. Earnings for the
second quarter of 2008 included other losses of $1.5 million or
$0.04 per diluted share, which was primarily related to an
unrealized loss on the decrease in value during the second quarter
of derivatives that are referenced to the common stock of The
Greenbrier Companies, Inc. (NYSE: GBX) partially offset by realized
gains on the sale of a portion of the Company�s investment in The
Greenbrier Companies, Inc. common stock. Revenues and railcar
shipments decreased in the second quarter of 2008 compared to the
same period in 2007, primarily due to lower volumes and lower
selling prices for many of our hopper railcars shipped in 2008,
partially offset by increased tank railcar shipments as described
above. During the three months ended June 30, 2008, the Company
shipped 2,077 railcars compared to 2,268 railcars in the same
period of 2007. EBITDA was $18.0 million in the second quarter of
2008, an 18.7% decrease compared to EBITDA of $22.2 million in the
second quarter of 2007. The decreases in EBITDA and net earnings
attributable to common shareholders resulted primarily from lower
profits on hopper railcar shipments during 2008 compared to 2007
and an unrealized loss incurred during the second quarter of 2008
on the Company�s derivatives that are referenced to the common
stock of The Greenbrier Companies, Inc. These were partially offset
by increased tank railcar shipments, labor efficiencies, overhead
savings, a decrease in stock based compensation expense and a $0.9
million pre-tax realized gain related to the sale of short term
investments. The highly competitive and weak hopper railcar market
has caused a reduction in average selling prices of hopper
railcars, which has compressed hopper railcar margins below 2007
levels. Additionally, the Company experienced an increase in net
interest expense that also contributed to the decrease in net
earnings. A reconciliation of the Company�s quarterly net earnings
to EBITDA (a non-GAAP financial measure) is set forth in the
supplemental disclosure attached to this press release. For the six
months ended June 30, 2008, revenues were $388.5 million and net
earnings attributable to common shareholders were $16.4 million or
$0.77 per diluted share. In comparison, for the six months ended
June 30, 2007, the Company had revenues of $396.3 million and net
earnings attributable to common shareholders of $24.5 million or
$1.15 per diluted share. Earnings for 2008 included other income of
$1.7 million or $0.05 per diluted share, which was primarily
related to an unrealized gain on the increase in value of
derivatives during 2008 that are referenced to the common stock of
The Greenbrier Companies, Inc., and to realized gains on the sale
of a portion of the Company�s investment in The Greenbrier
Companies, Inc. common stock. Revenues and railcar shipments
decreased in the first six months of 2008 compared to the same
period in 2007, primarily due to lower volumes and lower selling
prices for our hopper railcars, partially offset by increased tank
railcar shipments as described above. During the six months ended
June 30, 2008, the Company shipped 3,979 railcars compared to 4,189
railcars in the same period of 2007. EBITDA was $41.6 million in
the six months ended June 30, 2008, an 11.5% decrease compared to
EBITDA of $47.0 million in the six months ended June 30, 2007. The
decreases in EBITDA and net earnings attributable to common
shareholders resulted primarily from lower profits on hopper
railcar shipments during 2008 compared to 2007. These were
partially offset by unrealized gains incurred during 2008 on the
Company�s derivatives that are referenced to the common stock of
The Greenbrier Companies, Inc., along with increased tank railcar
shipments, labor efficiencies, overhead savings, a decrease in
stock based compensation expense and a $0.9 million pre-tax
realized gain related to the sale of short term investments.
Additionally, the Company experienced an increase in net interest
expense that also contributed to the decrease in net earnings. ARI
will host a webcast and conference call on Thursday, August 7, 2008
at 10:00 am (Eastern Time) to discuss the Company�s second quarter
2008 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 800-659-2037 and use participant code 96384710.
Participants are asked to logon 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
American Railcar Industries, Inc. American Railcar Industries, Inc.
is a leading North American manufacturer of hopper and tank
railcars. ARI also repairs and refurbishes railcars, provides fleet
management services and designs and manufactures certain railcar
and industrial components used in the production of its railcars,
as well as railcars and non-railcar industrial products produced by
others. ARI provides its railcar customers with integrated
solutions through a comprehensive set of high quality products and
related services. Forward Looking Statement Disclaimer This press
release contains 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 the Company�s estimates and assumptions only
as of the date of this press release. Such statements include,
without limitation, statements regarding estimated future
production rates, estimated future manufacturing capacity,
anticipated cost savings from vertical integration efforts and
statements regarding any implication that the Company�s backlog may
be indicative of future sales. 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 our forward-looking statements.
Estimated backlog reflects the total sales attributable to the
backlog reported at the end of the particular period as if such
backlog were converted to actual sales. Estimated backlog does not
reflect potential price increases or decreases under some customer
contracts that provide for pricing adjustments based on changes in
the cost of certain raw materials and railcar components or the
possibility that railcar delivery dates may be delayed, and does
not reflect potential price decreases due to market-related pricing
provisions in certain of our customer contracts, any of which may
occur. Other potential risks and uncertainties include, among other
things: the cyclical nature of the railcar manufacturing business;
adverse economic and market conditions; our reliance upon a small
number of customers that represent a large percentage of our
revenues; the highly competitive nature of the railcar
manufacturing industry; 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 ARI uses in railcar manufacturing;
ARI�s ability to maintain relationships with its suppliers of
railcar components and raw materials; the risk of damage to our
primary railcar manufacturing facilities or equipment; the variable
purchase patterns of our customers and the timing of completion,
delivery and acceptance of customer orders; the risks associated
with our completion of capital expenditure projects; our dependence
on key personnel; our ability to manage overhead and production
slow downs; risks associated with potential acquisitions or joint
ventures; the risk of lack of acceptance of our new railcar
offerings by our customers; and the additional risk factors
described in our filings with the Securities and Exchange
Commission. 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. �
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share
amounts, unaudited) � � June 30, � � December 31, � � � � 2008 � �
2007 � Assets � Current assets: Cash and cash equivalents $ 258,131
$ 303,882 Short term investments - available-for-sale securities
26,176 - Restricted cash 3,105 - Unrealized gain on total return
swap 619 - Accounts receivable, net 45,997 33,523 Accounts
receivable, due from affiliates 21,423 17,175 Inventories, net
113,146 93,475 Prepaid expenses 4,488 5,015 Deferred tax assets �
1,204 � � 1,610 � Total current assets 474,289 454,680 � Property,
plant and equipment, net 189,531 175,166 Deferred debt issuance
costs 3,611 3,977 Goodwill 7,169 7,169 Other assets 37 37
Investment in joint venture � 12,266 � � 13,355 � Total assets $
686,903 � $ 654,384 � � Liabilities and Stockholders' Equity
Current liabilities: Current portion of long-term debt $ - $ 8
Accounts payable 65,326 47,903 Accounts payable, due to affiliates
4,088 2,867 Accrued expenses and taxes 2,224 5,729 Accrued
compensation 10,004 10,379 Accrued interest expense 6,906 6,907
Accrued dividends � 639 � � 639 � Total current liabilities 89,187
74,432 � Senior unsecured notes 275,000 275,000 Deferred tax
liability 6,869 5,690 Pension and post-retirement liabilities 6,497
6,572 Other liabilities � 1,907 � � 1,702 � Total liabilities
379,460 363,396 � Commitments and contingencies - - � Stockholders'
equity: Common stock, $.01 par value, 50,000,000 shares authorized,
21,302,296 shares issued and outstanding at June 30, 2008 and
December 31, 2007 213 213 Additional paid-in capital 239,530
239,621 Retained earnings 66,291 51,314 Accumulated other
comprehensive income (loss) � 1,409 � � (160 ) Total stockholders'
equity � 307,443 � � 290,988 � Total liabilities and stockholders'
equity $ 686,903 � $ 654,384 � � See notes to the Condensed
Consolidated Financial Statements. � CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share amounts,
unaudited) � � For the Three Months Ended � June 30, � � � June 30,
� � 2008 � � � 2007 � Revenues: � Manufacturing operations
(including revenues from affiliates of $53,756 and $29,906 for the
three months ended June 30, 2008 and 2007, respectively) $ 190,863
$ 195,714 � Railcar services (including revenues from affiliates of
$4,172 and $4,399 for the three months ended June 30, 2008 and
2007, respectively) � 13,619 � � � 13,283 � Total revenues 204,482
208,997 � Cost of revenue: Manufacturing operations (173,152 )
(172,699 ) Railcar services � (10,718 ) � � (10,607 ) Total cost of
revenue (183,870 ) (183,306 ) Gross profit 20,612 25,691 � Selling,
administrative and other (including costs related to affiliates of
$152 both for the three months ended June 30, 2008 and 2007) �
(6,153 ) � � (7,346 ) Earnings from operations 14,459 18,345 �
Interest income 1,705 4,179 Interest expense (5,048 ) (5,380 )
Other loss (1,463 ) - Earnings from joint venture � 96 � � � 389 �
Earnings before income tax expense 9,749 17,533 Income tax expense
� (3,517 ) � � (6,501 ) Net earnings available to common
shareholders $ 6,232 � � $ 11,032 � � Net earnings per common share
- basic $ 0.29 $ 0.52 Net earnings per common share - diluted $
0.29 $ 0.52 Weighted average common shares outstanding - basic
21,302 21,270 Weighted average common shares outstanding - diluted
� 21,302 � � � 21,396 � � Dividends declared per common share $
0.03 $ 0.03 � See notes to the Condensed Consolidated Financial
Statements. � CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share amounts, unaudited) � � For the Six
Months Ended � June 30, � � � June 30, � � 2008 � � � 2007 �
Revenues: � Manufacturing operations (including revenues from
affiliates of $88,445 and $45,924 for the six months ended June 30,
2008 and 2007, respectively) $ 361,647 $ 370,841 � Railcar services
(including revenues from affiliates of $8,225 and $8,333 for the
six months ended June 30, 2008 and 2007, respectively) � 26,884 � �
� 25,499 � Total revenues 388,531 396,340 � Cost of revenue:
Manufacturing operations (324,042 ) (322,138 ) Railcar services �
(21,585 ) � � (20,530 ) Total cost of revenue (345,627 ) (342,668 )
Gross profit 42,904 53,672 � Selling, administrative and other
(including costs related to affiliates of $303 both for the six
months ended June 30, 2008 and 2007) � (12,994 ) � � (14,049 )
Earnings from operations 29,910 39,623 � Interest income 4,262
6,060 Interest expense (10,091 ) (7,318 ) Other income 1,736 -
Earnings from joint venture � 400 � � � 616 � Earnings before
income tax expense 26,217 38,981 Income tax expense � (9,857 ) � �
(14,442 ) Net earnings available to common shareholders $ 16,360 �
� $ 24,539 � � Net earnings per common share - basic $ 0.77 $ 1.16
Net earnings per common share - diluted $ 0.77 $ 1.15 Weighted
average common shares outstanding - basic 21,302 21,245 Weighted
average common shares outstanding - diluted � 21,302 � � � 21,356 �
� Dividends declared per common share $ 0.06 $ 0.06 � See notes to
the Condensed Consolidated Financial Statements. � CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) �
For the Six Months Ended � June 30, � � � June 30, � � 2008 � � �
2007 � Operating activities: � Net earnings $ 16,360 $ 24,539
Adjustments to reconcile net earnings to net cash provided by
operating activities: � Depreciation 9,591 6,808 Amortization of
deferred costs 406 285 Loss on disposal of property, plant and
equipment 237 223 Other income from unrealized gain on derivatives
(619 ) - Realized gain on sale of short term investments (930 ) -
Stock based compensation 395 1,312 Income related to reversal of
stock based compensation (411 ) Excess tax benefits from stock
option exercises - (241 ) Change in joint venture investment as a
result of earnings (400 ) (616 ) Provision for deferred income
taxes 572 (159 ) Provision for losses on accounts receivable 155
144 Changes in operating assets and liabilities: Accounts
receivable, net (12,629 ) (8,937 ) Accounts receivable, due from
affiliate (4,248 ) (3,246 ) Inventories, net (19,670 ) 10,151
Prepaid expenses 527 1,054 Accounts payable 17,423 (3,215 )
Accounts payable, due to affiliate 1,221 1,088 Accrued expenses and
taxes (3,975 ) 12,114 Other � (291 ) � � (429 ) Net cash provided
by operating activities 3,714 40,875 � Investing activities:
Purchases of property, plant and equipment (24,211 ) (20,479 )
Purchases of short term investments - available-for-sale securities
(27,857 ) (100,293 ) Sales of short term investments -
available-for-sale securities 5,291 - Repayment of note receivable
from affiliate (Ohio Castings Company, LLC) 329 - Restricted cash
(3,105 ) - Investment in joint venture (461 ) (1,000 ) Sale of
investment in joint venture � 1,875 � � � - � Net cash used in
investing activities (48,139 ) (121,772 ) � Financing activities:
Common stock dividends (1,278 ) (1,273 ) Proceeds from stock option
exercises - 1,985 Excess tax benefits from stock option exercises -
241 Proceeds from issuance of senior unsecured notes, gross -
275,000 Offering costs - senior unsecured notes issuance - (4,288 )
Finance fees related to credit facility (40 ) (60 ) Repayment of
debt � (8 ) � � (43 ) Net cash provided by (used in) financing
activities � (1,326 ) � � 271,562 � Increase (decrease) in cash and
cash equivalents (45,751 ) 190,665 Cash and cash equivalents at
beginning of period � 303,882 � � � 40,922 � Cash and cash
equivalents at end of period $ 258,131 � � $ 231,587 � � See notes
to the Condensed Consolidated Financial Statements. �
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA (In
thousands) � � Three months ended � � � Six months ended � � June
30, � � � � � � � June 30, � � � � � � � � 2008 � � � 2007 � � �
2008 � � � 2007 � � � � � Net earnings $ 6,232 $ 11,032 $ 16,360 $
24,539 Income tax expense 3,517 6,501 9,857 14,442 Interest expense
5,048 5,380 10,091 7,318 Interest income (1,705 ) (4,179 ) (4,262 )
(6,060 ) Depreciation � 4,939 � � � 3,444 � � � 9,591 � � � 6,808 �
EBITDA $ 18,031 � � $ 22,178 � � $ 41,637 � � $ 47,047 � (Income)
Expense related to stock-based compensation (279 ) 332 (91 ) 965
(Income) Expense related to stock appreciation rights compensation
income 1 (30 ) 348 75 347 Other loss (income) - loss / (gain) on
investments � 1,463 � � � - � � � (1,736 ) � � - � Adjusted EBITDA
$ 19,185 � � $ 22,858 � � $ 39,885 � � $ 48,359 � � 1 SARs are cash
settled at time of exercise � EBITDA represents net earnings before
income tax expense, interest expense (income), net of depreciation
of property, plant and equipment. 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 operating
performance of a company�s business. EBITDA is not a financial
measure presented in accordance with U.S. generally accepted
accounting principles, or U.S. GAAP. Accordingly, when analyzing
our operating performance, investors should not consider EBITDA in
isolation or as a substitute for net earnings, 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 similarly titled measures reported by other companies.
Adjusted EBITDA represents EBITDA before stock based compensation
income and expense related to stock options and stock appreciation
rights (SARs), and before gains or losses on investments. We
believe that Adjusted EBITDA is useful to investors evaluating our
operating performance, and management also uses Adjusted EBITDA for
that purpose. The charges related to our grants of stock options
are non-cash charges that are excluded from our calculation of
EBITDA under our unsecured senior notes. Our SARs (which settle in
cash) are revalued each quarter based upon changes in our stock
price. Management believes that eliminating the charges associated
with our SARs allows us and our investors to understand better our
operating results independent of financial changes caused by the
fluctuating price of our common stock. 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 earnings, 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.
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