American Railcar Industries, Inc. (�ARI� or the �Company�) (NASDAQ:
ARII) today reported its third quarter financial results. �We
increased railcar shipments in the third quarter of 2008 reaching
our second highest shipment level in our Company�s history. This
was driven by increased tank and hopper railcar production compared
with the second quarter of 2008. We have also increased railcar
shipments on a year to date basis in 2008 compared to 2007. We
continue to experience strong operational performance at most of
our locations as a result of labor efficiencies and controlled
overhead spending,� said James J. Unger, President and CEO of
ARI.��Offsetting the strong railcar shipments and efficiencies were
decreased selling prices in 2008 compared to 2007 for many of our
hopper railcars due to market conditions.� For the three months
ended September 30, 2008, revenues were $217.2 million and net
earnings available to common shareholders were $7.4 million or
$0.35 per diluted share. In comparison, for the three months ended
September 30, 2007, the Company had revenues of $139.9 million and
net earnings available to common shareholders of $4.9 million or
$0.23 per diluted share. Earnings for the third quarter of 2008
included other income of $1.1 million, after-tax, or $0.05 per
diluted share, which represents realized gains on sales of a
portion of the Company�s investment in common stock of The
Greenbrier Companies, Inc. (NYSE: GBX), offset by increased net
interest expense of $1.1 million, after-tax, in 2008 compared to
2007. Revenues increased in the third quarter of 2008 compared to
the same period in 2007, primarily due to the increase in the
number of railcars sold and higher tank railcar selling prices,
primarily as a result of the recovery of increased steel costs,
partially offset by competitive pricing for hopper railcars. During
the three months ended September 30, 2008, the Company shipped
2,116 railcars compared to 1,276 railcars in the same period of
2007. EBITDA was $20.3 million in the third quarter of 2008, a 60%
increase compared to EBITDA of $12.7 million in the third quarter
of 2007. The increases in EBITDA and net earnings available to
common shareholders resulted primarily from an increase in volume,
which was driven by higher tank railcar shipments from the added
capacity at our Marmaduke railcar manufacturing plant, and
additional railcars shipped under our ACF manufacturing agreement,
and the impact, in the third quarter of 2007, of low hopper railcar
shipments. 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
nine months ended September 30, 2008, revenues were $605.8 million
and net earnings available to common shareholders were $23.8
million or $1.12 per diluted share. In comparison, for the nine
months ended September 30, 2007, the Company had revenues of $536.2
million and net earnings available to common shareholders of $29.4
million or $1.38 per diluted share. Earnings for 2008 included
increased net interest expense of $3.9 million, after-tax,
partially offset by other income of $2.2 million, after-tax, or
$0.10 per diluted share, which was related to realized gains and
dividends received from our investment in The Greenbrier Companies,
Inc. common stock and investments referencing that stock. Revenues
increased in the nine months ended September 30, 2008, compared to
the same period in 2007, primarily due to increased tank railcar
shipments and higher selling prices of tank railcars, primarily as
a result of the recovery of increased steel costs, partially offset
by competitive pricing for hopper railcars. During the nine months
ended September 30, 2008, the Company shipped 6,095 railcars
compared to 5,465 railcars in the same period of 2007, a 12%
increase over the same period of the prior year. EBITDA was $61.9
million in the nine months ended September 30, 2008, representing a
4% increase compared to EBITDA of $59.8 million in the nine months
ended September 30, 2007. The increase in EBITDA resulted primarily
from a volume increase for tank railcar shipments during 2008
compared to 2007. This increase was partially offset by the
decrease in profits, primarily as a result of lower selling prices
and lower margins that the Company has experienced on hopper
railcars in 2008. Our backlog was 5,956 railcars as of September
30, 2008. We attribute the reduction in our backlog to market
uncertainty, driven primarily by an unstable economy, high steel
prices and a difficult credit environment. In response to this
lower demand, we have slowed our production rates for hopper
railcars in the fourth quarter. ARI will host a webcast and
conference call on Thursday, November 6, 2008 at 10:00 am (Eastern
Time) to discuss the Company�s third 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 866-770-7129 and use participant code 74486507.
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 future production rates
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, 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,
including the recent financial turmoil and associated economic
uncertainty; 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) � September 30, December 31, 2008 2007 (unaudited) Assets
Current assets: Cash and cash equivalents $ 283,582 $ 303,882 Short
term investments - available-for-sale securities 7,284 - Accounts
receivable, net 47,604 33,523 Accounts receivable, due from
affiliates 8,898 17,175 Inventories, net 120,864 93,475 Prepaid
expenses 3,955 5,015 Deferred tax assets � 2,154 � � 1,610 � Total
current assets 474,341 454,680 � Property, plant and equipment, net
199,058 175,166 Deferred debt issuance costs 3,407 3,977 Goodwill
7,169 7,169 Other assets 37 37 Investment in joint venture � 12,961
� � 13,355 � Total assets $ 696,973 � $ 654,384 � � Liabilities and
Stockholders' Equity Current liabilities: Current portion of
long-term debt $ - $ 8 Accounts payable 68,899 47,903 Accounts
payable, due to affiliates 5,680 2,867 Accrued expenses and taxes
6,176 5,729 Accrued compensation 11,153 10,379 Accrued interest
expense 1,750 6,907 Accrued dividends � 639 � � 639 � Total current
liabilities 94,297 74,432 � Senior unsecured notes 275,000 275,000
Deferred tax liability 6,400 5,690 Pension and post-retirement
liabilities 6,276 6,572 Other liabilities � 2,197 � � 1,702 � Total
liabilities 384,170 363,396 � Commitments and contingencies - - �
Stockholders' equity: Common stock, $.01 par value, 50,000,000
shares authorized, 21,302,296 shares issued and outstanding 213 213
Additional paid-in capital 239,517 239,621 Retained earnings 73,098
51,314 Accumulated other comprehensive loss � (25 ) � (160 ) Total
stockholders' equity � 312,803 � � 290,988 � Total liabilities and
stockholders' equity $ 696,973 � $ 654,384 � � � � CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share amounts, unaudited) � For the Three Months Ended September
30, September 30, 2008 2007 Revenues: Manufacturing operations
(including revenues from affiliates of $47,689 and $47,634 for the
three months ended September 30, 2008 and 2007, respectively) $
205,107 $ 127,376 � Railcar services (including revenues from
affiliates of $3,392 and $4,289 for the three months ended
September 30, 2008 and 2007, respectively) � 12,141 � � 12,515 �
Total revenues 217,248 139,891 � Cost of revenue: Manufacturing
operations (187,771 ) (113,251 ) Railcar services � (9,874 ) �
(10,668 ) Total cost of revenue (197,645 ) (123,919 ) Gross profit
19,603 15,972 � Selling, administrative and other (including costs
related to affiliates of $151 both for the three months ended
September 30, 2008 and 2007) � (6,602 ) � (6,835 ) Earnings from
operations 13,001 9,137 � Interest income 1,693 3,986 Interest
expense (5,018 ) (5,517 ) Other income 1,750 - Earnings from joint
venture � 509 � � 115 � Earnings before income tax expense 11,935
7,721 Income tax expense � (4,488 ) � (2,861 ) Net earnings
available to common shareholders $ 7,447 � $ 4,860 � � Net earnings
per common share - basic $ 0.35 $ 0.23 Net earnings per common
share - diluted $ 0.35 $ 0.23 Weighted average common shares
outstanding - basic 21,302 21,302 Weighted average common shares
outstanding - diluted � 21,302 � � 21,392 � � Dividends declared
per common share $ 0.03 $ 0.03 � � CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per share amounts,
unaudited) � � For the Nine Months Ended September 30, September
30, 2008 2007 Revenues: Manufacturing operations (including
revenues from affiliates of $136,134 and $93,558 for the nine
months ended September 30, 2008 and 2007, respectively) $ 566,754 $
498,217 � Railcar services (including revenues from affiliates of
$11,617 and $12,622 for the nine months ended September 30, 2008
and 2007, respectively) � 39,025 � � 38,014 � Total revenues
605,779 536,231 � Cost of revenue: Manufacturing operations
(511,813 ) (435,389 ) Railcar services � (31,459 ) � (31,198 )
Total cost of revenue (543,272 ) (466,587 ) Gross profit 62,507
69,644 � Selling, administrative and other (including costs related
to affiliates of $454 both for the nine months ended September 30,
2008 and 2007) � (19,596 ) � (20,884 ) Earnings from operations
42,911 48,760 � Interest income 5,955 10,046 Interest expense
(15,109 ) (12,835 ) Other income 3,486 - Earnings from joint
venture � 909 � � 731 � Earnings before income tax expense 38,152
46,702 Income tax expense � (14,345 ) � (17,303 ) Net earnings
available to common shareholders $ 23,807 � $ 29,399 � � Net
earnings per common share - basic $ 1.12 $ 1.38 Net earnings per
common share - diluted $ 1.12 $ 1.38 Weighted average common shares
outstanding - basic 21,302 21,265 Weighted average common shares
outstanding - diluted � 21,302 � � 21,368 � � Dividends declared
per common share $ 0.09 $ 0.09 � � � CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands, unaudited) � For the Nine
Months Ended September 30, September 30, 2008 2007 Operating
activities: Net earnings $ 23,807 $ 29,399 Adjustments to reconcile
net earnings to net cash provided by (used in) operating
activities: � Depreciation 14,614 10,266 Amortization of deferred
costs 609 482 Loss on disposal of property, plant and equipment 242
233 Realized gain on sale of short term investments (2,589 ) -
Realized gain on sale of total return swaps (630 ) - Dividends
received from short term investments - available-for-sale
securities (267 ) - Stock based compensation 590 1,992 Income
related to reversal of stock based compensation for stock options
(411 ) - Excess tax benefits from stock option exercises - (241 )
Change in joint venture investment as a result of earnings (909 )
(731 ) Provision (benefit) for deferred income taxes 14 (737 )
Provision for losses on accounts receivable 156 84 Changes in
operating assets and liabilities: Accounts receivable, net (14,237
) 255 Accounts receivable, due from affiliate 8,277 (3,921 )
Inventories, net (35,031 ) 2,375 Prepaid expenses 1,060 1,924
Accounts payable 20,996 (14,416 ) Accounts payable, due to
affiliate 2,813 1,005 Accrued expenses and taxes (4,061 ) 4,344
Other � (697 ) � (1,331 ) Net cash provided by operating activities
14,346 30,982 � Investing activities: Purchases of property, plant
and equipment (31,155 ) (36,495 ) Purchases of short term
investments - available-for-sale securities (27,857 ) (100,596 )
Sales of short term investments - available-for-sale securities
23,631 100,596 Dividends received from short term investments -
available-for-sale securities 267 - Realized gain on sale of total
return swaps 630 - Repayment of note receivable from affiliate
(Ohio Castings Company, LLC) 494 165 Investment in joint venture
(566 ) (8,840 ) Sale of investment in joint venture � 1,875 � � - �
Net cash used in investing activities (32,681 ) (45,170 ) � �
Continued � � � CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands, unaudited) � For the Nine Months Ended September 30,
September 30, 2008 2007 Financing activities: Common stock
dividends (1,917 ) (1,912 ) 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 - (4,314 ) Finance
fees related to credit facility (40 ) (60 ) Repayment of debt � (8
) � (65 ) Net cash provided by (used in) financing activities �
(1,965 ) � 270,875 � Increase (decrease) in cash and cash
equivalents (20,300 ) 256,687 Cash and cash equivalents at
beginning of period � 303,882 � � 40,922 � Cash and cash
equivalents at end of period $ 283,582 � $ 297,609 � � � � � �
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA(In
thousands, unaudited) � Three months ended Nine months ended
September 30, September 30, 2008 2007 2008 2007 � Net earnings $
7,447 $ 4,860 $ 23,807 $ 29,399 Income tax expense 4,488 2,861
14,345 17,303 Interest expense 5,018 5,517 15,109 12,835 Interest
income (1,693 ) (3,986 ) (5,955 ) (10,046 ) Depreciation � 5,023 �
� 3,457 � � 14,614 � � 10,266 � EBITDA $ 20,283 � $ 12,709 � $
61,920 � $ 59,757 � Expense related to share based compensation 100
332 9 1,297 Expense related to stock appreciation rights
compensation 1 95 348 170 695 Other income � (1,750 ) � - � �
(3,486 ) � - � Adjusted EBITDA $ 18,728 � $ 13,389 � $ 58,613 � $
61,749 � � � 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 share based compensation 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 share based compensation and our
investments allows us and our investors to understand better our
operating results independent of financial changes caused by the
fluctuating price of our common stock and our investments. 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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