American Railcar Industries, Inc. Reports First Quarter 2011 Results
April 27 2011 - 7:03PM
American Railcar Industries, Inc. (ARI or the Company)
(Nasdaq:ARII) today reported its first quarter 2011 financial
results.
First Quarter Highlights
- Manufacturing Operations revenues for the first quarter of 2011
were $68.7 million as compared to $35.6 million for the first
quarter of 2010.
- Railcar shipments for the first quarter of 2011 were
approximately 670 railcars as compared to approximately 340
railcars for the same period in 2010.
- Gross profit was $4.9 million for the first quarter of 2011 as
compared to $1.0 million for the same period in 2010.
- Adjusted EBITDA was $3.7 million for the first quarter of 2011
as compared to an Adjusted EBITDA loss of $0.3 million for the same
period in 2010.
- The Company's backlog increased to approximately 5,630 railcars
at March 31, 2011 from approximately 1,050 at December 31, 2010.
The Company's backlog at March 31, 2011 includes approximately 280
railcars for lease.
Message from our President and CEO
"I am excited to announce that both our revenues and shipments
increased in the first quarter of 2011 as compared to the same
period in 2010. Industry reports show that railcar loadings have
increased and a significant number of stored railcars have returned
to service indicating that the railcar industry continues to gain
momentum. In turn, we received orders for over 5,000 railcars
during the first three months of 2011," said James Cowan, President
and CEO of ARI. "Our railcar services segment also reported strong
results with revenues of $16.1 million and a gross profit margin of
almost 18% for the first quarter of 2011."
Discussion of Results
For the three months ended March 31, 2011, revenues were $84.8
million as compared to $52.3 million for the three months ended
March 31, 2010. Revenues increased primarily due to an increase in
railcar shipments, partially offset by a decrease in railcar
services revenues. The decrease in railcar services revenues was
primarily attributable to a reduction in railcar repair projects
performed at the Company's railcar manufacturing facilities.
EBITDA, adjusted to exclude investment activity and stock based
compensation (Adjusted EBITDA), was $3.7 million in the first
quarter of 2011 compared to an Adjusted EBITDA loss of $0.3 million
in the first quarter of 2010. The increase resulted primarily from
an increase in revenues, an increase in gross profit margin and a
decrease in selling, administrative and other costs, exclusive of
stock based compensation. The Company's gross profit margin
increase is primarily attributable to strong volumes and a good mix
of work for both the manufacturing operations and railcar services
segments. Selling, administrative and other costs decreased
primarily due to a decrease in incentive compensation. These
decreases were partially offset by an increase in losses from our
joint ventures. The increase in joint venture losses was primarily
attributable to an increase in our axle joint venture losses and
the losses of our Indian joint venture. A reconciliation of the
Company's net loss to EBITDA and Adjusted EBITDA (both non-GAAP
financial measures) is set forth in the supplemental disclosure
attached to this press release.
The Company reported a net loss of $5.3 million or $0.25 per
share for the first quarter of 2011 as compared to a net loss of
$7.0 million or $0.33 per share for the same period in 2010. The
Company's net loss decreased due to the factors mentioned above and
a decrease in net interest expense.
ARI will host a webcast and conference call on Thursday, April
28, 2011 at 10:00 am (Eastern Time) to discuss the Company's first
quarter 2011 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 American Railcar Industries, Inc.
American Railcar Industries, Inc. is a leading North American
designer and manufacturer of hopper and tank railcars. ARI also
leases, 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.
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. 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 potential improvements in
our business and the overall railcar industry, the potential for
increased order activity, anticipated future production rates, the
Company's backlog and 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.
Other potential risks and uncertainties include, among other
things: the impact of the recent economic downturn, adverse market
conditions and restricted credit markets, and the impact of the
continuation of these conditions; our reliance upon a small number
of customers that represent a large percentage of our revenues and
backlog; the health of and prospects for the overall railcar
industry; our prospects in light of the cyclical nature of the
railcar manufacturing business and the current economic
environment; anticipated trends relating to our shipments, leasing,
revenues, financial condition or results of operations; our ability
to manage overhead and production slowdowns; 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; 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 international economic and political risks related
to our joint ventures' current and potential international
operations; the risk of the lack of acceptance of new railcar
offerings by our customers and the risk of initial production costs
for our new railcar offerings being significantly higher than
expected; the sufficiency of our liquidity and capital resources;
the conversion of our railcar backlog into revenues; compliance
with covenants contained in our unsecured senior notes; the impact
and anticipated benefits of any acquisitions we may complete; the
impact and costs and expenses of any litigation we may be subject
to now or in the future; the ongoing benefits and risks related to
our relationship with Mr. Carl Icahn (the chairman of our board of
directors and, through his holdings of Icahn Enterprises LP, our
principal beneficial stockholder) and certain of his affiliates;
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) |
As
of |
|
March 31, 2011 |
December 31,
2010 |
|
(unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 314,225 |
$ 318,758 |
Accounts receivable, net |
19,603 |
21,002 |
Accounts receivable, due from
related parties |
2,539 |
4,981 |
Income taxes receivable |
14,806 |
14,939 |
Inventories, net |
59,069 |
50,033 |
Deferred tax assets |
2,599 |
3,029 |
Prepaid expenses and other
current assets |
3,751 |
2,654 |
Total current assets |
416,592 |
415,396 |
|
|
|
Property, plant and equipment, net |
176,379 |
181,255 |
Deferred debt issuance costs |
1,797 |
1,951 |
Interest receivable, due from related
parties |
228 |
187 |
Goodwill |
7,169 |
7,169 |
Investments in and loans to joint
ventures |
46,545 |
48,169 |
Other assets |
282 |
240 |
Total assets |
$ 648,992 |
$ 654,367 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 32,560 |
$ 29,334 |
Accounts payable, due to
related parties |
883 |
275 |
Accrued expenses and taxes |
6,063 |
5,095 |
Accrued compensation |
14,554 |
11,054 |
Accrued interest expense |
1,719 |
6,875 |
Total current liabilities |
55,779 |
52,633 |
|
|
|
Senior unsecured notes |
275,000 |
275,000 |
Deferred tax liability |
4,287 |
7,938 |
Pension and post-retirement liabilities |
6,370 |
6,707 |
Other liabilities |
4,277 |
4,313 |
Total liabilities |
345,713 |
346,591 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
Common stock, $.01 par value, 50,000,000
shares authorized, 21,352,297 shares issued and outstanding at
March 31, 2011 and 21,316,296 shares issued and outstanding at
December 31, 2010 |
214 |
213 |
Additional paid-in capital |
239,608 |
238,947 |
Retained earnings |
61,880 |
67,209 |
Accumulated other comprehensive income |
1,577 |
1,407 |
Total stockholders' equity |
303,279 |
307,776 |
Total liabilities and
stockholders' equity |
$ 648,992 |
$ 654,367 |
|
|
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
(In thousands, except per share amounts,
unaudited) |
|
|
|
For the Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
|
|
Revenues: |
|
|
Manufacturing operations (including revenues
from affiliates of $1,221 and $12,575 for the three months ended
March 31, 2011 and 2010, respectively) |
$ 68,696 |
$ 35,635 |
|
|
|
Railcar services (including revenues from
affiliates of $5,537 and $2,841 for the three months ended March
31, 2011 and 2010, respectively) |
16,147 |
16,676 |
Total revenues |
84,843 |
52,311 |
|
|
|
Cost of revenues: |
|
|
Manufacturing operations |
(66,581) |
(37,387) |
Railcar services |
(13,318) |
(13,968) |
Total cost of revenues |
(79,899) |
(51,355) |
Gross profit |
4,944 |
956 |
|
|
|
Selling, administrative and other (including
costs to a related party of $145 and $154 for the three months
ended March 31, 2011 and 2010, respectively) |
(6,882) |
(6,087) |
Loss from operations |
(1,938) |
(5,131) |
|
|
|
Interest income (including income from
related parties of $679 and $607 for the three months ended March
31, 2011 and 2010, respectively) |
916 |
730 |
Interest expense |
(5,335) |
(5,321) |
|
|
|
Other income (including income from a related
party of $4 for both the three months ended March 31, 2011 and
2010) |
4 |
85 |
Loss from joint ventures |
(2,242) |
(1,782) |
Loss before income taxes |
(8,595) |
(11,419) |
Income tax benefit |
3,266 |
4,396 |
Net loss |
$ (5,329) |
$ (7,023) |
|
|
|
Net loss per common share - basic and
diluted |
$ (0.25) |
$ (0.33) |
Weighted average common shares outstanding -
basic and diluted |
21,349 |
21,302 |
|
|
|
Dividends declared per common share |
$ -- |
$ -- |
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands, unaudited) |
|
|
For the Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
|
|
|
Operating activities: |
|
Net loss |
$ (5,329) |
$ (7,023) |
Adjustments to reconcile net earnings to net
cash used in operating activities: |
|
|
Depreciation |
5,766 |
5,915 |
Amortization of deferred costs |
175 |
175 |
Loss on disposal of property, plant and
equipment |
63 |
-- |
Stock based compensation |
2,148 |
700 |
Change in interest receivable, due from
related parties |
(41) |
(608) |
Change in investments in joint ventures
as a result of loss |
2,242 |
1,782 |
Realized gain on short-term investments -
available-for-sale securities |
-- |
(81) |
Deferred income taxes benefit |
(3,224) |
(4,423) |
Recovery for doubtful accounts
receivable |
(46) |
(26) |
Changes in operating assets
and liabilities: |
|
Accounts receivable, net |
1,455 |
(1,442) |
Accounts receivable, due from related
parties |
2,446 |
(2,746) |
Income taxes receivable |
133 |
304 |
Inventories, net |
(9,014) |
(1,617) |
Prepaid expenses |
(1,095) |
(54) |
Accounts payable |
3,221 |
1,259 |
Accounts payable, due to related
parties |
609 |
(119) |
Accrued expenses and taxes |
(2,877) |
(4,960) |
Other |
(559) |
(744) |
Net cash used in operating activities |
(3,927) |
(13,708) |
Investing activities: |
|
|
Purchases of property, plant and
equipment |
(729) |
(1,491) |
Sale of short-term investments -
available-for-sale securities |
-- |
1,832 |
Investments in and loans to joint
ventures |
(639) |
(10,205) |
Net cash used in investing activities |
(1,368) |
(9,864) |
Financing activities: |
|
Proceeds from stock option exercises |
756 |
-- |
Net cash provided by financing
activities |
756 |
-- |
Effect of exchange rate changes on cash and
cash equivalents |
6 |
5 |
Decrease in cash and cash equivalents |
(4,533) |
(23,567) |
Cash and cash equivalents at beginning of
period |
318,758 |
347,290 |
Cash and cash equivalents at end of
period |
$ 314,225 |
$ 323,723 |
|
|
|
|
|
|
RECONCILIATION OF NET LOSS TO EBITDA
AND ADJUSTED EBITDA |
|
|
(In thousands, unaudited) |
|
|
|
|
|
|
Three months
ended |
|
March
31, |
|
2011 |
2010 |
|
|
|
|
|
|
Net loss |
$ (5,329) |
$ (7,023) |
Income tax benefit |
(3,266) |
(4,396) |
Interest expense |
5,335 |
5,321 |
Interest income |
(916) |
(730) |
Depreciation |
5,766 |
5,915 |
EBITDA |
$ 1,590 |
$ (913) |
Expense related to stock appreciation rights
compensation 1 |
2,148 |
700 |
Other income on short-term investment
activity |
-- |
(81) |
Adjusted EBITDA |
$ 3,738 |
$ (294) |
|
|
|
1 SARs are cash settled at time of
exercise |
|
|
EBITDA represents net loss before income tax benefit, interest
expense (income) 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 loss, cash flows
used in 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 expense related to stock appreciation rights (SARs),
and before income on investments. We believe that Adjusted EBITDA
is useful to investors evaluating our operating performance, and
management also uses Adjusted EBITDA for that purpose. Our SARs
(which settle in cash) are revalued each quarter based primarily
upon changes in our stock price. Management believes that
eliminating the expense or income associated with our stock based
compensation and investments allows us and our investors to
understand better our operating results independent of financial
changes caused by the fluctuating price and value of our common
stock and 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 loss, cash flows
used in 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.
CONTACT: Dale C. Davies
Michael Obertop
636.940.6000
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