First Quarter 2016 Highlights
American Railcar Industries, Inc. (ARI or the Company)
(NASDAQ:ARII) today reported its first quarter 2016 financial
results. Jeff Hollister, President and CEO of ARI, commented, “In
response to customer demand, both our hopper and tank railcar
manufacturing facilities are producing more specialized railcars
from our family of unique product offerings. As a result, our
shipments in 2016 will likely be lower than the record levels set
in 2015. Even though we are currently at lower production and
shipment levels, we continue to efficiently produce high quality
railcars while increasing our flexibility and repair
capacity. Investments in our railcar services and railcar
leasing segments continue to complement our manufacturing business
and both segments serve to partially offset the lower volume of new
railcar shipments. Our railcar services segment is gaining
momentum as it takes advantage of the additional capacity that has
resulted from the completion of multiple expansion projects. In
addition, our gross margins continue to benefit from the sustained
returns from our railcar services business and the successful
growth of our lease fleet which continues to be 100%
utilized. This momentum combined with our ability to maintain
efficient production at our vertically integrated facilities should
better enable us to remain competitive in the future.”
First Quarter Summary
Total consolidated revenues for the first
quarter of 2016 were $176.2 million, a decrease of 33% when
compared to $263.8 million for the comparable period in 2015. This
decrease was primarily driven by lower manufacturing revenues,
partially offset by increased revenues in the railcar leasing and
railcar services segments.
Manufacturing revenues were $123.8 million for
the first quarter of 2016, a decrease of 44% compared to the same
period in 2015. This decrease was primarily driven by fewer
railcar shipments for direct sale and an overall decrease in
average selling prices with a higher mix of hopper railcars sold,
which generally have lower average selling prices than tank
railcars due to less material and labor content. Tank railcar
shipments for direct sale have decreased as that market continues
to soften. Also impacting both hopper and tank railcar
shipments for direct sale is a shift in production to a larger mix
of specialty railcars. During the first quarter of 2016, ARI
shipped 1,130 direct sale railcars and 200 railcars built for the
Company's lease fleet compared to 2,017 direct sale railcars and
651 railcars built for the lease fleet during the same period in
2015. Railcars built for the lease fleet represented 15% of
ARI’s railcar shipments during the first quarter of 2016 compared
to 24% for the same period in 2015. Because revenues and
earnings related to leased railcars are recognized over the life of
the lease, ARI's quarterly results may vary depending on the mix of
lease versus direct sale railcars that the Company ships during a
given period.
Manufacturing revenues for the first quarter of
2016 exclude $23.6 million of estimated revenues related to
railcars built for the Company's lease fleet compared to $83.7
million for the same period in 2015. Estimated revenues
related to railcars built for the Company's lease fleet decreased
primarily due to lower quantities of both tank and hopper railcars
shipped for lease. 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 not recognized in consolidated revenues as
railcar sales. Rather lease revenues are recognized in
accordance with the terms of the contract over the life of the
lease.
Railcar leasing revenues were $32.8 million for
the first quarter of 2016, an increase of 33% over the $24.6
million for the comparable period in 2015. The primary reason for
the increase in revenue was an increase in the number of railcars
on lease. ARI had 10,556 railcars in its lease fleet as of
March 31, 2016 compared to 8,381 railcars as of March 31,
2015.
Railcar services revenues were $19.6 million for
the first quarter of 2016, an increase of 13% over the $17.4
million for the same period in 2015. The primary reasons for
the increase in revenue were an increase in demand, a favorable
change in the mix of work at our repair facilities and the
additional capacity resulting from expansion projects that became
operational during the second half of 2015.
Consolidated earnings from operations were $40.7
million for the first quarter of 2016, a decrease of 32% compared
to the $60.0 million for the same period in 2015. The decrease in
consolidated earnings from operations was primarily driven by
decreased earnings in the manufacturing segment.
Consolidated operating margins increased to
23.1% for the first quarter of 2016 compared to 22.8% for the same
period in 2015. This increase was primarily driven by an
increase in the railcar leasing segment's contribution to earnings
with the continued growth of the Company's lease fleet, partially
offset by lower margins in the manufacturing segment.
Manufacturing earnings from operations were
$19.3 million for the first quarter of 2016 compared to $44.8
million for the same period in 2015. This decrease was due
primarily to fewer direct sale shipments, as discussed above, and
more competitive pricing on both hopper and tank railcars,
partially offset by stronger efficiencies and cost reduction
initiatives. Estimated profit on railcars built for the
Company’s lease fleet was $3.4 million and $25.6 million for the
first quarter of 2016 and 2015, respectively, and is excluded from
manufacturing earnings from operations. Profit on railcars
built for the Company's lease fleet 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.
Railcar leasing earnings from operations were
$22.7 million for the first quarter of 2016 compared to $16.7
million for the same period in 2015. This increase was due to
the growth in the number of railcars in the Company's lease
fleet.
Railcar services earnings from operations were
$3.2 million for the first quarter of 2016 compared to $2.8 million
for the same period in 2015. This increase was primarily due
to the increase in revenues driven by increased demand, a favorable
change in the mix of work and the additional capacity from our
expansion projects, as discussed above.
Selling, general and administrative expenses
were $8.0 million for the first quarter of 2016 compared to $7.7
million for the same period in 2015. This $0.3 million
increase was driven by higher depreciation related to the Company's
new enterprise resource planning system and increased legal costs,
partially offset by lower share-based compensation expense.
EBITDA, adjusted to exclude share-based
compensation expense (Adjusted EBITDA), was $54.5 million for the
first quarter of 2016 compared to $72.0 million for the comparable
quarter of 2015. The decrease resulted primarily from decreased
earnings from operations as discussed above. 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.
Net earnings for the first quarter of 2016 were
$22.8 million, or $1.16 per share compared to $35.0 million, or
$1.64 per share, in the same period in 2015. This decrease
was driven primarily by decreased consolidated earnings from
operations combined with an increase in interest expense due to a
higher average debt balance, partially offset by the loss on debt
extinguishment in the first quarter of 2015.
Cash Flow and Liquidity
The Company’s strong earnings have contributed
to cash flow from operations in the first quarter of 2016 of $57.9
million. As of March 31, 2016, ARI had working capital
of $267.9 million, including $208.1 million of cash and cash
equivalents.
The Company paid dividends totaling $7.8 million
during the first quarter of 2016. At the board meeting in April,
the Company’s board of directors declared a cash dividend of $0.40
per share of common stock of the Company to shareholders of record
as of June 17, 2016 that will be paid on June 30,
2016.
During the first quarter of 2016, the Company repurchased
283,320 shares of common stock at a cost of $10.9 million under its
stock repurchase program. Board authorization for approximately
$181.7 million remains available for further share repurchases.
Backlog
ARI's backlog as of March 31, 2016 was
5,958 railcars with an estimated value of $569.1 million. Of
the total backlog, 1,359 railcars, or 23%, were subject to lease
with an estimated market value of $132.3 million.
Conference Call and Webcast
ARI will host a webcast and conference call on
Friday, April 29, 2016 at 10:00 am (Eastern Time) to discuss
the Company’s first quarter 2016 financial results. In conjunction
with this press release, ARI has posted a supplemental information
presentation to its website. To participate in the webcast,
please log-on to ARI’s investor relations page through the ARI
website at 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 one of the leading North American
designers and manufacturers of hopper and tank railcars. ARI
provides its railcar customers with integrated solutions through a
comprehensive set of high quality products and related services.
ARI manufactures and sells railcars, custom designed railcar parts,
and other industrial products. ARI and its subsidiaries also lease
railcars manufactured by the Company to certain markets. In
addition, ARI provides railcar repair services through its various
repair facilities, including mini-shops and mobile units, offering
a range of services from full to light repair. More information
about American Railcar Industries, Inc. is available on its website
at americanrailcar.com or call the Investor Relations Department,
636.940.6000.
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: our projects to expand
our manufacturing flexibility and repair capacity, industry,
product and market trends, potential impact of regulatory
developments, anticipated customer demand for the Company’s
products and services and the Company's ability to adapt to
evolving demand, the Company’s strategic objectives and long-term
strategies, trends related to railcar shipments for direct sale
versus lease, operating margins or manufacturing efficiencies,
anticipated benefits from expansion and diversification of our
businesses, plans regarding the growth of the Company’s leasing
business and the mix of railcars, customers and commodities in our
lease fleet, anticipated future production rates, the sufficiency
of the Company's short- and long-term liquidity, the Company's
ability to service current debt obligations and future financing
plans, the Company's Stock Repurchase Program, the Company’s plans
regarding future dividends, 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: the Company's prospects in light of
the cyclical nature of the railcar industry; the health of and
prospects for the overall railcar industry; 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 market price
of the Company's stock; the nature of other investment
opportunities presented to the Company, cash flows, basing
financial or other information on judgments or estimates based on
future performance or events; risks relating to the Company's
compliance with, and the overall railcar industry's implementation
of, United States and Canadian regulations related to the
transportation of flammable liquids by rail released on May 1,
2015; fluctuations in commodity prices, including oil and gas; the
highly competitive nature of the manufacturing, railcar leasing and
railcar services industries; the variable purchase patterns of
ARI’s railcar customers and the timing of completion, customer
acceptance and shipment of orders; the Company’s ability to manage
overhead and variations in production rates; the Company’s ability
to recruit, retain and train adequate numbers of qualified
personnel; ARI’s reliance upon a small number of customers that
represent a large percentage of revenues and backlog; 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 impact of an economic downturn,
adverse market conditions and restricted credit markets; the
ongoing benefits and risks related to ARI’s relationship with Mr.
Carl Icahn, ARI’s principal beneficial stockholder, through Icahn
Enterprises L.P (IELP), and certain of his affiliates; the
sufficiency of our liquidity and capital resources, including
long-term capital needs to further support the growth of our lease
fleet; the impact of repurchases pursuant to ARI's Stock Repurchase
Program on ARI's current liquidity and the ownership percentage of
our principal beneficial stockholder through IELP, Carl Icahn; the
impact, costs and expenses of any litigation ARI may be subject to
now or in the future; the risks associated with the Company’s
on-going compliance with environmental, health, safety, and
regulatory laws and regulations, which may be subject to change;
the conversion of ARI’s railcar backlog into revenues; the risks
associated with the Company's current joint ventures and
anticipated capital needs of, and production at the Company's joint
ventures; the risks, impact and anticipated benefits associated
with potential joint ventures, acquisitions, strategic
opportunities or new business endeavors; the implementation,
integration with other systems or ongoing management of the
Company’s new enterprise resource planning system; risks related to
our and our subsidiaries' indebtedness and compliance with
covenants contained in the relevant financing arrangements; 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, 2016 |
|
December 31, 2015 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
208,081 |
|
|
$ |
298,064 |
|
Restricted cash |
16,776 |
|
|
16,917 |
|
Accounts receivable, net |
28,392 |
|
|
29,018 |
|
Accounts receivable, due from
related parties |
7,357 |
|
|
9,401 |
|
Income taxes receivable |
1,812 |
|
|
3,058 |
|
Inventories, net |
75,624 |
|
|
96,965 |
|
Prepaid expenses and other current
assets |
5,857 |
|
|
4,058 |
|
Total current assets |
343,899 |
|
|
457,481 |
|
Property, plant and
equipment, net |
175,784 |
|
|
176,311 |
|
Railcars on leases,
net |
861,488 |
|
|
848,717 |
|
Goodwill |
7,169 |
|
|
7,169 |
|
Investments in and loans
to joint ventures |
27,386 |
|
|
27,397 |
|
Other assets |
7,790 |
|
|
7,999 |
|
Total assets |
$ |
1,423,516 |
|
|
$ |
1,525,074 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
26,308 |
|
|
$ |
36,080 |
|
Accounts payable, due to related
parties |
2,477 |
|
|
4,477 |
|
Accrued expenses and taxes |
10,891 |
|
|
6,344 |
|
Accrued compensation |
10,598 |
|
|
11,459 |
|
Short-term debt, including current
portion of long-term debt |
25,691 |
|
|
125,784 |
|
Total current liabilities |
75,965 |
|
|
184,144 |
|
Long-term debt, net of
unamortized debt issuance costs of $5,026 and $5,081 as of March
31, 2016 and December 31, 2015, respectively |
564,502 |
|
|
570,756 |
|
Deferred tax
liability |
231,058 |
|
|
222,338 |
|
Pension and
post-retirement liabilities |
8,469 |
|
|
8,484 |
|
Other liabilities |
2,290 |
|
|
3,055 |
|
Total liabilities |
882,284 |
|
|
988,777 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized; 19,561,211 and 19,844,531
shares outstanding as of March 31, 2016 and December 31, 2015,
respectively |
213 |
|
|
213 |
|
Additional paid-in
capital |
239,609 |
|
|
239,609 |
|
Treasury Stock |
(68,296 |
) |
|
(57,423 |
) |
Retained earnings |
376,120 |
|
|
361,153 |
|
Accumulated other
comprehensive loss |
(6,414 |
) |
|
(7,255 |
) |
Total stockholders’ equity |
541,232 |
|
|
536,297 |
|
Total liabilities and stockholders’
equity |
$ |
1,423,516 |
|
|
$ |
1,525,074 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts,
unaudited) |
|
Three Months Ended |
|
March 31, |
|
2016 |
|
2015 |
Revenues: |
|
|
|
Manufacturing (including revenues from affiliates
of $553 and $121,196 for the three months ended March 31, 2016 and
2015, respectively) |
$ |
123,792 |
|
|
$ |
221,811 |
|
Railcar leasing |
32,768 |
|
|
24,585 |
|
Railcar services (including revenues from
affiliates of $7,994 and $6,380 for the three months ended March
31, 2016 and 2015, respectively) |
19,620 |
|
|
17,380 |
|
Total revenues |
176,180 |
|
|
263,776 |
|
Cost of revenues: |
|
|
|
Manufacturing |
(102,281 |
) |
|
(174,534 |
) |
Railcar leasing |
(10,175 |
) |
|
(7,701 |
) |
Railcar services |
(15,237 |
) |
|
(13,845 |
) |
Total cost of revenues |
(127,693 |
) |
|
(196,080 |
) |
Gross profit |
48,487 |
|
|
67,696 |
|
Selling, general and administrative |
(7,957 |
) |
|
(7,681 |
) |
Net gains on disposition of leased railcars |
167 |
|
|
— |
|
Earnings from
operations |
40,697 |
|
|
60,015 |
|
Interest income (including income from related
parties of $457 and $557 for the three months ended March 31, 2016
and 2015, respectively) |
478 |
|
|
563 |
|
Interest expense |
(5,906 |
) |
|
(4,738 |
) |
Loss on debt extinguishment |
— |
|
|
(2,126 |
) |
Other Income |
— |
|
|
6 |
|
Earnings from joint ventures |
1,486 |
|
|
1,797 |
|
Earnings before income taxes |
36,755 |
|
|
55,517 |
|
Income tax expense |
(13,963 |
) |
|
(20,541 |
) |
Net earnings |
$ |
22,792 |
|
|
$ |
34,976 |
|
Net earnings per common share—basic and
diluted |
$ |
1.16 |
|
|
$ |
1.64 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
SEGMENT DATA |
(In thousands, unaudited) |
|
|
Three Months Ended March 31,
2016 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
123,792 |
|
|
$ |
23,631 |
|
|
$ |
147,423 |
|
|
$ |
22,686 |
|
Railcar leasing |
32,768 |
|
|
— |
|
|
32,768 |
|
|
19,675 |
|
Railcar services |
19,620 |
|
|
959 |
|
|
20,579 |
|
|
3,508 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,508 |
) |
Eliminations |
— |
|
|
(24,590 |
) |
|
(24,590 |
) |
|
(664 |
) |
Total Consolidated |
$ |
176,180 |
|
|
$ |
— |
|
|
$ |
176,180 |
|
|
$ |
40,697 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2015 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
221,811 |
|
|
$ |
83,731 |
|
|
$ |
305,542 |
|
|
$ |
70,438 |
|
Railcar leasing |
24,585 |
|
|
— |
|
|
24,585 |
|
|
14,764 |
|
Railcar services |
17,380 |
|
|
102 |
|
|
17,482 |
|
|
2,867 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,350 |
) |
Eliminations |
— |
|
|
(83,833 |
) |
|
(83,833 |
) |
|
(23,704 |
) |
Total Consolidated |
$ |
263,776 |
|
|
$ |
— |
|
|
$ |
263,776 |
|
|
$ |
60,015 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
Three Months Ended |
|
March 31, |
|
2016 |
|
2015 |
Operating
activities: |
|
|
|
Net
earnings |
$ |
22,792 |
|
|
$ |
34,976 |
|
Adjustments to reconcile
net earnings to net cash provided by operating activities: |
|
|
|
Depreciation |
12,655 |
|
|
10,061 |
|
Amortization
of deferred costs |
126 |
|
|
152 |
|
Loss on
disposal of property, plant, equipment and leased railcars |
25 |
|
|
— |
|
Earnings
from joint ventures |
(1,486 |
) |
|
(1,797 |
) |
Provision
for deferred income taxes |
8,640 |
|
|
4,717 |
|
Provision
for allowance for doubtful accounts receivable |
(126 |
) |
|
(16 |
) |
Items
related to financing activities: |
|
|
|
Loss on debt
extinguishment |
— |
|
|
2,126 |
|
Changes in
operating assets and liabilities: |
|
|
|
Accounts
receivable, net |
820 |
|
|
(6,149 |
) |
Accounts
receivable, due from related parties |
2,071 |
|
|
20,391 |
|
Income taxes
receivable |
1,246 |
|
|
22,272 |
|
Inventories,
net |
21,429 |
|
|
(4,730 |
) |
Prepaid
expenses and other current assets |
(1,796 |
) |
|
(897 |
) |
Accounts
payable |
(9,786 |
) |
|
8,804 |
|
Accounts
payable, due to related parties |
(1,999 |
) |
|
511 |
|
Accrued
expenses and taxes |
3,674 |
|
|
(1,077 |
) |
Other |
(417 |
) |
|
(3,770 |
) |
Net cash provided by
operating activities |
57,868 |
|
|
85,574 |
|
Investing
activities: |
|
|
|
Purchases of
property, plant and equipment |
(4,367 |
) |
|
(4,972 |
) |
Capital
expenditures - leased railcars |
(20,620 |
) |
|
(48,095 |
) |
Proceeds
from the sale of property, plant, equipment and leased
railcars |
640 |
|
|
— |
|
Proceeds
from repayments of loans by joint ventures |
1,477 |
|
|
1,250 |
|
Net cash used in investing
activities |
(22,870 |
) |
|
(51,817 |
) |
Financing
activities: |
|
|
|
Repayments
of long-term debt |
(106,402 |
) |
|
(413,275 |
) |
Proceeds
from long-term debt |
— |
|
|
625,306 |
|
Change in
interest reserve related to long-term debt |
142 |
|
|
(9,794 |
) |
Stock
repurchases |
(10,872 |
) |
|
— |
|
Payment of
common stock dividends |
(7,825 |
) |
|
(8,541 |
) |
Debt
issuance costs |
(10 |
) |
|
(5,271 |
) |
Net cash (used in)
provided by financing activities |
(124,967 |
) |
|
188,425 |
|
Effect of exchange rate
changes on cash and cash equivalents |
(14 |
) |
|
(235 |
) |
(Decrease) Increase in
cash and cash equivalents |
(89,983 |
) |
|
221,947 |
|
Cash and cash equivalents
at beginning of period |
298,064 |
|
|
88,109 |
|
Cash and cash equivalents
at end of period |
$ |
208,081 |
|
|
$ |
310,056 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
RECONCILIATION OF NET EARNINGS TO EBITDA AND
ADJUSTED EBITDA |
(In thousands, unaudited) |
|
|
Three Months Ended March
31, |
|
2016 |
|
2015 |
Net earnings |
$ |
22,792 |
|
|
$ |
34,976 |
|
Income tax expense |
13,963 |
|
|
20,541 |
|
Interest expense |
5,906 |
|
|
4,738 |
|
Loss on debt
extinguishment |
— |
|
|
2,126 |
|
Interest income |
(478 |
) |
|
(563 |
) |
Depreciation |
12,655 |
|
|
10,061 |
|
EBITDA |
$ |
54,838 |
|
|
$ |
71,879 |
|
(Income) Expense
related to stock appreciation rights compensation |
(311 |
) |
|
107 |
|
Adjusted EBITDA |
$ |
54,527 |
|
|
$ |
71,986 |
|
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 (income) expense related to stock
appreciation rights (SARs). 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 (income) expense associated with
share-based compensation 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 certain non-recurring events. 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 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.
AMERICAN RAILCAR INDUSTRIES, INC.
100 Clark Street, St. Charles, Missouri 63301
americanrailcar.com
636.940.6000
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