ST. CHARLES, Mo., April 27, 2011 (GLOBE NEWSWIRE) -- 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.