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8-K - FORM 8-K - American Railcar Industries, Inc. | c23727e8vk.htm |
Exhibit 99.1
Press
Release
|
AMERICAN RAILCAR INDUSTRIES,
INC. 100 Clark Street, St. Charles, Missouri 63301 www.americanrailcar.com |
For Release: OCTOBER 26, 2011
|
Contact: | Dale C. Davies Michael Obertop 636.940.6000 |
AMERICAN RAILCAR INDUSTRIES, INC. REPORTS LARGEST BACKLOG SINCE JUNE
2008 AND INCREASED RAILCAR SHIPMENTS
2008 AND INCREASED RAILCAR SHIPMENTS
St. Charles, MO, October 26, 2011 American Railcar Industries, Inc. (ARI or the
Company) (NASDAQ: ARII) today reported its third quarter 2011 financial results.
Third Quarter Highlights
| The Companys backlog increased to approximately 7,110 railcars at September 30, 2011,
the largest since June 2008. The Companys backlog at September 30, 2011 included
approximately 1,700 railcars for lease. The Company had approximately 1,050 railcars in
its backlog at December 31, 2010. |
| Total revenues for the third quarter of 2011 were $125.8 million compared to $64.8
million for the third quarter of 2010. |
| Railcar shipments for the third quarter of 2011 were approximately 1,340 railcars
compared to approximately 420 railcars for the same period in 2010. |
| Gross profit was $15.0 million for the third quarter of 2011 compared to $2.3 million
for the same period in 2010. |
| Net earnings per share for the third quarter of 2011 were $0.19 compared to a net loss
per share of $(0.29) for the same period in 2010. |
| Adjusted EBITDA was $12.2 million for the third quarter of 2011 compared to $1.5 million
for the same period in 2010. |
Message from ARIs President and CEO
Our orders of over 9,100 railcars during the first nine months of 2011 have given us our
largest backlog since June 2008. Revenues, railcar shipments and gross profit have increased in
the third quarter of 2011 compared to the second quarter of 2011 and the third quarter of 2010. We
have continued to ramp up production to meet customer demand with approximately 1,340 deliveries
for the third quarter, said James Cowan, President and CEO of ARI. Our railcar services segment
also reported strong results, with gross profit margin at 27% on revenues of $17.2 million for the
third quarter of 2011.
Discussion of Results
For the third quarter of 2011, total revenues were $125.8 million compared to $64.8 million
for the third quarter of 2010. Revenues increased primarily due to an increase in railcar
shipments.
EBITDA, adjusted to exclude stock based compensation (Adjusted EBITDA), was $12.2 million for
the third quarter of 2011 compared to $1.5 million for the comparable quarter of 2010. The increase
from 2010 resulted primarily from increases in revenues and gross profit margin. The Companys
gross profit margin increase was primarily attributable to increased shipments, improved pricing
and leverage created by higher volumes, partially offset by decreased railcar repair projects at
the manufacturing facilities as this capacity was returned to new railcar manufacturing. Selling,
administrative and other costs, exclusive of stock based compensation, remained consistent with the
third quarter of 2010. A reconciliation of the Companys net earnings (loss) to EBITDA and Adjusted
EBITDA (both non-GAAP financial measures) is set forth in the supplemental disclosure attached to
this press release.
Net interest expense was $3.5 million for the third quarter of 2011 compared to $4.3 million
of net interest expense for the third quarter of 2010. Interest expense decreased due to
capitalized interest recorded for the investment in the Companys joint venture.
The Company reported net earnings of $4.0 million, or $0.19 per share, for the third quarter
of 2011 compared to a net loss of $(6.3) million, or $(0.29) per share, for the same period in
2010. The Companys net earnings increased due to the factors mentioned above and a decrease in
stock based compensation of $4.6 million as a result of fluctuations in the Companys stock price.
For the nine months ended September 30, 2011, total revenues were $322.5 million compared to
$178.3 million for the comparable period in 2010. Revenues increased primarily due to an increase
in railcar shipments, partially offset by decreased railcar repair projects at the manufacturing
facilities as this capacity was returned to new railcar manufacturing. During the nine months
ended September 30, 2011, approximately 3,060 railcars were shipped compared to approximately 1,130
railcars for the same period of 2010.
Adjusted EBITDA was $26.8 million for the nine months ended September 30, 2011 compared to
$2.0 million for the same period in 2010. The increase resulted primarily from an increase in
revenues and gross profit margin and a decrease in selling, administrative and other costs,
exclusive of stock based compensation. The Companys gross profit margin increase was primarily
attributable to increased railcar shipments, improved pricing and leverage created by higher
volumes. Selling, administrative and other costs, exclusive of stock based compensation, decreased
primarily due to a decrease in outside services. In addition, losses from the Companys joint
ventures increased, which were primarily attributable to restarting production of the Companys
castings joint venture and the continued development of the Companys Indian joint venture
business.
Net interest expense for the nine months ended September 30, 2011 was $12.3 million compared
to $13.4 million of net interest expense for the same period in 2010. Interest expense decreased
due to capitalized interest recorded for the investment in the Companys joint venture.
The Company reported a net loss of $(0.7) million, or $(0.03) per share, for the nine months
ended September 30, 2011 compared to a net loss of $(19.2) million, or $(0.90) per share, for the
same period in 2010. The Companys net loss decreased due to the factors mentioned above and a
decrease in stock based compensation of $3.5 million as a result of fluctuations in the Companys
stock price.
ARI will host a webcast and conference call on Thursday, October 27, 2011 at 10:00 am (Eastern
Time) to discuss the Companys third quarter 2011 financial results. To participate in the webcast,
please log-on to ARIs 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 Companys 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 expected financial performance and/or
future business prospects, events and plans that are forward-looking statements. Forward-looking
statements represent the Companys estimates and assumptions only as of the date of this press
release. Such statements include, without limitation, statements regarding potential improvements
in ARIs business and the overall railcar industry, the potential for increased order activity,
improved pricing, anticipated future production rates, the Companys backlog and any implication
that the Companys 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 the Companys 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; ARIs reliance upon a small number of customers that
represent a large percentage of revenues and backlog; the health of and prospects for the overall
railcar industry; prospects in light of the cyclical nature of the railcar manufacturing business
and the current economic environment; anticipated trends relating to shipments, leasing, railcar
services, revenues, financial condition or results of operations; the Companys ability to manage
overhead and variations in production rates; 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 that ARI uses in railcar manufacturing; anticipated
production schedules for products and the anticipated financing needs, construction and production
schedules of ARIs joint ventures; the risks associated with potential joint ventures, potential
acquisitions or new business endeavors; the international economic and political risks related to
ARIs joint ventures current and potential international operations; the risk of the lack of
acceptance of new railcar offerings by ARIs customers and the risk of initial production costs for
the Companys new railcar offerings being significantly higher than expected; the sufficiency of
the Companys liquidity and capital resources; the conversion of ARIs railcar backlog into
revenues; compliance with covenants contained in the Companys unsecured senior notes; the impact
and anticipated benefits of any acquisitions ARI may complete; the impact and costs and expenses of
any litigation ARI may be subject to now or in the future; the ongoing benefits and risks related
to the Companys relationship with Mr. Carl Icahn (the chairman of the Companys board of directors
and, through his holdings of Icahn Enterprises LP, the Companys principal beneficial stockholder)
and certain of his affiliates; and the additional risk factors described in ARIs 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(In thousands, except share amounts)
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 284,099 | $ | 318,758 | ||||
Accounts receivable, net |
32,441 | 21,002 | ||||||
Accounts receivable, due from related parties |
3,473 | 4,981 | ||||||
Income taxes receivable |
14,878 | 14,939 | ||||||
Inventories, net |
114,628 | 50,033 | ||||||
Deferred tax assets |
3,632 | 3,029 | ||||||
Prepaid expenses and other current assets |
3,502 | 2,654 | ||||||
Total current assets |
456,653 | 415,396 | ||||||
Property, plant and equipment, net |
175,630 | 181,255 | ||||||
Deferred debt issuance costs |
1,489 | 1,951 | ||||||
Interest receivable, due from related parties |
308 | 187 | ||||||
Goodwill |
7,169 | 7,169 | ||||||
Investments in and loans to joint ventures |
45,319 | 48,169 | ||||||
Other assets |
862 | 240 | ||||||
Total assets |
$ | 687,430 | $ | 654,367 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 66,417 | $ | 29,334 | ||||
Accounts payable, due to related parties |
499 | 275 | ||||||
Accrued expenses and taxes |
8,909 | 5,095 | ||||||
Accrued compensation |
10,880 | 11,054 | ||||||
Accrued interest expense |
1,719 | 6,875 | ||||||
Total current liabilities |
88,424 | 52,633 | ||||||
Senior unsecured notes |
275,000 | 275,000 | ||||||
Deferred tax liability |
8,226 | 7,938 | ||||||
Pension and post-retirement liabilities |
6,132 | 6,707 | ||||||
Other liabilities |
2,700 | 4,313 | ||||||
Total liabilities |
380,482 | 346,591 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued
and outstanding at September 30, 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 |
66,475 | 67,209 | ||||||
Accumulated other comprehensive income |
651 | 1,407 | ||||||
Total stockholders equity |
306,948 | 307,776 | ||||||
Total liabilities and stockholders equity |
$ | 687,430 | $ | 654,367 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
(In thousands, except per share amounts, unaudited)
For the Three Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Manufacturing operations (including $0 and $19,274 from affiliates for the three
months ended September 30, 2011 and 2010, respectively) |
$ | 108,615 | $ | 48,404 | ||||
Railcar services (including revenues from affiliates of $6,916 and $4,263 for the
three months ended September 30, 2011 and 2010, respectively) |
17,169 | 16,393 | ||||||
Total revenues |
125,784 | 64,797 | ||||||
Cost of revenues: |
||||||||
Manufacturing operations |
(98,211 | ) | (49,366 | ) | ||||
Railcar services |
(12,618 | ) | (13,141 | ) | ||||
Total cost of revenues |
(110,829 | ) | (62,507 | ) | ||||
Gross profit |
14,955 | 2,290 | ||||||
Selling, administrative and other (including costs to a related party of $145
and $154
for the three months ended September 30, 2011 and 2010, respectively) |
(2,934 | ) | (6,232 | ) | ||||
Earnings (loss) from operations |
12,021 | (3,942 | ) | |||||
Interest income (including income from related parties of $717 for both the three
months ended September 30, 2011 and 2010) |
1,005 | 1,058 | ||||||
Interest expense |
(4,478 | ) | (5,316 | ) | ||||
Other income (including income from a related party of $4 for both the three
months ended September 30, 2011 and 2010) |
5 | 4 | ||||||
Loss from joint ventures |
(2,170 | ) | (1,946 | ) | ||||
Earnings (loss) before income taxes |
6,383 | (10,142 | ) | |||||
Income tax (expense) benefit |
(2,357 | ) | 3,890 | |||||
Net earnings (loss) |
$ | 4,026 | $ | (6,252 | ) | |||
Net earnings (loss) per common share basic and diluted |
$ | 0.19 | $ | (0.29 | ) | |||
Weighted average common shares outstanding basic and diluted |
21,352 | 21,302 | ||||||
Dividends declared per common share |
$ | | $ | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
(In thousands, except per share amounts, unaudited)
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Manufacturing operations (including revenues from affiliates of $1,221 and
$65,401
for the nine months ended September 30, 2011 and 2010, respectively) |
$ | 271,908 | $ | 127,262 | ||||
Railcar services (including revenues from affiliates of $19,049 and $10,283
for the
nine months ended September 30, 2011 and 2010, respectively) |
50,632 | 51,011 | ||||||
Total revenues |
322,540 | 178,273 | ||||||
Cost of revenues: |
||||||||
Manufacturing operations |
(250,892 | ) | (131,643 | ) | ||||
Railcar services |
(38,493 | ) | (40,814 | ) | ||||
Total cost of revenues |
(289,385 | ) | (172,457 | ) | ||||
Gross profit |
33,155 | 5,816 | ||||||
Selling, administrative and other (including costs to a related party of $436
and $462
for the nine months ended September 30, 2011 and 2010, respectively) |
(14,878 | ) | (17,925 | ) | ||||
Earnings (loss) from operations |
18,277 | (12,109 | ) | |||||
Interest income (including income from related parties of $2,111 and $1,938 for
the nine months ended September 30, 2011 and 2010, respectively) |
2,865 | 2,557 | ||||||
Interest expense |
(15,143 | ) | (15,956 | ) | ||||
Other income (including income from a related party of $11 and $12 for the nine
months ended September 30, 2011 and 2010, respectively) |
24 | 381 | ||||||
Loss from joint ventures |
(7,241 | ) | (5,999 | ) | ||||
Loss before income taxes |
(1,218 | ) | (31,126 | ) | ||||
Income tax benefit |
484 | 11,969 | ||||||
Net loss |
$ | (734 | ) | $ | (19,157 | ) | ||
Net loss per common share basic and diluted |
$ | (0.03 | ) | $ | (0.90 | ) | ||
Weighted average common shares outstanding basic and diluted |
21,351 | 21,302 | ||||||
Dividends declared per common share |
$ | | $ | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
(In thousands, unaudited)
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Operating activities: |
||||||||
Net loss |
$ | (734 | ) | $ | (19,157 | ) | ||
Adjustments to reconcile net earnings to net cash used in operating activities: |
||||||||
Depreciation |
16,872 | 17,777 | ||||||
Amortization of deferred costs |
524 | 524 | ||||||
Loss on disposal of property, plant and equipment |
82 | 34 | ||||||
Stock based compensation |
(1,128 | ) | 2,353 | |||||
Change in interest receivable, due from related parties |
(120 | ) | 837 | |||||
Change in investments in joint ventures as a result of loss |
7,241 | 5,999 | ||||||
Realized gain on short-term investments available-for-sale securities |
| (379 | ) | |||||
Deferred income tax benefit |
(312 | ) | (12,320 | ) | ||||
(Recovery) provision for doubtful accounts receivable |
(26 | ) | 68 | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
(11,437 | ) | (7,663 | ) | ||||
Accounts receivable, due from related parties |
1,448 | (4,601 | ) | |||||
Income taxes receivable |
(12 | ) | 831 | |||||
Inventories, net |
(64,633 | ) | (18,049 | ) | ||||
Prepaid expenses and other current assets |
(848 | ) | 1,032 | |||||
Accounts payable |
37,091 | 15,462 | ||||||
Accounts payable, due to related parties |
224 | (196 | ) | |||||
Accrued expenses and taxes |
(1,989 | ) | (4,408 | ) | ||||
Other |
(1,463 | ) | 19 | |||||
Net cash used in operating activities |
(19,220 | ) | (21,837 | ) | ||||
Investing activities: |
||||||||
Purchases of property, plant and equipment |
(11,836 | ) | (4,852 | ) | ||||
Proceeds from the sale of property, plant and equipment |
117 | 104 | ||||||
Proceeds from the sale of short-term investments available-for-sale securities |
| 4,180 | ||||||
Investments in and loans to joint ventures |
(4,453 | ) | (14,298 | ) | ||||
Net cash used in investing activities |
(16,172 | ) | (14,866 | ) | ||||
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 |
(23 | ) | 1 | |||||
Decrease in cash and cash equivalents |
(34,659 | ) | (36,702 | ) | ||||
Cash and cash equivalents at beginning of period |
318,758 | 347,290 | ||||||
Cash and cash equivalents at end of period |
$ | 284,099 | $ | 310,588 | ||||
RECONCILIATION OF NET EARNINGS (LOSS) TO EBITDA AND ADJUSTED EBITDA
(In thousands, unaudited)
(In thousands, unaudited)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net earnings (loss) |
$ | 4,026 | $ | (6,252 | ) | $ | (734 | ) | $ | (19,157 | ) | |||||
Income tax expense (benefit) |
2,357 | (3,890 | ) | (484 | ) | (11,969 | ) | |||||||||
Interest expense |
4,478 | 5,316 | 15,143 | 15,956 | ||||||||||||
Interest income |
(1,005 | ) | (1,058 | ) | (2,865 | ) | (2,557 | ) | ||||||||
Depreciation |
5,418 | 5,876 | 16,872 | 17,777 | ||||||||||||
EBITDA |
$ | 15,274 | $ | (8 | ) | $ | 27,932 | $ | 50 | |||||||
(Income) expense related to stock
appreciation rights compensation 1 |
(3,087 | ) | 1,532 | (1,128 | ) | 2,353 | ||||||||||
Other income on short-term investment activity |
| | | (379 | ) | |||||||||||
Adjusted EBITDA |
$ | 12,187 | $ | 1,524 | $ | 26,804 | $ | 2,024 | ||||||||
1 | SARs are cash settled at time of exercise |
EBITDA represents net earnings (loss) before income tax expense (benefit), interest expense
(income) and depreciation of property, plant and equipment. The Company believes EBITDA is useful
to investors in evaluating ARIs operating performance compared to that of other companies in the
same industry. In addition, ARIs 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 companys business. EBITDA is not a financial measure presented
in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Accordingly, when
analyzing the Companys 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. The 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 related to stock
appreciation rights (SARs), and before income on short-term investments. Management believes that
Adjusted EBITDA is useful to investors in evaluating the Companys operating performance, and
therefore uses Adjusted EBITDA for that purpose. The Companys SARs, which settle in cash, are
revalued each quarter based primarily upon changes in ARIs stock price. Management believes that
eliminating the expense or income associated with stock based compensation and short-term
investment activity allows management and ARIs investors to understand better the operating
results independent of financial changes caused by the fluctuating price and value of the Companys
common stock and short-term investments. 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 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. The Companys calculation of Adjusted EBITDA is not necessarily comparable to that
of other similarly titled measures reported by other companies.