2014 Highlights
- Record Adjusted EBITDA of $209.0 million vs. prior year
of $181.1 million - up 15%
- Record earnings per share of $4.66 vs. prior year of
$4.07 - up 14%
- Record railcar shipments of 8,018 vs. prior year of
6,900 - up 16.2%
- Gross Margin of 27.2% vs. prior year of
23.8%
- 3,291 railcars added to lease fleet in
2014
American Railcar Industries, Inc. (ARI or the Company)
(Nasdaq:ARII) today reported its fourth quarter and full year 2014
financial results.
"We are proud to announce the third consecutive year of record
earnings, largely driven by high production volumes and improved
efficiencies at our facilities. We believe our production processes
are efficiently producing high quality railcars, which has played a
significant role in the 13% improvement in consolidated operating
earnings in 2014, compared to 2013. Our railcar leasing segment was
also a strong contributor to our increased consolidated operating
margins. We remain committed to the growth of our lease fleet to
further diversify our business as demonstrated by the 74% growth in
our lease fleet from December 31, 2013 to December 31, 2014. Our
backlog of 11,732 railcars at December 31, 2014 is at its highest
point since December 2007 and includes 2,844 railcars being
manufactured for lease," said Jeff Hollister, President and CEO of
ARI.
Fourth Quarter Revenue Summary
Total consolidated revenues were $150.5 million for the fourth
quarter of 2014, a decrease of 24% when compared to $197.2 million
for the same period in 2013. This decrease was primarily driven by
decreased revenues in the manufacturing and railcar services
segments, partially offset by higher railcar leasing revenues.
Manufacturing revenues were $111.7 million for the fourth
quarter of 2014, a decrease of 34% compared to the same period in
2013 due to a higher mix of railcars shipped for the Company's
lease fleet relative to direct sale shipments. During the fourth
quarter of 2014, ARI shipped 893 direct sale railcars and 1,224
railcars built for the Company's lease fleet, compared to 1,380
direct sale railcars and 670 railcars built for the lease fleet
during the same period in 2013. Railcars built for the lease fleet
represented 58% of ARI's railcar shipments during the fourth
quarter of 2014 compared to 33% for the same period in 2013. While
production of tank and hopper railcars continue at strong levels, a
higher percentage of these railcars were built for the Company's
lease fleet during the fourth quarter of 2014. 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 fourth quarter of 2014 exclude
$150.3 million of estimated revenues related to railcars built for
the Company's lease fleet, compared to $82.6 million for the same
period in 2013. Estimated revenues related to railcars built for
the Company's lease fleet increased due to a higher quantity of
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, but rather as lease revenues in accordance with
the terms of the contract over the life of the lease.
Railcar leasing revenues were $22.3 million for the fourth
quarter of 2014, an increase of 134% over the $9.5 million for the
comparable period in 2013. The primary reasons for the increase in
revenue were an increase in the number of railcars on lease and
higher average lease rates. ARI had 7,730 railcars in its lease
fleet at the end of 2014, compared to approximately 4,450 railcars
at the end of 2013.
Railcar services revenues for the fourth quarter of 2014 were
$16.6 million. Revenue decreased from $17.8 million for the same
period in 2013 due to certain repair projects being performed at
the Company's hopper railcar manufacturing facility during the
fourth quarter of 2013 that did not continue into 2014. Production
of hopper railcars has ramped up due to increased demand, thus
repair projects are no longer being performed at this facility.
Fourth Quarter Earnings Summary
Consolidated earnings from operations were $42.4 million for the
fourth quarter of 2014, a decrease of 4% over the $44.2 million for
the same period in 2013. The decrease was primarily due to
decreased earnings in the manufacturing segment due to a higher mix
of railcars shipped for the Company's lease fleet relative to
direct sale shipments and decreased earnings in the railcar
services segment, partially offset by increased earnings in the
railcar leasing segment.
Consolidated operating margins increased to 28.2% for the fourth
quarter of 2014, compared to 22.4% for the comparable period in
2013. Consolidated operating margins continue to benefit from the
growth of the Company's lease fleet as well as the Company's
ability to sustain high production volumes at its tank railcar
facility and efficiently ramp up production at its hopper railcar
facility, leading to operational efficiencies and leveraged
overhead costs.
Manufacturing earnings from operations were $28.0 million for
the fourth quarter of 2014, compared to $36.6 million for the same
period in 2013. This decrease was due primarily to a higher mix of
railcars shipped for our lease fleet relative to direct sale
shipments, as discussed above. Estimated profit on railcars built
for the Company's lease fleet was $42.6 million and $25.1 million
for the fourth quarter of 2014 and 2013, 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 $13.0 million for
the fourth quarter of 2014 compared to $4.9 million for the same
period in 2013. This increase was due to the growth in the number
of railcars in the Company's lease fleet and higher average lease
rates.
Railcar services earnings from operations were $2.3 million for
the fourth quarter of 2014 compared to $4.7 million for the same
period in 2013. This decrease was primarily due to the termination
of the Company's postretirement medical benefit plan during the
fourth quarter of 2013 that resulted in a one-time gain of $1.7
million and the decrease in revenues discussed above.
EBITDA, adjusted to exclude share-based compensation, other
income on short-term investments, and the loss from the sale of the
Company's interest in Amtek Railcar in the fourth quarter of 2013
(Adjusted EBITDA), was $52.6 million for the fourth quarter of
2014, compared to $52.0 million for the comparable quarter of 2013.
The increase was primarily driven by earnings from joint ventures
improving by $2.2 million, partially offset by lower 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 fourth quarter of 2014 were $22.7 million,
or $1.06 per share, compared to $24.4 million, or $1.14 per share,
in the same quarter of 2013. This decrease was driven primarily by
an increase in the Company's effective tax rate and lower earnings
from operations, partially offset by improved results from the
Company's joint ventures, which included the loss from the sale of
the investment in Amtek Railcar in 2013.
Full Year 2014 Results
Consolidated revenues for 2014 were $733.0 million compared to
$750.6 million in 2013. This decrease was primarily driven by
a higher mix of railcars shipped for our lease fleet relative to
direct sale shipments. Railcars built for the lease fleet
represented 41% of ARI's railcar shipments in 2014, compared to 27%
in 2013.
The Company shipped a record 8,018 railcars in 2014 compared to
6,900 railcars in 2013, generating manufacturing segment revenues
of $1.0 billion for 2014, compared to $864.0 million in 2013.
Consolidated earnings from operations for 2014 were $170.1
million, a new record and up by 13% from $150.9 million in 2013.
Consolidated earnings from operations for 2014 and 2013 excluded
$126.0 million and $54.6 million, respectively, of profit on
railcars built for the lease fleet that is eliminated in
consolidation. Consolidated operating margins were 23.2% in 2014
compared to 20.1% in 2013, reflecting the growth in the number of
railcars in the Company's lease fleet, higher average lease rates
and higher volumes and good efficiencies as a result of sustained
high levels of production for tank railcars and ramped up
production for hopper railcars.
Adjusted EBITDA was $209.0 million in 2014, a new record and up
by 15% from $181.1 million in 2013. The increase was primarily
driven by increased earnings from operations, as discussed above
and earnings from joint ventures improving by $4.2 million.
Net earnings in 2014 were $99.5 million, or $4.66 per share, a
new record and up by 14% compared to $86.9 million, or $4.07 per
share in 2013.
Cash Flow and Liquidity
The Company's strong earnings have contributed to cash flow from
operations of $136.8 million in 2014. Additionally, the Company
received net proceeds of $221.8 million in 2014 from its lease
fleet financings and invested $307.7 million in 3,291 new railcars
for lease.
In January 2015, the Company raised $625.5 million to increase
cash, refinance its 2012 and 2014 lease fleet financings, and
extend the maturity of its debt. The financing provided the Company
with net cash of $211.6 million.
The Company paid dividends totaling $34.2 million during
2014. At the board meeting in February, 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 March 20, 2015 that will be paid on March 26,
2015.
Backlog
ARI's backlog as of December 31, 2014 was approximately
11,732 railcars, with an estimated market value of $1.2 billion.
This backlog includes approximately 2,844 railcars for lease with
an estimated market value of $334.1 million.
Conference Call and Webcast
ARI will host a webcast and conference call on Thursday,
February 19, 2015 at 10:00 am (Eastern Time) to discuss the
Company's fourth quarter 2014 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 ARI
ARI is a leading North American designer and manufacturer 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
www.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 industry trends, potential
regulatory developments, anticipated customer demand for the
Company's products, the Company's strategic objectives and
long-term strategies, trends related to railcar shipments for
direct sale versus lease, trends relating to operating margins or
manufacturing efficiencies, anticipated benefits regarding the
growth of the Company's leasing business and the mix of railcars in
our lease fleet, anticipated benefits regarding the Company's
current and potential future efforts to expand its railcar repair
business, anticipated future production rates, the sufficiency of
the Company's short- and long-term liquidity, 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: basing financial or other information
on judgments or estimates based on future performance or events;
prospects in light of the cyclical nature of ARI's business; the
health of and prospects for the overall railcar industry;
fluctuations in commodity prices, including oil and gas; the highly
competitive nature of the manufacturing, railcar leasing and
railcar services industries; ARI's reliance upon a small number of
customers that represent a large percentage of revenues and
backlog; 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; 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, and certain of his affiliates; the sufficiency of
our liquidity and capital resources; 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 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; the risks, impact and anticipated benefits
associated with potential joint ventures, acquisitions 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 indebtedness and
compliance with covenants contained in the Company's 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) |
|
|
|
|
December 31, |
December 31, |
|
2014 |
2013 |
|
(unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 88,109 |
$ 97,252 |
Restricted cash |
7,178 |
3,908 |
Accounts receivable, net |
33,618 |
21,939 |
Accounts receivable, due from related
parties |
33,027 |
16,402 |
Income taxes receivable |
33,879 |
2,187 |
Inventories, net |
117,007 |
90,185 |
Deferred tax assets |
7,688 |
9,060 |
Prepaid expenses and other current
assets |
5,353 |
4,313 |
Total current assets |
325,859 |
245,246 |
Property, plant and equipment, net |
160,787 |
159,375 |
Railcars on leases, net |
663,315 |
372,551 |
Deferred debt issuance costs, net |
2,148 |
2,026 |
Goodwill |
7,169 |
7,169 |
Investment in and loans to joint
ventures |
29,168 |
31,430 |
Other assets |
3,963 |
7,812 |
Total assets |
$ 1,192,409 |
$ 825,609 |
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
68,789 |
52,772 |
Accounts payable, due to related
parties |
2,793 |
1,410 |
Accrued expenses and taxes |
5,208 |
7,231 |
Accrued compensation |
15,046 |
16,071 |
Deferred revenue |
16,723 |
12,985 |
Short-term debt, including current
portion of long-term debt |
110,612 |
6,655 |
Total current liabilities |
219,171 |
97,124 |
Long-term debt, net of current portion |
298,342 |
188,103 |
Deferred tax liability |
168,349 |
99,212 |
Pension and post-retirement liabilities |
8,544 |
4,718 |
Other liabilities |
2,587 |
2,550 |
Total liabilities |
696,993 |
391,707 |
Stockholders' equity: |
|
|
Common stock, $0.01 par value, 50,000,000
shares authorized, 21,352,297 shares issued and outstanding at both
December 31, 2014 and 2013 |
213 |
213 |
Additional paid-in capital |
239,609 |
239,609 |
Retained earnings |
260,943 |
195,574 |
Accumulated other comprehensive loss |
(5,349) |
(1,494) |
Total stockholders' equity |
495,416 |
433,902 |
Total liabilities and stockholders'
equity |
$ 1,192,409 |
$ 825,609 |
|
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except per share
amounts, unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, 2014 |
December
31, 2014 |
|
2014 |
2013 |
2014 |
2013 |
Revenues: |
|
|
|
|
Manufacturing (including revenues from
affiliates of $50,823 and $245,891 for the three and twelve months
ended December 31, 2014, respectively, and $101,795 and $250,455
for the same periods in 2013) |
$ 111,729 |
$ 169,940 |
$ 600,326 |
$ 646,100 |
Railcar leasing |
22,258 |
9,500 |
65,108 |
31,871 |
Railcar services (including revenues from
affiliates of $5,730 and $19,304 for the three and twelve months
ended December 31, 2014, respectively, and $3,706 and $17,167 for
the same periods in 2013) |
16,553 |
17,739 |
67,572 |
72,621 |
Total revenues |
150,540 |
197,179 |
733,006 |
750,592 |
Cost of revenues: |
|
|
|
|
Manufacturing |
(81,540) |
(131,372) |
(455,547) |
(503,178) |
Railcar leasing |
(7,541) |
(3,665) |
(23,733) |
(13,394) |
Railcar services |
(13,532) |
(12,345) |
(54,386) |
(55,408) |
Total cost of revenues |
(102,613) |
(147,382) |
(533,666) |
(571,980) |
Gross profit |
47,927 |
49,797 |
199,340 |
178,612 |
Selling, general and administrative |
(5,643) |
(5,614) |
(29,420) |
(27,705) |
Net gains on disposition of leased
railcars |
138 |
— |
138 |
— |
Earnings from
operations |
42,422 |
44,183 |
170,058 |
150,907 |
Interest income (including income from
related parties of $586 and $2,678 for the three and twelve months
ended December 31, 2014, respectively, and $652 and $2,678 for the
same periods in 2013) |
649 |
674 |
2,517 |
2,716 |
Interest expense |
(2,258) |
(1,484) |
(7,622) |
(7,337) |
Loss on debt extinguishment |
— |
— |
(1,896) |
(392) |
Other income |
(115) |
13 |
(20) |
2,037 |
Earnings (loss) from joint ventures |
1,833 |
(6,313) |
1,570 |
(8,595) |
Earnings before income taxes |
42,531 |
37,073 |
164,607 |
139,336 |
Income tax expense |
(19,808) |
(12,703) |
(65,074) |
(52,440) |
Net earnings |
$ 22,723 |
$ 24,370 |
$ 99,533 |
$ 86,896 |
Net earnings per common share—basic and
diluted |
$ 1.06 |
$ 1.14 |
$ 4.66 |
$ 4.07 |
Weighted average common shares
outstanding—basic and diluted |
21,352 |
21,352 |
21,352 |
21,352 |
|
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
SEGMENT
DATA |
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
Revenues |
Earnings (Loss) from Operations |
|
External |
Intersegment |
Total |
External |
Intersegment |
Total |
Three Months Ended December 31,
2014 |
|
|
|
|
|
|
Manufacturing |
$ 111,729 |
$ 150,255 |
$ 261,984 |
$ 27,970 |
$ 42,645 |
$ 70,615 |
Railcar leasing |
22,258 |
— |
22,258 |
13,038 |
(10) |
13,028 |
Railcar services |
16,553 |
48 |
16,601 |
2,328 |
9 |
2,337 |
Corporate/Eliminations |
— |
(150,303) |
(150,303) |
(914) |
(42,644) |
(43,558) |
Total Consolidated |
$ 150,540 |
$ — |
$ 150,540 |
$ 42,422 |
$ — |
$ 42,422 |
Three Months Ended December 31,
2013 |
|
|
|
|
|
|
Manufacturing |
$ 169,940 |
$ 82,607 |
$ 252,547 |
$ 36,620 |
$ 25,080 |
$ 61,700 |
Railcar leasing |
9,500 |
— |
9,500 |
4,873 |
23 |
4,896 |
Railcar services |
17,739 |
107 |
17,846 |
4,692 |
(36) |
4,656 |
Corporate/Eliminations |
— |
(82,714) |
(82,714) |
(2,002) |
(25,067) |
(27,069) |
Total Consolidated |
$ 197,179 |
$ — |
$ 197,179 |
$ 44,183 |
$ — |
$ 44,183 |
Twelve Months Ended December 31,
2014 |
|
|
|
|
|
|
Manufacturing |
$ 600,326 |
$ 419,295 |
$ 1,019,621 |
$ 136,918 |
$ 126,019 |
$ 262,937 |
Railcar leasing |
65,108 |
— |
65,108 |
36,140 |
(50) |
36,090 |
Railcar services |
67,572 |
270 |
67,842 |
10,299 |
67 |
10,366 |
Corporate/Eliminations |
— |
(419,565) |
(419,565) |
(13,299) |
(126,036) |
(139,335) |
Total Consolidated |
$ 733,006 |
$ — |
$ 733,006 |
$ 170,058 |
$ — |
$ 170,058 |
Twelve Months Ended December 31,
2013 |
|
|
|
|
|
|
Manufacturing |
$ 646,100 |
$ 217,922 |
$ 864,022 |
$ 135,454 |
$ 54,621 |
$ 190,075 |
Railcar leasing |
31,871 |
— |
31,871 |
14,836 |
40 |
14,876 |
Railcar services |
72,621 |
233 |
72,854 |
14,372 |
(47) |
14,325 |
Corporate/Eliminations |
— |
(218,155) |
(218,155) |
(13,755) |
(54,614) |
(68,369) |
Total Consolidated |
$ 750,592 |
$ — |
$ 750,592 |
$ 150,907 |
$ — |
$ 150,907 |
|
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands, unaudited) |
|
|
|
|
For the Years
Ended December 31, |
|
2014 |
2013 |
Operating activities: |
|
|
Net earnings |
$ 99,533 |
$ 86,896 |
Adjustments to reconcile net earnings to net
cash provided by operating activities: |
|
|
Depreciation |
34,212 |
27,712 |
Amortization of deferred costs |
549 |
633 |
(Gain) loss on disposal of property,
plant, equipment and leased railcars |
(71) |
24 |
(Earnings) loss from joint ventures |
(1,570) |
8,595 |
Provision for deferred income taxes |
72,369 |
39,707 |
Provision for allowance for doubtful
accounts receivable |
1,064 |
48 |
Item related to investing
activities: |
|
|
Realized and unrealized gains on
short-term investments—available for sale securities |
— |
(141) |
Item related to financing
activities: |
|
|
Loss on debt extinguishment |
1,896 |
392 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable, net |
(12,779) |
14,077 |
Accounts receivable, due from
affiliates |
(16,703) |
(12,904) |
Income taxes receivable |
(31,576) |
(2,316) |
Inventories, net |
(26,935) |
19,819 |
Prepaid expenses and other current
assets |
(4,244) |
(398) |
Accounts payable |
16,034 |
(12,184) |
Accounts payable, due to related
parties |
1,383 |
(1,421) |
Accrued expenses and taxes |
639 |
5,468 |
Other |
2,998 |
(9,241) |
Net cash provided by operating
activities |
136,799 |
164,766 |
Investing activities: |
|
|
Purchases of property, plant and
equipment |
(20,070) |
(22,025) |
Capital expenditures—leased railcars |
(307,680) |
(162,068) |
Proceeds from the sale of property,
plant, equipment and leased railcars |
800 |
54 |
Proceeds from the sale of short-term
investments—available for sale securities |
— |
12,699 |
Proceeds from repayments of loans by
joint ventures and sale of investment in joint venture |
3,750 |
5,100 |
Investments in and loans to joint
ventures |
— |
(136) |
Net cash used in investing activities |
(323,200) |
(166,376) |
Financing activities: |
|
|
Repayments of short-term and long-term
debt |
(204,486) |
(180,083) |
Proceeds from short-term and long-term
debt |
418,682 |
99,841 |
Change in interest reserve related to
long-term debt |
13 |
(3,908) |
Payment of common stock dividends |
(34,164) |
(21,352) |
Debt issuance costs |
(2,566) |
(543) |
Net cash provided by (used in) financing
activities |
177,479 |
(106,045) |
Effect of exchange rate changes on cash and
cash equivalents |
(221) |
(138) |
Decrease in cash and cash equivalents |
(9,143) |
(107,793) |
Cash and cash equivalents at beginning of
year |
97,252 |
205,045 |
Cash and cash equivalents at end of year |
$ 88,109 |
$ 97,252 |
|
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NET
EARNINGS TO EBITDA AND ADJUSTED EBITDA |
(In thousands, unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
Net earnings |
$ 22,723 |
$ 24,370 |
$ 99,533 |
$ 86,896 |
Income tax expense |
19,808 |
12,703 |
65,074 |
52,440 |
Interest expense |
2,258 |
1,484 |
7,622 |
7,337 |
Loss on debt extinguishment |
— |
— |
1,896 |
392 |
Interest income |
(649) |
(674) |
(2,517) |
(2,716) |
Depreciation |
9,789 |
7,279 |
34,212 |
27,712 |
EBITDA |
$ 53,929 |
$ 45,162 |
$ 205,820 |
$ 172,061 |
Loss on sale of investment in India joint
venture |
— |
5,917 |
— |
5,917 |
Other income related to short-term
investments |
— |
— |
— |
(2,008) |
(Income) expense related to stock
appreciation rights compensation |
(1,320) |
889 |
3,192 |
5,129 |
Adjusted EBITDA |
$ 52,609 |
$ 51,968 |
$ 209,012 |
$ 181,099 |
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), other income related to our short-term investments and the
loss on sale of the Company's investment in the India joint
venture. 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, income associated with short-term investments, and
other one-time, nonrecurring, unusual or infrequent charges,
expenses or gains that may not be indicative of the Company's core
business results 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, short-term investments 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.
CONTACT: AMERICAN RAILCAR INDUSTRIES, INC.
100 Clark Street, St. Charles, Missouri 63301
www.americanrailcar.com
Investor Relations Department, 636.940.6000
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