Second Quarter 2016 Highlights
American Railcar Industries, Inc. (ARI or the Company)
(NASDAQ:ARII) today reported its second quarter 2016 financial
results. Jeff Hollister, President and CEO of ARI, commented, “We
remain disciplined in executing our business strategy by
maintaining our focus on efficiently manufacturing quality hopper
and tank railcars, while supporting the growth of our railcar
leasing and railcar services segments. We believe our Company is
prepared to face the headwinds the industry is experiencing
following record high demand for railcars over the last couple of
years. Our experienced management team and employees are accustomed
to the cyclical nature of the industry, and we remain close to our
customers, adapting our business to meet their ever-evolving needs.
Here at ARI, we continue to evaluate and act on opportunities to
reduce costs and further enhance our business strategy, such as
strategically adding railcars to our lease fleet and supporting
capital projects that are expected to further increase the
capabilities of our repair network, both of which are made possible
by the strength of our balance sheet, strong earnings from
operations, positive cash flow and availability under our revolving
credit facility.”
Second Quarter Summary
Total consolidated revenues were $150.5 million
for the second quarter of 2016, a decrease of 22% when compared to
$192.0 million for the same period in 2015. This decrease was
primarily driven by decreased revenues in the manufacturing
segment, partially offset by increased revenues in the railcar
leasing and railcar services segments.
Manufacturing revenues were $97.5 million for
the second quarter of 2016, a decrease of 32% compared to the same
period in 2015. This decrease was primarily driven by fewer
railcar shipments for direct sale 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, and more
competitive pricing on both hopper and tank railcars. Given the
decrease in tank railcar demand and a shift in production to a
larger mix of specialty railcars, both hopper and tank railcar
shipments have decreased. During the second quarter of 2016,
ARI shipped 932 direct sale railcars and 85 railcars built for the
Company's lease fleet compared to 1,378 direct sale railcars and
1,019 railcars built for the lease fleet during the same period in
2015. Railcars built for the lease fleet represented 8% of
ARI’s railcar shipments during the second quarter of 2016 compared
to 43% 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 second quarter of
2016 exclude $9.3 million of estimated revenues related to railcars
built for the Company's lease fleet compared to $123.7 million for
the same period in 2015. Estimated revenues related to
railcars built for the Company's lease fleet decreased due to a
lower 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. Rather lease revenues
are recognized in accordance with the terms of the contract over
the life of the lease.
Railcar leasing revenues were $33.2 million for
the second quarter of 2016, an increase of 18% over the $28.2
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 10,641 railcars in its lease fleet as of
June 30, 2016 compared to 9,399 railcars as of June 30,
2015.
Railcar services revenues were $19.7 million for
the second quarter of 2016, an increase of 2% compared to $19.3
million for the same period in 2015. The primary reasons for
the increase in revenue were an increase in demand and the
additional capacity resulting from the Company's expansion projects
that continue to ramp up in 2016.
Consolidated earnings from operations were $36.0
million for the second quarter of 2016, a decrease of 35% from the
$55.3 million for the same period in 2015. Consolidated operating
margins decreased to 23.9% for the second quarter of 2016 compared
to 28.8% for the same period in 2015. These decreases were
primarily driven by lower earnings from operations in the Company's
manufacturing segment partially offset by the growth of the
Company’s lease fleet.
Manufacturing earnings from operations were
$14.4 million for the second quarter of 2016 compared to $34.7
million for the same period in 2015. This decrease was due
primarily to fewer direct sale shipments, as discussed above, more
competitive pricing on both hopper and tank railcars and higher
costs associated with the lower production rates at our tank
railcar facility. Estimated profit on railcars built for the
Company’s lease fleet was $1.1 million and $35.2 million for the
second 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
$22.9 million for the second quarter of 2016 compared to $19.1
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
$3.1 million for the second quarter of 2016 compared to $3.9
million for the same period in 2015. This decrease was
primarily due to costs associated with the ramp up of operations at
our recently completed expansion projects as well as higher
depreciation expenses and additional administrative support
expenses to foster growth of this segment.
Selling, general and administrative expenses
were $7.3 million for the second quarter of 2016 compared to $5.3
million for the same period in 2015. This $2.0 million
increase was due primarily to lower consulting expense in the
second quarter of 2015 as well as higher depreciation related to
the Company's new enterprise resource planning system in 2016.
Net earnings for the second quarter of 2016 were
$19.9 million, or $1.02 per share compared to $33.0 million, or
$1.54 per share, in the same period in 2015. This decrease
was driven primarily by decreased consolidated earnings from
operations, as discussed above.
EBITDA, adjusted to exclude share-based
compensation expense (Adjusted EBITDA), was $50.4 million for the
second quarter of 2016 compared to $68.5 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.
Year-to-Date Results
Consolidated revenues for the first six months
of 2016 were $326.7 million compared to $455.8 million for the
comparable period in 2015. The Company shipped 2,062 direct sale
railcars and 285 railcars built for the Company's lease fleet
during the first six months of 2016 compared to 3,395 direct sale
railcars and 1,670 railcars built for the lease fleet during the
same period in 2015. Railcars built for the lease fleet represented
12% of ARI's railcar shipments in the first six months of 2016
compared to 33% for the same period in 2015.
Consolidated earnings from operations for the
first six months of 2016 were $76.7 million, a decrease of 33% from
$115.3 million for the comparable period in 2015. Consolidated
earnings from operations for the first six months of 2016 and 2015
excluded $4.5 million and $60.9 million, respectively, of profit on
railcars built for the lease fleet that is eliminated in
consolidation. Operating margins were 23.5% for the first six
months of 2016 compared to 25.3% for the same period of 2015.
These decreases were primarily due to fewer direct sale shipments,
as discussed above, more competitive pricing on both hopper and
tank railcars and higher costs associated with the lower production
rates at our tank railcar facility, partially offset by increased
earnings due to the growth in the lease fleet.
Net earnings for the first six months of 2016
were $42.7 million, or $2.18 per share compared to $67.9 million,
or $3.18 per share, for the comparable period in 2015, due to
decreased earnings from operations and a reduction of $1.0 million
from earnings from joint ventures as demand is tied to the
industry's new railcar demand.
Adjusted EBITDA was $104.9 million for the first
six months of 2016, a decrease of $35.5 million from $140.5 million
for the comparable period in 2015. The decrease resulted primarily
from decreased consolidated earnings from operations, in addition
to a reduction of earnings from joint ventures for the first six
months of 2016 compared to the same period in 2015.
Cash Flow and Liquidity
The Company’s earnings have contributed to cash
flow from operations in the first six months of 2016 of $87.5
million. As of June 30, 2016, ARI had working capital of
$270.3 million, including $199.5 million of cash and cash
equivalents.
The Company paid dividends totaling $15.6
million during the first six months of 2016. At the board
meeting in July, 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 September 9, 2016 that will be
paid on September 23, 2016.
For 2016 through July 27, 2016, the Company repurchased 445,278
shares of common stock at a cost of $16.9 million under its stock
repurchase program. As of June 30, 2016, board authorization
for approximately $175.6 million remains available for further
stock repurchases.
Backlog
ARI's backlog as of June 30, 2016 was 5,601
railcars with an estimated value of $536.7 million. Of the
total backlog, 1,556 railcars, or 28%, were subject to lease with
an estimated market value of $143.9 million.
Conference Call and Webcast
ARI will host a webcast and conference call on
Friday, July 29, 2016 at 10:00 am (Eastern Time) to discuss
the Company’s second 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 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 and its
subsidiaries provide 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 current joint
ventures and anticipated capital needs of, and production at the
Company's joint ventures; the conversion of ARI’s railcar backlog
into revenues; 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 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) |
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
199,451 |
|
|
$ |
298,064 |
|
Restricted cash |
16,655 |
|
|
16,917 |
|
Accounts receivable, net |
40,899 |
|
|
29,018 |
|
Accounts receivable, due from
related parties |
6,114 |
|
|
9,401 |
|
Income taxes receivable |
2,132 |
|
|
3,058 |
|
Inventories, net |
76,881 |
|
|
96,965 |
|
Prepaid expenses and other current
assets |
6,704 |
|
|
4,058 |
|
Total current assets |
348,836 |
|
|
457,481 |
|
Property, plant and
equipment, net |
176,649 |
|
|
176,311 |
|
Railcars on leases,
net |
866,808 |
|
|
848,717 |
|
Goodwill |
7,169 |
|
|
7,169 |
|
Investments in and loans
to joint ventures |
27,347 |
|
|
27,397 |
|
Other assets |
5,791 |
|
|
7,999 |
|
Total assets |
$ |
1,432,600 |
|
|
$ |
1,525,074 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
24,712 |
|
|
$ |
36,080 |
|
Accounts payable, due to related
parties |
1,908 |
|
|
4,477 |
|
Accrued expenses and taxes |
15,074 |
|
|
6,344 |
|
Accrued compensation |
11,255 |
|
|
11,459 |
|
Short-term debt, including current
portion of long-term debt |
25,617 |
|
|
125,784 |
|
Total current liabilities |
78,566 |
|
|
184,144 |
|
Long-term debt, net of
unamortized debt issuance costs of $4,972 and $5,081 as of June 30,
2016 and December 31, 2015, respectively |
558,199 |
|
|
570,756 |
|
Deferred tax
liability |
237,655 |
|
|
222,338 |
|
Pension and
post-retirement liabilities |
8,456 |
|
|
8,484 |
|
Other liabilities |
2,347 |
|
|
3,055 |
|
Total liabilities |
885,223 |
|
|
988,777 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized, 19,399,755 and 19,844,531
shares outstanding as of June 30, 2016 and December 31, 2015,
respectively |
213 |
|
|
213 |
|
Additional paid-in
capital |
239,609 |
|
|
239,609 |
|
Treasury Stock |
(74,340 |
) |
|
(57,423 |
) |
Retained earnings |
388,228 |
|
|
361,153 |
|
Accumulated other
comprehensive loss |
(6,333 |
) |
|
(7,255 |
) |
Total stockholders’ equity |
547,377 |
|
|
536,297 |
|
Total liabilities and stockholders’
equity |
$ |
1,432,600 |
|
|
$ |
1,525,074 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except
per share amounts, unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
Manufacturing (including
revenues from affiliates of $223 and $776 for the three and six
months ended June 30, 2016, respectively, and $61,743 and $182,939
for the same periods in 2015) |
$ |
97,548 |
|
|
$ |
144,481 |
|
|
$ |
221,340 |
|
|
$ |
366,292 |
|
Railcar leasing |
33,209 |
|
|
28,216 |
|
|
65,977 |
|
|
52,801 |
|
Railcar services
(including revenues from affiliates of $7,249 and $15,243 for the
three and six months ended June 30, 2016, respectively, and $6,406
and $12,786 for the same periods in 2015) |
19,727 |
|
|
19,301 |
|
|
39,347 |
|
|
36,681 |
|
Total revenues |
150,484 |
|
|
191,998 |
|
|
326,664 |
|
|
455,774 |
|
Cost of
revenues: |
|
|
|
|
|
|
|
Manufacturing |
(81,437 |
) |
|
(107,714 |
) |
|
(183,718 |
) |
|
(282,248 |
) |
Railcar leasing |
(10,356 |
) |
|
(8,993 |
) |
|
(20,531 |
) |
|
(16,694 |
) |
Railcar services |
(15,420 |
) |
|
(14,737 |
) |
|
(30,657 |
) |
|
(28,582 |
) |
Total cost of revenues |
(107,213 |
) |
|
(131,444 |
) |
|
(234,906 |
) |
|
(327,524 |
) |
Gross profit |
43,271 |
|
|
60,554 |
|
|
91,758 |
|
|
128,250 |
|
Selling, general and
administrative |
(7,297 |
) |
|
(5,315 |
) |
|
(15,254 |
) |
|
(12,996 |
) |
Net gains on disposition
of leased railcars |
— |
|
|
25 |
|
|
167 |
|
|
25 |
|
Earnings from
operations |
35,974 |
|
|
55,264 |
|
|
76,671 |
|
|
115,279 |
|
Interest income (including
income from related parties of $427 and $884 for the three and six
months ended June 30, 2016, respectively, and $538 and $1,095 for
the same periods in 2015) |
453 |
|
|
550 |
|
|
931 |
|
|
1,113 |
|
Interest expense |
(5,678 |
) |
|
(5,694 |
) |
|
(11,584 |
) |
|
(10,432 |
) |
Loss on debt
extinguishment |
— |
|
|
— |
|
|
— |
|
|
(2,126 |
) |
Other Income |
1 |
|
|
5 |
|
|
1 |
|
|
11 |
|
Earnings from joint
ventures |
1,458 |
|
|
2,141 |
|
|
2,944 |
|
|
3,938 |
|
Earnings before income taxes |
32,208 |
|
|
52,266 |
|
|
68,963 |
|
|
107,783 |
|
Income tax expense |
(12,312 |
) |
|
(19,297 |
) |
|
(26,275 |
) |
|
(39,838 |
) |
Net earnings |
$ |
19,896 |
|
|
$ |
32,969 |
|
|
$ |
42,688 |
|
|
$ |
67,945 |
|
Net earnings per common
share—basic and diluted |
$ |
1.02 |
|
|
$ |
1.54 |
|
|
$ |
2.18 |
|
|
$ |
3.18 |
|
Weighted average common
shares outstanding—basic and diluted |
19,511 |
|
|
21,352 |
|
|
19,588 |
|
|
21,352 |
|
Cash dividends declared
per common share |
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
0.80 |
|
|
$ |
0.80 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
SEGMENT
DATA |
(In thousands,
unaudited) |
|
|
Three Months Ended June 30, 2016 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
97,548 |
|
|
$ |
9,266 |
|
|
$ |
106,814 |
|
|
$ |
15,538 |
|
Railcar leasing |
33,209 |
|
|
— |
|
|
33,209 |
|
|
20,237 |
|
Railcar services |
19,727 |
|
|
609 |
|
|
20,336 |
|
|
3,059 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,441 |
) |
Eliminations |
— |
|
|
(9,875 |
) |
|
(9,875 |
) |
|
1,581 |
|
Total Consolidated |
$ |
150,484 |
|
|
$ |
— |
|
|
$ |
150,484 |
|
|
$ |
35,974 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2015 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
144,481 |
|
|
$ |
123,693 |
|
|
$ |
268,174 |
|
|
$ |
69,941 |
|
Railcar leasing |
28,216 |
|
|
— |
|
|
28,216 |
|
|
16,976 |
|
Railcar services |
19,301 |
|
|
94 |
|
|
19,395 |
|
|
3,880 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(2,463 |
) |
Eliminations |
— |
|
|
(123,787 |
) |
|
(123,787 |
) |
|
(33,070 |
) |
Total Consolidated |
$ |
191,998 |
|
|
$ |
— |
|
|
$ |
191,998 |
|
|
$ |
55,264 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2016 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
221,340 |
|
|
$ |
32,897 |
|
|
$ |
254,237 |
|
|
$ |
38,224 |
|
Railcar leasing |
65,977 |
|
|
— |
|
|
65,977 |
|
|
39,912 |
|
Railcar services |
39,347 |
|
|
1,568 |
|
|
40,915 |
|
|
6,567 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(8,949 |
) |
Eliminations |
— |
|
|
(34,465 |
) |
|
(34,465 |
) |
|
917 |
|
Total Consolidated |
$ |
326,664 |
|
|
$ |
— |
|
|
$ |
326,664 |
|
|
$ |
76,671 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2015 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
366,292 |
|
|
$ |
207,424 |
|
|
$ |
573,716 |
|
|
$ |
140,379 |
|
Railcar leasing |
52,801 |
|
|
— |
|
|
52,801 |
|
|
31,740 |
|
Railcar services |
36,681 |
|
|
196 |
|
|
36,877 |
|
|
6,747 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(6,813 |
) |
Eliminations |
— |
|
|
(207,620 |
) |
|
(207,620 |
) |
|
(56,774 |
) |
Total Consolidated |
$ |
455,774 |
|
|
$ |
— |
|
|
$ |
455,774 |
|
|
$ |
115,279 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands,
unaudited) |
|
|
Six Months Ended |
|
June 30, |
|
2016 |
|
2015 |
Operating
activities: |
|
|
|
Net earnings |
$ |
42,688 |
|
|
$ |
67,945 |
|
Adjustments to reconcile
net earnings to net cash provided by operating activities: |
|
|
|
Depreciation |
25,616 |
|
|
20,971 |
|
Amortization of deferred costs |
252 |
|
|
228 |
|
Loss on disposal of property,
plant, equipment and leased railcars |
18 |
|
|
2 |
|
Earnings from joint ventures |
(2,944 |
) |
|
(3,938 |
) |
Provision for deferred income
taxes |
15,163 |
|
|
10,129 |
|
Provision for allowance for
doubtful accounts receivable |
(1,121 |
) |
|
(20 |
) |
Items related to financing
activities: |
|
|
|
Loss on debt extinguishment |
— |
|
|
2,126 |
|
Changes in operating
assets and liabilities: |
|
|
|
Accounts receivable, net |
(10,300 |
) |
|
2,164 |
|
Accounts receivable, due from
related parties |
3,322 |
|
|
15,426 |
|
Income taxes receivable |
926 |
|
|
21,867 |
|
Inventories, net |
20,167 |
|
|
(431 |
) |
Prepaid expenses and other current
assets |
(2,643 |
) |
|
(881 |
) |
Accounts payable |
(11,377 |
) |
|
(9,107 |
) |
Accounts payable, due to related
parties |
(2,569 |
) |
|
973 |
|
Accrued expenses and taxes |
8,514 |
|
|
(3,297 |
) |
Other |
1,772 |
|
|
(3,848 |
) |
Net cash provided by
operating activities |
87,484 |
|
|
120,309 |
|
Investing
activities: |
|
|
|
Purchases of property, plant and
equipment |
(11,187 |
) |
|
(15,354 |
) |
Grant Proceeds |
75 |
|
|
— |
|
Capital expenditures - leased
railcars |
(33,444 |
) |
|
(132,578 |
) |
Proceeds from the sale of property,
plant, equipment and leased railcars |
640 |
|
|
113 |
|
Proceeds from repayments of loans
by joint ventures |
2,953 |
|
|
2,500 |
|
Net cash used in investing
activities |
(40,963 |
) |
|
(145,319 |
) |
Financing
activities: |
|
|
|
Repayments of long-term debt |
(112,834 |
) |
|
(419,698 |
) |
Proceeds from long-term debt |
— |
|
|
625,306 |
|
Change in interest reserve related
to long-term debt |
263 |
|
|
(9,876 |
) |
Stock repurchases |
(16,917 |
) |
|
— |
|
Payment of common stock
dividends |
(15,613 |
) |
|
(17,082 |
) |
Debt issuance costs |
(14 |
) |
|
(5,271 |
) |
Net cash (used in)
provided by financing activities |
(145,115 |
) |
|
173,379 |
|
Effect of exchange rate
changes on cash and cash equivalents |
(19 |
) |
|
(202 |
) |
(Decrease) Increase in
cash and cash equivalents |
(98,613 |
) |
|
148,167 |
|
Cash and cash equivalents
at beginning of period |
298,064 |
|
|
88,109 |
|
Cash and cash equivalents
at end of period |
$ |
199,451 |
|
|
$ |
236,276 |
|
AMERICAN RAILCAR
INDUSTRIES, INC. AND SUBSIDIARIES |
RECONCILIATION
OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA |
(In thousands,
unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net earnings |
$ |
19,896 |
|
|
$ |
32,969 |
|
|
$ |
42,688 |
|
|
$ |
67,945 |
|
Income tax expense |
12,312 |
|
|
19,297 |
|
|
26,275 |
|
|
39,838 |
|
Interest expense |
5,678 |
|
|
5,694 |
|
|
11,584 |
|
|
10,432 |
|
Loss on debt
extinguishment |
— |
|
|
— |
|
|
— |
|
|
2,126 |
|
Interest income |
(453 |
) |
|
(550 |
) |
|
(931 |
) |
|
(1,113 |
) |
Depreciation |
12,961 |
|
|
10,910 |
|
|
25,616 |
|
|
20,971 |
|
EBITDA |
$ |
50,394 |
|
|
$ |
68,320 |
|
|
$ |
105,232 |
|
|
$ |
140,199 |
|
Expense (Income)
related to stock appreciation rights compensation |
24 |
|
|
184 |
|
|
(287 |
) |
|
291 |
|
Adjusted EBITDA |
$ |
50,418 |
|
|
$ |
68,504 |
|
|
$ |
104,945 |
|
|
$ |
140,490 |
|
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 expense (income) 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 expense (income) 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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