Second Quarter 2017 Highlights
American Railcar Industries, Inc. (ARI or the Company)
(NASDAQ:ARII) today reported its second quarter 2017 financial
results. Jeff Hollister, President and CEO of ARI, commented, "As
announced in our press release in early June, we began managing our
railcar leasing business in-house upon completion of the sale of
our previous lease fleet manager, American Railcar Leasing (ARL).
As a result, we have added personnel to increase our sales force
and to support managing our lease fleet, and we feel we have a
strong team in place. This group is comprised of numerous key
employees including existing ARI employees, former ARL employees,
and others who have joined us from elsewhere in the industry. The
commercial team is led by John O'Bryan, our Chief Commercial
Officer. Managing our lease fleet in-house enhances our ability to
serve our customers with a complete suite of products and services
to support all of their needs. Our balanced sales and lease
strategy across a broad group of customers and railcar types is
complemented by our strong core manufacturing business and repair
services network, which together allow us to better position
ourselves in the current challenging railcar market.
Shipments for the second quarter of 2017 were
1,076 railcars, which represent an increase of 5.8% when compared
to the same period of 2016. Furthermore, we have received orders
for 798 railcars during the second quarter of 2017, bringing total
orders to 1,672 railcars for the first six months of 2017. This
total compares to orders for 1,568 railcars for the full year of
2016. While industry orders during the second quarter of 2017 were
reported at their highest level since the second quarter of 2015,
we still see softness in the tank railcar market. There are
consistent levels of interest in certain hopper railcar types, but
these opportunities have been and continue to be competitive. We
feel we are strategically positioned with our vertically integrated
business model to capitalize on limited opportunities that arise as
we work with customers operating within the hopper and tank railcar
markets."
Second Quarter Revenue
Summary
Total consolidated revenues were $109.0 million
for the second quarter of 2017, a decrease of 28% when compared to
$150.5 million for the same period in 2016. This decrease was due
to decreased revenues in the manufacturing segment, partially
offset by slightly increased revenues in the railcar leasing and
railcar services segments.
Manufacturing revenues were $55.1 million for
the second quarter of 2017, a decrease of 44% compared to $97.5
million for the same period in 2016. This decrease was primarily
driven by fewer railcar shipments for direct sale as more than half
of our railcar shipments were for lease during the second quarter
of 2017. Furthermore, the Company experienced a more competitive
pricing environment during the second quarter of 2017 compared to
the same period in 2016.
During the second quarter of 2017, ARI shipped
531 railcars for direct sale and 545 railcars for lease compared to
932 railcars for direct sale and 85 railcars for lease during the
same period in 2016. Railcars built for the lease fleet represented
51% of ARI’s railcar shipments during the second quarter of 2017
compared to 8% for the same period in 2016. This quarterly rate is
high relative to our historical average, but it is consistent with
our strategy to continue to invest in and grow our lease fleet as
demand dictates in certain railcar types. Shipments and orders for
railcars on long-term leases not only help us to maintain a steady
level of production during the manufacturing period, but also
provide a steady stream of future cash flows. Because revenues and
earnings related to leased railcars are recognized over the life of
the lease, our quarterly results may vary depending on the mix of
lease versus direct sale railcars that we ship during a given
period.
Manufacturing revenues for the second quarter of
2017, on a consolidated basis, exclude $54.6 million of revenues
related to railcars built for the Company's lease fleet compared to
$9.3 million for the same period in 2016. Revenues related to
railcars built for the Company's lease fleet increased due to a
higher volume 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 $33.7 million for
the second quarter of 2017, an increase of 2% over the $33.2
million for the comparable period in 2016. The primary reason for
the increase in revenue was an increase in the number of railcars
on lease, partially offset by a decline in weighted average lease
rates. ARI had 12,414 railcars in its lease fleet as of
June 30, 2017 compared to 10,641 railcars as of June 30,
2016.
Railcar services revenues were $20.2 million for
the second quarter of 2017, an increase of 2% compared to $19.7
million for the same period in 2016. The primary reasons for the
increase in revenue were due to increased demand and additional
capacity from our mobile repair operations, partially offset by
decreased demand for tank railcar qualifications and tank railcar
exterior paint and interior linings. Our tank railcar manufacturing
facility provides us the flexibility not only to produce new
railcars, but also to perform repair and retrofit services in a
production line set-up offering another option for us to meet our
customers' repair needs. This additional flexibility allowed us to
complete certain repair projects at our tank railcar manufacturing
facility during the three and six months ended June 30, 2017 that
were performed to a lesser extent during the comparable periods of
2016. We also saw increased intercompany repair work for our
growing lease fleet.
Consolidated earnings from operations were $22.2
million for the second quarter of 2017, a decrease of 38% from the
$36.0 million for the same period in 2016. Consolidated operating
margins decreased to 20.3% for the second quarter of 2017 compared
to 23.9% for the same period in 2016. These decreases were
primarily driven by lower earnings from operations in the Company's
manufacturing segment combined with slightly lower earnings from
operations in the railcar leasing segment and higher selling,
general and administrative costs.
Manufacturing earnings from operations were $2.5
million for the second quarter of 2017 compared to earnings of
$14.4 million for the same period in 2016. The decrease was
primarily a result of fewer overall direct sale shipments, as
discussed above, more competitive pricing on both hopper and tank
railcars, and higher costs associated with lower production
volumes. Profit on railcars built for the Company’s lease fleet was
$4.8 million and $1.1 million for the second quarter of 2017 and
2016, 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. Partially offsetting this decrease was a reduction of
the loss contingency established in response to the FRA Revised
Directive, as discussed further in our SEC filings.
Railcar leasing earnings from operations were
$21.6 million for the second quarter of 2017 compared to $22.9
million for the same period in 2016. This decrease was primarily
due to increased maintenance costs associated with our growing
lease fleet and certain railcars reassigned to other lessees and
lower lease rates on certain renewals.
Railcar services earnings from operations were
$3.0 million for the second quarter of 2017 compared to $3.1
million for the same period in 2016. This decrease was primarily
due to an unfavorable mix of work, partially offset by an increase
in demand for our mobile repair services.
Selling, general and administrative expenses
were $9.0 million for the second quarter of 2017 compared to $7.3
million for the same period in 2016. This $1.7 million increase was
primarily due to higher legal costs, a prior year credit to bad
debt expense and compensation costs primarily related to the
increased workforce in sales and fleet management due to the
transition of managing our lease fleet in-house, partially offset
by decreased commissions due to a lower mix of railcar shipments
for direct sale compared to the prior year and stock-based
compensation costs due to fluctuations in the Company’s stock
price.
Net earnings for the second quarter of 2017 were
$10.9 million, or $0.57 per share compared to $19.9 million, or
$1.02 per share, in the same period in 2016. This decrease was
driven largely by decreased earnings from operations, as discussed
above, as well as the impact of increased tax expense during the
second quarter of 2017 as the Company recorded a valuation
allowance of $1.0 million against a deferred tax asset related to a
capital loss carryforward. This valuation allowance equates to a
decrease of $0.05 per share for the second quarter of 2017.
EBITDA, adjusted to exclude share-based
compensation expense and other income related to short-term
investment activity (Adjusted EBITDA), was $37.0 million for the
second quarter of 2017 compared to $50.4 million for the comparable
quarter in 2016. 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 2017 were $223.7
million compared to $326.7 million for the
comparable period in 2016. The Company
shipped 1,080 direct sale railcars
and 1,147 railcars built for the Company's lease fleet
during the first six months of 2017 compared
to 2,062 direct sale railcars and 285 railcars
built for the lease fleet during the same period in 2016.
Railcars built for the lease fleet represented 52% of
ARI's railcar shipments in the first six months
of 2017 compared to 12% for the same period
in 2016.
Consolidated earnings from operations for the
first six months of 2017 were $44.1
million, a decrease of 43% from $76.7
million for the comparable period in 2016. Consolidated
earnings from operations for the first six months
of 2017 and 2016 excluded $10.9
million and $4.5 million, respectively, of profit on
railcars built for the lease fleet that is eliminated in
consolidation. Operating margins were 19.7% for the
first six months of 2017 compared
to 23.5% for the same period of 2016. These
decreases were primarily driven by lower earnings from operations
in the Company's manufacturing segment combined with slightly lower
earnings from operations in the railcar leasing and railcar
services segments and higher selling, general and administrative
costs.
Net earnings for the first six months
of 2017 were $21.5 million, or $1.12 per
share compared to $42.7 million, or $2.18 per share,
for the comparable period in 2016, primarily due to decreased
earnings from operations as discussed above, driven largely by the
heavier mix of railcars produced for our lease fleet during the
first half of 2017 and lower overall shipments.
Adjusted EBITDA was $73.1 million for the
first six months of 2017, a decrease of $31.8
million from $104.9 million for the comparable period
in 2016. 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.
Cash Flow and Liquidity
The Company’s earnings have contributed to cash
flow from operations in the first six months of 2017 of $52.2
million. As of June 30, 2017, ARI had working capital of
$172.0 million, including $102.8 million of cash and cash
equivalents.
As of June 30, 2017, the Company had $558.4
million of debt outstanding, net of unamortized debt issuance costs
of $4.8 million, and borrowing availability of $200.0 million under
a revolving loan.
The Company paid dividends totaling $15.3
million during the first six months of 2017. 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 8, 2017 that will be paid on
September 22, 2017.
The Company has not repurchased any shares of its common stock
thus far in 2017 under its stock repurchase program. Board
authorization for approximately $164.0 million remains available
for further stock repurchases.
Backlog
ARI's backlog as of June 30, 2017 was 2,878
railcars with an estimated market value of $270.0 million. Of the
total backlog, we currently expect 715 railcars, or 25%, having an
estimated market value of $66.5 million, will be placed into our
lease fleet.
Conference Call and Webcast
ARI will host a webcast and conference call on
Tuesday, August 1, 2017 at 10:00 am (Eastern Time) to discuss
the Company’s second quarter 2017 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 prominent 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, and ARI has begun managing these
lease railcars in-house. 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 the Company's expected financial performance, objectives,
long-term strategies 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: various estimates we have
made in preparing our financial statements, expected future trends
relating to our industry, products and markets, anticipated
customer demand for our products and services, trends relating to
our shipments, leasing business, railcar services, revenues, profit
margin, capacity, financial condition, and results of operations,
trends related to shipments for direct sale versus lease, our
backlog and any implication that our backlog may be indicative of
our future revenues, our strategic objectives and long-term
strategies, our results of operations, financial condition and the
sufficiency of our capital resources, our capital expenditure
plans, short- and long-term liquidity needs, ability to service our
current debt obligations and future financing plans, our Stock
Repurchase Program, anticipated benefits regarding the growth of
our leasing business, the mix of railcars in our lease fleet and
our lease fleet financings, anticipated production schedules for
our products and the anticipated production schedules of our joint
ventures, our plans regarding future dividends and the anticipated
performance and capital requirements of our joint ventures. These
forward-looking statements are subject to known and unknown risks
and uncertainties that could cause actual results to differ
materially from those anticipated. Investors should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made and are not guarantees of future performance.
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 that could adversely affect our business
and prospects include without limitation: our prospects in light of
the cyclical nature of our business; the health of and prospects
for the overall railcar industry; risks relating to our compliance
with the FRA directive released September 30, 2016 and subsequently
revised and superseded on November 18, 2016 (Directive), any
developments related to the Directive and any costs or loss of
revenue related thereto; risks relating to the ongoing transition
of the management of our railcar leasing business from ARL to
in-house management following completion of the ARL Sale; the risk
of being unable to market or remarket railcars for sale or lease at
favorable prices or on favorable terms or at all; fluctuations in
commodity prices, including oil and gas; the impact, costs and
expenses of any warranty claims we may be subject to now or in the
future; the highly competitive nature of the manufacturing, railcar
leasing and railcar services industries; the variable purchase
patterns of our railcar customers and the timing of completion,
customer acceptance and shipment of orders, as well as the mix of
railcars for lease versus direct sale; risks relating to our
compliance with, and the overall railcar industry's implementation
of, United States and Canadian regulations related to the
transportation of flammable liquids by rail; our ability to manage
overhead and variations in production rates; our ability to
recruit, retain and train qualified personnel; the impact of any
economic downturn, adverse market conditions or restricted credit
markets; our reliance upon a small number of customers that
represent a large percentage of our revenues and backlog;
fluctuations in the 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 we use in railcar manufacturing; the ongoing
risks related to our relationship with Mr. Carl Icahn, our
principal beneficial stockholder through Icahn Enterprises L.P.
(IELP), and certain of his affiliates; the risks associated with
ongoing compliance with environmental, health, safety, and
regulatory laws and regulations, which may be subject to change;
the impact, costs and expenses of any litigation we may be subject
to now or in the future; the sufficiency of our liquidity and
capital resources, including long-term capital needs to support the
growth of our lease fleet; the impact of repurchases pursuant to
our Stock Repurchase Program on our current liquidity and the
ownership percentage of our principal beneficial stockholder
through IELP, Mr. Carl Icahn; the risks associated with our current
joint ventures and anticipated capital needs of, and production
capabilities at our joint ventures; the conversion of our railcar
backlog into revenues equal to our reported estimated backlog
value; the risks and impact associated with any potential joint
ventures, acquisitions, strategic opportunities, dispositions or
new business endeavors; the integration with other systems and
ongoing management of our new enterprise resource planning system;
the risks related to our and our subsidiaries' indebtedness and
compliance with covenants contained in our and our subsidiaries'
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, 2017 |
|
December 31, 2016 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
102,811 |
|
|
$ |
178,571 |
|
Restricted cash |
16,684 |
|
|
16,714 |
|
Short-term investments—available for sale securities |
1,815 |
|
|
8,958 |
|
Accounts
receivable, net |
44,780 |
|
|
39,727 |
|
Accounts
receivable, due from related parties |
2,453 |
|
|
4,790 |
|
Inventories, net |
70,807 |
|
|
75,028 |
|
Prepaid
expenses and other current assets |
9,155 |
|
|
8,623 |
|
Total
current assets |
248,505 |
|
|
332,411 |
|
Property, plant and
equipment, net |
169,628 |
|
|
177,051 |
|
Railcars on lease,
net |
994,821 |
|
|
908,010 |
|
Income Tax
Receivable |
11,721 |
|
|
234 |
|
Goodwill |
7,169 |
|
|
7,169 |
|
Investments in and
loans to joint ventures |
24,683 |
|
|
26,332 |
|
Other assets |
3,831 |
|
|
5,043 |
|
Total
assets |
$ |
1,460,358 |
|
|
$ |
1,456,250 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
24,346 |
|
|
$ |
29,314 |
|
Accounts
payable, due to related parties |
186 |
|
|
3,252 |
|
Accrued
expenses, including loss contingency of $8,104 and $10,127 at June
30, 2017 and December 31, 2016, respectively |
15,509 |
|
|
15,411 |
|
Accrued
income taxes payable |
— |
|
|
7,660 |
|
Accrued
compensation |
10,800 |
|
|
11,628 |
|
Short-term debt, including current portion of long-term debt |
25,681 |
|
|
25,588 |
|
Total
current liabilities |
76,522 |
|
|
92,853 |
|
Long-term debt, net of
unamortized debt issuance costs of $4,756 and $4,863 at June 30,
2017 and December 31, 2016, respectively |
532,740 |
|
|
545,392 |
|
Deferred tax
liability |
279,709 |
|
|
252,943 |
|
Pension and
post-retirement liabilities |
8,672 |
|
|
8,648 |
|
Other liabilities,
including loss contingency of $1,970 and $2,161 at June 30, 2017
and December 31, 2016, respectively |
5,616 |
|
|
6,144 |
|
Total
liabilities |
903,259 |
|
|
905,980 |
|
Stockholders’
equity: |
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized, 19,083,878 shares outstanding
as of both June 30, 2017 and December 31, 2016 |
213 |
|
|
213 |
|
Additional paid-in
capital |
239,609 |
|
|
239,609 |
|
Retained Earnings |
409,010 |
|
|
402,810 |
|
Accumulated other
comprehensive loss |
(5,702 |
) |
|
(6,331 |
) |
Treasury Stock |
(86,031 |
) |
|
(86,031 |
) |
Total
stockholders’ equity |
557,099 |
|
|
550,270 |
|
Total
liabilities and stockholders’ equity |
$ |
1,460,358 |
|
|
$ |
1,456,250 |
|
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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
Manufacturing
(including revenues from affiliates of $137 for both the three and
six months ended June 30, 2017 and $223 and $776 for the three and
six months ended June 30 2016, respectively) |
$ |
55,087 |
|
|
$ |
97,548 |
|
|
$ |
115,813 |
|
|
$ |
221,340 |
|
Railcar leasing
(including revenues from affiliates of $223 and $447 for the three
and six months ended June 30, 2017, respectively, and zero for the
same periods in 2016) |
33,717 |
|
|
33,209 |
|
|
67,552 |
|
|
65,977 |
|
Railcar services
(including revenues from affiliates of $4,425 and $10,572 for the
three and six months ended June 30, 2017, respectively, and $7,249
and $15,243 for the same periods in 2016) |
20,216 |
|
|
19,727 |
|
|
40,336 |
|
|
39,347 |
|
Total
revenues |
109,020 |
|
|
150,484 |
|
|
223,701 |
|
|
326,664 |
|
Cost of
revenues: |
|
|
|
|
|
|
|
Manufacturing |
(51,121 |
) |
|
(81,437 |
) |
|
(105,680 |
) |
|
(183,718 |
) |
Other
operating income |
1,033 |
|
|
— |
|
|
1,064 |
|
|
— |
|
Railcar leasing |
(11,617 |
) |
|
(10,356 |
) |
|
(23,676 |
) |
|
(20,531 |
) |
Railcar services |
(16,146 |
) |
|
(15,420 |
) |
|
(33,536 |
) |
|
(30,657 |
) |
Total
cost of revenues |
(77,851 |
) |
|
(107,213 |
) |
|
(161,828 |
) |
|
(234,906 |
) |
Gross
profit |
31,169 |
|
|
43,271 |
|
|
61,873 |
|
|
91,758 |
|
Selling, general and
administrative |
(9,019 |
) |
|
(7,297 |
) |
|
(17,821 |
) |
|
(15,254 |
) |
Net gains on
disposition of leased railcars |
— |
|
|
— |
|
|
13 |
|
|
167 |
|
Earnings from operations |
22,150 |
|
|
35,974 |
|
|
44,065 |
|
|
76,671 |
|
Interest income
(including income from related parties of $306 and $642 for the
three and six months ended June 30, 2017, respectively, and $427
and $884 for the same periods in 2016) |
368 |
|
|
453 |
|
|
741 |
|
|
931 |
|
Interest expense |
(5,488 |
) |
|
(5,678 |
) |
|
(11,019 |
) |
|
(11,584 |
) |
Other income |
1,867 |
|
|
1 |
|
|
1,921 |
|
|
1 |
|
Earnings from joint
ventures |
796 |
|
|
1,458 |
|
|
1,346 |
|
|
2,944 |
|
Earnings
before income taxes |
19,693 |
|
|
32,208 |
|
|
37,054 |
|
|
68,963 |
|
Income tax expense |
(8,794 |
) |
|
(12,312 |
) |
|
(15,587 |
) |
|
(26,275 |
) |
Net earnings |
$ |
10,899 |
|
|
$ |
19,896 |
|
|
$ |
21,467 |
|
|
$ |
42,688 |
|
Net earnings per common
share—basic and diluted |
$ |
0.57 |
|
|
$ |
1.02 |
|
|
$ |
1.12 |
|
|
$ |
2.18 |
|
Weighted average common
shares outstanding—basic and diluted |
19,084 |
|
|
19,511 |
|
|
19,084 |
|
|
19,588 |
|
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, 2017 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss)from Operations |
|
(in thousands) |
Manufacturing |
$ |
55,087 |
|
|
$ |
55,442 |
|
|
$ |
110,529 |
|
|
$ |
7,299 |
|
Railcar leasing |
33,717 |
|
|
— |
|
|
33,717 |
|
|
18,690 |
|
Railcar services |
20,216 |
|
|
1,883 |
|
|
22,099 |
|
|
3,329 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,953 |
) |
Eliminations |
— |
|
|
(57,325 |
) |
|
(57,325 |
) |
|
(2,215 |
) |
Total Consolidated |
$ |
109,020 |
|
|
$ |
— |
|
|
$ |
109,020 |
|
|
$ |
22,150 |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss)from Operations |
|
(in thousands) |
Manufacturing |
$ |
115,813 |
|
|
$ |
115,546 |
|
|
$ |
231,359 |
|
|
$ |
16,450 |
|
Railcar leasing |
67,552 |
|
|
— |
|
|
67,552 |
|
|
37,500 |
|
Railcar services |
40,336 |
|
|
2,215 |
|
|
42,551 |
|
|
5,045 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(9,225 |
) |
Eliminations |
— |
|
|
(117,761 |
) |
|
(117,761 |
) |
|
(5,705 |
) |
Total Consolidated |
$ |
223,701 |
|
|
$ |
— |
|
|
$ |
223,701 |
|
|
$ |
44,065 |
|
|
|
|
|
|
|
|
|
|
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 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
Six Months Ended |
|
June 30, |
|
2017 |
|
2016 |
Operating
activities: |
|
|
|
Net
earnings |
$ |
21,467 |
|
|
$ |
42,688 |
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities: |
|
|
|
Depreciation |
28,174 |
|
|
25,616 |
|
Amortization of deferred costs |
250 |
|
|
252 |
|
(Gain)
loss on disposal of property, plant, equipment and leased
railcars |
(12 |
) |
|
18 |
|
Earnings
from joint ventures |
(1,346 |
) |
|
(2,944 |
) |
Provision
for deferred income taxes |
26,720 |
|
|
15,163 |
|
Items
related to investing activities: |
|
|
|
Realized gain on short-term investments - available for sale
securities |
(1,823 |
) |
|
— |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
(393 |
) |
|
(11,421 |
) |
Accounts receivable, due from related parties |
2,357 |
|
|
3,322 |
|
Income taxes receivable |
(12,248 |
) |
|
926 |
|
Inventories, net |
4,264 |
|
|
20,167 |
|
Prepaid
expenses and other current assets |
235 |
|
|
(2,643 |
) |
Accounts
payable |
(4,983 |
) |
|
(11,377 |
) |
Accounts
payable, due to related parties |
(3,065 |
) |
|
(2,569 |
) |
Accrued
expenses and taxes |
(8,401 |
) |
|
8,514 |
|
Other |
956 |
|
|
1,772 |
|
Net cash provided by
operating activities |
52,152 |
|
|
87,484 |
|
Investing
activities: |
|
|
|
Purchases
of property, plant and equipment |
(3,422 |
) |
|
(11,187 |
) |
Grant
Proceeds |
— |
|
|
75 |
|
Capital
expenditures - leased railcars |
(103,765 |
) |
|
(33,444 |
) |
Proceeds
from the disposal of property, plant, equipment and leased
railcars |
73 |
|
|
640 |
|
Proceeds
from sale of short-term investments - available for sale
securities |
4,086 |
|
|
— |
|
Proceeds
from repayments of loans by joint ventures |
2,953 |
|
|
2,953 |
|
Net cash used in
investing activities |
(100,075 |
) |
|
(40,963 |
) |
Financing
activities: |
|
|
|
Repayments of debt |
(12,669 |
) |
|
(112,834 |
) |
Change in
restricted cash related to long-term debt |
30 |
|
|
263 |
|
Stock
repurchases |
— |
|
|
(16,917 |
) |
Payment
of common stock dividends |
(15,267 |
) |
|
(15,613 |
) |
Debt
issuance costs |
— |
|
|
(14 |
) |
Net cash used in
financing activities |
(27,906 |
) |
|
(145,115 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
69 |
|
|
(19 |
) |
Decrease in cash and
cash equivalents |
(75,760 |
) |
|
(98,613 |
) |
Cash and cash
equivalents at beginning of period |
178,571 |
|
|
298,064 |
|
Cash and cash
equivalents at end of period |
$ |
102,811 |
|
|
$ |
199,451 |
|
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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net earnings |
$ |
10,899 |
|
|
$ |
19,896 |
|
|
$ |
21,467 |
|
|
$ |
42,688 |
|
Income tax expense |
8,794 |
|
|
12,312 |
|
|
15,587 |
|
|
26,275 |
|
Interest expense |
5,488 |
|
|
5,678 |
|
|
11,019 |
|
|
11,584 |
|
Interest income |
(368 |
) |
|
(453 |
) |
|
(741 |
) |
|
(931 |
) |
Depreciation |
14,301 |
|
|
12,961 |
|
|
28,174 |
|
|
25,616 |
|
EBITDA |
$ |
39,114 |
|
|
$ |
50,394 |
|
|
$ |
75,506 |
|
|
$ |
105,232 |
|
Expense (Income)
related to stock appreciation rights compensation |
(225 |
) |
|
24 |
|
|
(472 |
) |
|
(287 |
) |
Other Income on
short-term investment activity |
$ |
(1,867 |
) |
|
— |
|
|
$ |
(1,921 |
) |
|
— |
|
Adjusted EBITDA |
$ |
37,022 |
|
|
$ |
50,418 |
|
|
$ |
73,113 |
|
|
$ |
104,945 |
|
EBITDA represents net earnings before income tax
expense, 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 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) and other income related to our
short-term investments. 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 and income associated with short-term
investments 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 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 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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