UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2015
AMERICAN RAILCAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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North Dakota | | 000-51728 | | 43-1481791 |
(State or other jurisdiction | | (Commission | | (IRS Employer |
of incorporation) | | File Number) | | Identification No.) |
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| | |
100 Clark Street | | |
St. Charles, Missouri | | 63301 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (636) 940-6000
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
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q | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
q | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
q | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
q | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On April 27, 2015, American Railcar Industries, Inc. (ARI) entered into a repair services and support agreement (Repair Services Agreement) with ACF Industries, LLC (ACF), a company controlled by Mr. Carl Icahn, ARI's principal beneficial stockholder through Icahn Enterprises L.P. The Repair Services Agreement was unanimously approved by the independent directors of ARI's audit committee.
Under the Repair Services Agreement, ARI will provide certain sales and administrative and technical services, materials and purchasing support and engineering services to ACF to provide repair and retrofit services (Repair Services). Additionally, ARI will provide a non-exclusive and non-assignable license of certain intellectual property related to the Repair Services for railcars. ARI will receive 30% of the net profits (as defined in the agreement) for Repair Services related to all railcars not owned by ARL or its subsidiaries and 20% of the net profits for Repair Services related to all railcars owned by ARL or its subsidiaries, if any, but will not absorb any losses incurred by ACF. Under the Repair Services Agreement, ARI has the exclusive right to sales opportunities related to Repair Services, except for any sales opportunity related to Repair Services presented to ACF by American Railcar Leasing LLC (ARL), a company controlled by Mr. Carl Icahn, ARI's principal beneficial stockholder through Icahn Enterprises L.P., with respect to ARL-owned railcars. ARI also has the right to assign any sales opportunities related to Repair Services to ACF, and ACF has the right, but not the obligation, to accept such sales opportunity. Subject to certain early termination events, the Repair Services Agreement terminates on December 31, 2020.
Also on April 27, 2015, ARI entered into a parts purchasing and sale agreement (Parts Agreement) with ACF. The Parts Agreement was unanimously approved by the independent directors of ARI's audit committee.
Under the Parts Agreement, ARI and ACF may, from time to time, purchase from and sell to each other certain parts for railcars (Parts). ARI also will provide a non-exclusive and non-assignable license of certain intellectual property related to the manufacture and sale of Parts to ARI. The buyer under the Parts Agreement must pay the market price of the parts as determined in the Parts Agreement or as stated on a public website for all ARI buyers. ARI may provide designs, engineering and purchasing support, including all materials and components to ACF. Subject to certain early termination events, the agreement terminates on December 31, 2020.
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2015, American Railcar Industries, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference. In conjunction with the press release, ARI has posted a supplemental information presentation to its website (www.americanrailcar.com) and a copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated herein in its entirety by reference.
Limitation on Incorporation by Reference. The information furnished in this Item 2.02, including the press release attached hereto as Exhibit 99.1 and the presentation attached hereto as Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release and presentation attached as exhibits hereto, the press release and presentation contain forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary notes in the press release and presentation, respectively, regarding these forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
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Exhibit Number | | Description |
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Exhibit 99.1 | | Press release dated April 29, 2015 of American Railcar Industries, Inc. |
Exhibit 99.2 | | Supplemental Information Presentation for the period ended March 31, 2015 |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: April 29, 2015 | | | American Railcar Industries, Inc. |
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| | By: | /s/ Umesh Choksi |
| | Name: | Umesh Choksi |
| | Title: | Senior Vice President, Chief Financial Officer and Treasurer |
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Exhibit Number | | Description |
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Exhibit 99.1 | | Press release dated April 29, 2015 of American Railcar Industries, Inc. |
Exhibit 99.2 | | Supplemental Information Presentation for the period ended March 31, 2015 |
Exhibit 99.1
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PRESS RELEASE | | | AMERICAN RAILCAR INDUSTRIES, INC. 100 Clark Street, St. Charles, Missouri 63301 www.americanrailcar.com |
| | | 636.940.6000 |
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FOR RELEASE: | April 29, 2015 | | | | | | |
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AMERICAN RAILCAR INDUSTRIES, INC. REPORTS
RECORD QUARTERLY REVENUE, EARNINGS AND SHIPMENTS
First Quarter 2015 Highlights
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• | Record quarterly revenues of $263.8 million vs. prior year of $182.1 million - up 45% |
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• | Record quarterly earnings per share of $1.64 vs. prior year of $0.97 - up 69% |
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• | Record quarterly adjusted EBITDA of $72.0 million vs. prior year of $47.6 million - up 51% |
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• | Record quarterly railcar shipments of 2,668 vs. prior year of 1,610 - up 66% |
St. Charles, MO, April 29, 2015 - American Railcar Industries, Inc. (ARI or the Company) (NASDAQ: ARII) today reported its first quarter 2015 financial results. Jeff Hollister, President and CEO of ARI, commented, “In the first quarter of 2015, we experienced new quarterly records for both revenue and earnings driven by strong levels of hopper and tank railcar shipments for direct sale. We continue to benefit from the growth of our lease fleet, our ability to efficiently produce high quality hopper and tank railcars and sustain high volumes of production at our facilities."
"We are investing capital and have plans to further expand our manufacturing flexibility and repair capacity to address the anticipated needs of the industry resulting from the pending tank railcar regulations. The current expansion projects at two of our existing repair plants are progressing and we expect these projects will be completed in 2015," Hollister added.
First Quarter Summary
Total consolidated revenues were $263.8 million for the first quarter of 2015, a new quarterly record and an increase of 45% when compared to $182.1 million for the same period in 2014. This increase was primarily driven by increased manufacturing revenues due to a higher mix of direct sale shipments relative to railcars shipped for the Company's lease fleet. 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 were $221.8 million for the first quarter of 2015, an increase of 44% compared to the same period in 2014. During the first quarter of 2015, ARI shipped 2,017 direct sale railcars and 651 railcars built for the Company's lease fleet, compared to 1,130 direct sale railcars and 480 railcars built for the lease fleet during the same period in 2014. Railcars built for the lease fleet represented 24% of ARI’s railcar shipments during the first quarter of 2015 compared to 30% for the same period in 2014. Hopper railcar shipments for direct sale increased significantly in the first quarter of 2015 compared to the same period of 2014 as that market has strengthened. In contrast, while production of tank railcars continues at strong levels, a higher percentage of tank railcars were built for the Company's lease fleet during the first quarter of 2015 compared to the same period of 2014. This has resulted in a greater mix of hopper railcars shipped for direct sale, which generally sell at lower prices than tank railcars due to less material and labor content.
Manufacturing revenues for the first quarter of 2015 exclude $83.7 million of estimated revenues related to railcars built for the Company's lease fleet, compared to $64.0 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 both hopper and tank railcars shipped for lease during the first quarter of 2015. 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 $24.6 million for the first quarter of 2015, an increase of 109% over the $11.7 million for the comparable period in 2014. 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 8,381 railcars in its lease fleet as of March 31, 2015, compared to 4,930 railcars as of March 31, 2014.
Railcar services revenues were $17.4 million for the first quarter of 2015, an increase of 6% compared to $16.4 million for the same period in 2014. The primary reasons for the increase in revenue were a favorable change in the mix of work at the Company's repair facilities and the additional capacity resulting from the Company's Brookhaven repair facility that became operational during the third quarter of 2014.
Consolidated earnings from operations were $60.0 million for the first quarter of 2015, a new quarterly record and an increase of 64% over the $36.5 million for the same period in 2014. Earnings continue to benefit from strong sales of tank and hopper railcars. As a percentage of overall shipments, the Company shipped fewer railcars for its lease fleet in the first quarter of 2015 than in the first quarter of 2014. This shift in the mix of railcars for direct sale versus for lease also benefitted earnings for the quarter.
Consolidated operating margins increased to 22.8% for the first quarter of 2015, compared to 20.0% for the same period in 2014. This increase was primarily driven by the growth of the Company’s lease fleet, partially offset by lower operating margins driven by the higher mix of hopper railcars shipped for direct sale, as discussed above.
Manufacturing earnings from operations were $44.8 million for the first quarter of 2015 compared to $33.7 million for the same period in 2014. This increase was due primarily to a higher mix of direct sale shipments relative to railcars shipped for our lease fleet, as discussed above. Estimated profit on railcars built for the Company’s lease fleet was $25.6 million and $19.7 million for the first quarter of 2015 and 2014, 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 $14.8 million for the first quarter of 2015 compared to $6.2 million for the same period in 2014. 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 $2.8 million for the first quarter of 2015 compared to $2.2 million for the same period in 2014. This increase was primarily due to the increase in revenues driven by the favorable change in the mix of work and the additional capacity resulting from the Company's Brookhaven repair facility, as discussed above.
Selling, general and administrative expenses were $7.7 million for the first quarter of 2015 compared to $9.4 million for the same period in 2014. This $1.7 million decrease was primarily due to a decrease of $2.8 million in share-based compensation expense driven by the decrease in our stock price of $2 per share during the first quarter of 2015 compared to an increase of $24 per share during the same period in 2014. This decrease was partially offset by an increase of $0.7 million in sales commissions due to a higher volume of direct sale hopper railcar shipments during the three months ended March 31, 2015 compared to the same period in 2014 and an increase of $0.4 million in other corporate expenses.
EBITDA, adjusted to exclude share-based compensation expense (Adjusted EBITDA), was $72.0 million for the first quarter of 2015, a new quarterly record, compared to $47.6 million for the comparable quarter of 2014. The increase resulted primarily from increased consolidated earnings from operations in addition to earnings from joint ventures improving by $2.4 million for the first quarter of 2015 compared to the comparable period in 2014. The improvement experienced by the Company's joint ventures was driven by increased sales and production levels due to strong railcar industry demand. 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 first quarter of 2015 were $35.0 million, or $1.64 per share, a new quarterly record, compared to $20.8 million, or $0.97 per share, in the same period in 2014. This increase was driven primarily by increased consolidated earnings from operations and improved results from the Company's joint ventures, as discussed above, partially offset by an increase in interest expense due to a higher average debt balance and a higher weighted average interest rate as a result of increased borrowings to support the growth of the Company's lease fleet.
Cash Flow and Liquidity
The Company’s strong earnings have contributed to cash flow from operations in the first three months of 2015 of $85.6 million. As of March 31, 2015, ARI had working capital of $382.8 million, including $310.1 million of cash and cash equivalents. In January 2015, the Company raised $625.5 million to increase cash, refinance its prior lease fleet financings and extend the maturity of its debt. The financing provided the Company with net cash of $211.6 million. As of March 31, 2015, ARI had $621.0 million of debt outstanding under the refinanced lease fleet financing facility.
At the board meeting in April, 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 June 18, 2015 that will be paid on June 30, 2015.
Backlog
ARI's backlog as of March 31, 2015 was 10,471 railcars with an estimated value of $1.1 billion. Of the total backlog, 2,343, or 22%, were railcars subject to lease with an estimated market value of $267.5 million. Management expects that the Company's lease fleet will exceed 10,000 railcars by the end of 2015.
Other
In April 2015, ARI entered into a repair services and support agreement with ACF to provide repair and retrofit services. ARI will receive 30% of the net profits (as defined in the agreement) for Repair Services related to all railcars not owned by ARL or its subsidiaries and 20% of the net profits for Repair Services related to all railcars owned by ARL or its subsidiaries, if any, but will not absorb any losses incurred by ACF. Subject to certain early termination events, the agreement terminates on December 31, 2020.
Also in April 2015, ARI and ACF entered into a parts purchasing and sale agreement under which ARI and ACF may, from time to time, purchase from and sell to each other certain parts for railcars. The parts will be bought and sold for market price, as set forth in the agreement. Subject to certain early termination events, the agreement terminates on December 31, 2020.
Conference Call and Webcast
ARI will host a webcast and conference call on Thursday, April 30, 2015 at 10:00 am (Eastern Time) to discuss the Company’s first quarter 2015 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 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 benefits of agreements with ACF, 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)
|
| | | | | | | |
| March 31,
2015 | | December 31,
2014 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 310,056 |
| | $ | 88,109 |
|
Restricted cash | 16,972 |
| | 7,178 |
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Accounts receivable, net | 39,735 |
| | 33,618 |
|
Accounts receivable, due from related parties | 12,593 |
| | 33,027 |
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Income taxes receivable | 11,607 |
| | 33,879 |
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Inventories, net | 121,623 |
| | 117,007 |
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Deferred tax assets | 6,600 |
| | 7,688 |
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Prepaid expenses and other current assets | 6,164 |
| | 5,353 |
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Total current assets | 525,350 |
| | 325,859 |
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Property, plant and equipment, net | 160,593 |
| | 160,787 |
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Railcars on leases, net | 705,919 |
| | 663,315 |
|
Deferred debt issuance costs, net | 5,244 |
| | 2,148 |
|
Goodwill | 7,169 |
| | 7,169 |
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Investments in and loans to joint ventures | 29,694 |
| | 29,168 |
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Other assets | 7,587 |
| | 3,963 |
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Total assets | $ | 1,441,556 |
| | $ | 1,192,409 |
|
Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 77,569 |
| | $ | 68,789 |
|
Accounts payable, due to related parties | 3,304 |
| | 2,793 |
|
Accrued expenses and taxes | 19,946 |
| | 5,208 |
|
Accrued compensation | 15,759 |
| | 15,046 |
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Deferred revenue | 176 |
| | 16,723 |
|
Short-term debt, including current portion of long-term debt | 25,772 |
| | 110,612 |
|
Total current liabilities | 142,526 |
| | 219,171 |
|
Long-term debt, net of current portion | 595,214 |
| | 298,342 |
|
Deferred tax liability | 172,042 |
| | 168,349 |
|
Pension and post-retirement liabilities | 8,145 |
| | 8,544 |
|
Other liabilities | 2,649 |
| | 2,587 |
|
Total liabilities | 920,576 |
| | 696,993 |
|
Stockholders’ equity: | | | |
Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 213 |
| | 213 |
|
Additional paid-in capital | 239,609 |
| | 239,609 |
|
Retained earnings | 287,378 |
| | 260,943 |
|
Accumulated other comprehensive loss | (6,220 | ) | | (5,349 | ) |
Total stockholders’ equity | 520,980 |
| | 495,416 |
|
Total liabilities and stockholders’ equity | $ | 1,441,556 |
| | $ | 1,192,409 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
|
| | | | | | | |
| Three Months Ended |
| March 31, |
| 2015 | | 2014 |
Revenues: | | | |
Manufacturing (including revenues from affiliates of $121,196 and $41,235 for the three months ended March 31, 2015 and 2014, respectively) | $ | 221,811 |
| | $ | 153,963 |
|
Railcar leasing | 24,585 |
| | 11,746 |
|
Railcar services (including revenues from affiliates of $6,380 and $3,963 for the three months ended March 31, 2015 and 2014, respectively) | 17,380 |
| | 16,406 |
|
Total revenues | 263,776 |
| | 182,115 |
|
Cost of revenues: | | | |
Manufacturing | (174,534 | ) | | (118,365 | ) |
Railcar leasing | (7,701 | ) | | (4,491 | ) |
Railcar services | (13,845 | ) | | (13,365 | ) |
Total cost of revenues | (196,080 | ) | | (136,221 | ) |
Gross profit | 67,696 |
| | 45,894 |
|
Selling, general and administrative | (7,681 | ) | | (9,387 | ) |
Earnings from operations | 60,015 |
| | 36,507 |
|
Interest income (including income from related parties of $557 and $627 for the three months ended March 31, 2015 and 2014, respectively) | 563 |
| | 641 |
|
Interest expense | (4,738 | ) | | (1,672 | ) |
Loss on debt extinguishment | (2,126 | ) | | (1,896 | ) |
Other Income | 6 |
| | 5 |
|
Earnings (Loss) from joint ventures | 1,797 |
| | (601 | ) |
Earnings before income taxes | 55,517 |
| | 32,984 |
|
Income tax expense | (20,541 | ) | | (12,214 | ) |
Net earnings | $ | 34,976 |
| | $ | 20,770 |
|
Net earnings per common share—basic and diluted | $ | 1.64 |
| | $ | 0.97 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT DATA
(In thousands, unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Revenues | | Earnings (Loss) from Operations |
| External | | Intersegment | | Total | | External | | Intersegment | | Total |
| (in thousands) |
Three Months Ended March 31, 2015 | | | | | | | | | | | |
Manufacturing | $ | 221,811 |
| | $ | 83,731 |
| | $ | 305,542 |
| | $ | 44,793 |
| | $ | 25,645 |
| | $ | 70,438 |
|
Railcar leasing | 24,585 |
| | — |
| | 24,585 |
| | 14,786 |
| | (22 | ) | | 14,764 |
|
Railcar services | 17,380 |
| | 102 |
| | 17,482 |
| | 2,840 |
| | 27 |
| | 2,867 |
|
Corporate/Eliminations | — |
| | (83,833 | ) | | (83,833 | ) | | (2,404 | ) | | (25,650 | ) | | (28,054 | ) |
Total Consolidated | $ | 263,776 |
| | $ | — |
| | $ | 263,776 |
| | $ | 60,015 |
| | $ | — |
| | $ | 60,015 |
|
Three Months Ended March 31, 2014 | | | | | | | | | | | |
Manufacturing | $ | 153,963 |
| | $ | 64,029 |
| | $ | 217,992 |
| | $ | 33,655 |
| | $ | 19,730 |
| | $ | 53,385 |
|
Railcar leasing | 11,746 |
| | — |
| | 11,746 |
| | 6,230 |
| | 31 |
| | 6,261 |
|
Railcar services | 16,406 |
| | 132 |
| | 16,538 |
| | 2,181 |
| | 38 |
| | 2,219 |
|
Corporate/Eliminations | — |
| | (64,161 | ) | | (64,161 | ) | | (5,559 | ) | | (19,799 | ) | | (25,358 | ) |
Total Consolidated | $ | 182,115 |
| | $ | — |
| | $ | 182,115 |
| | $ | 36,507 |
| | $ | — |
| | $ | 36,507 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
|
| | | | | | | |
| Three Months Ended |
| March 31, |
| 2015 | | 2014 |
Operating activities: | | | |
Net earnings | $ | 34,976 |
| | $ | 20,770 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation | 10,061 |
| | 7,683 |
|
Amortization of deferred costs | 152 |
| | 109 |
|
Loss on disposal of property, plant, equipment and leased railcars | — |
| | 45 |
|
(Earnings) Losses from joint ventures | (1,797 | ) | | 601 |
|
Provision for deferred income taxes | 4,717 |
| | 3,892 |
|
Provision for allowance for doubtful accounts receivable | (16 | ) | | 31 |
|
Items related to financing activities: | | | |
Loss on debt extinguishment | 2,126 |
| | 1,896 |
|
Changes in operating assets and liabilities: | | | |
Accounts receivable, net | (6,149 | ) | | (40,846 | ) |
Accounts receivable, due from related parties | 20,391 |
| | 1,035 |
|
Income taxes receivable | 22,272 |
| | 1,904 |
|
Inventories, net | (4,730 | ) | | (15,874 | ) |
Prepaid expenses and other current assets | (897 | ) | | (5,147 | ) |
Accounts payable | 8,804 |
| | 10,423 |
|
Accounts payable, due to related parties | 511 |
| | 507 |
|
Accrued expenses and taxes | (1,077 | ) | | 2,679 |
|
Other | (3,770 | ) | | 2,883 |
|
Net cash provided by (used in) operating activities | 85,574 |
| | (7,409 | ) |
Investing activities: | | | |
Purchases of property, plant and equipment | (4,972 | ) | | (3,585 | ) |
Capital expenditures - leased railcars | (48,095 | ) | | (43,947 | ) |
Proceeds from repayments of loans by joint ventures | 1,250 |
| | 1,125 |
|
Net cash used in investing activities | (51,817 | ) | | (46,407 | ) |
Financing activities: | | | |
Repayments of long-term debt | (413,275 | ) | | (196,527 | ) |
Proceeds from long-term debt | 625,306 |
| | 318,682 |
|
Change in interest reserve related to long-term debt | (9,794 | ) | | (87 | ) |
Payment of common stock dividends | (8,541 | ) | | (8,541 | ) |
Debt issuance costs | (5,271 | ) | | (2,403 | ) |
Net cash provided by financing activities | 188,425 |
| | 111,124 |
|
Effect of exchange rate changes on cash and cash equivalents | (235 | ) | | (72 | ) |
Increase in cash and cash equivalents | 221,947 |
| | 57,236 |
|
Cash and cash equivalents at beginning of period | 88,109 |
| | 97,252 |
|
Cash and cash equivalents at end of period | $ | 310,056 |
| | $ | 154,488 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA
(In thousands, unaudited)
|
| | | | | | | |
| Three Months Ended
March 31, |
| 2015 | | 2014 |
Net earnings | $ | 34,976 |
| | $ | 20,770 |
|
Income tax expense | 20,541 |
| | 12,214 |
|
Interest expense | 4,738 |
| | 1,672 |
|
Loss on debt extinguishment | 2,126 |
| | 1,896 |
|
Interest income | (563 | ) | | (641 | ) |
Depreciation | 10,061 |
| | 7,683 |
|
EBITDA | $ | 71,879 |
| | $ | 43,594 |
|
Expense related to stock appreciation rights compensation | 107 |
| | 4,006 |
|
Adjusted EBITDA | $ | 71,986 |
| | $ | 47,600 |
|
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 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 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 (NASDAQ:ARII)
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