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): July 28, 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 2.02 Results of Operations and Financial Condition.
On July 29, 2015, American Railcar Industries, Inc. (“ARI” or the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 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 (the Securities Act), 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 99.1 and 99.2 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 7.01. Regulation FD Disclosure.
On July 29, 2015, American Railcar Industries, Inc. issued a press release announcing details related to its the expansion of its tank railcar manufacturing facility in Marmaduke, Arkansas. A copy of the press release is attached hereto as Exhibit 99.3 to this report.
Limitation on Incorporation by Reference. The information furnished in this Item 7.01, including the press release attached hereto as Exhibit 99.3, shall not be deemed “filed” for purposes of Section 18 of 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, 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 attached as Exhibit 99.3 hereto, the press release contains 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 regarding these forward-looking statements.
Item 8.01. Other Events.
On July 28, 2015, the Company's Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”) pursuant to which the Company may, from time to time, repurchase up to $250 million of its common stock. As part of the Stock Repurchase Program, shares may be purchased in open market transactions including through block purchases, through privately negotiated transactions, pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, through tender offers or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act on terms to be determined from time to time.
The Stock Repurchase Program will end upon the earlier of the date on which the plan is terminated by the Board or when all authorized repurchases are completed. The Stock Repurchase Program does not obligate the Company to purchase any particular amount of common stock at any particular price or at all. The Stock Repurchase Program may be suspended, modified, or terminated by the Company's Board of Directors at any time for any reason.
Item 9.01 Financial Statements and Exhibits.
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Exhibit Number | | Description |
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Exhibit 99.1 | | Press release dated July 29, 2015 of American Railcar Industries, Inc. announcing financial results for the second quarter of 2015 and authorization for a stock repurchase program |
Exhibit 99.2 | | Supplemental Information Presentation for the period ended June 30, 2015 |
Exhibit 99.3 | | Press release dated July 29, 2015 of American Railcar Industries, Inc. providing update regarding Marmaduke expansion |
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: July 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 July 29, 2015 of American Railcar Industries, Inc. announcing financial results for the second quarter of 2015 and authorization for a stock repurchase program |
Exhibit 99.2 | | Supplemental Information Presentation for the period ended June 30, 2015 |
Exhibit 99.3 | | Press release dated July 29, 2015 of American Railcar Industries, Inc. providing update regarding Marmaduke expansion |
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: | July 29, 2015 | | | | | | |
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AMERICAN RAILCAR INDUSTRIES, INC. REPORTS STRONG
QUARTERLY EARNINGS AND SHIPMENTS
Second Quarter 2015 Highlights
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• | Quarterly earnings per share of $1.54 vs. prior year of $1.51 - up 2% |
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• | Quarterly adjusted EBITDA of $68.5 million vs. prior year of $60.2 million - up 14% |
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• | Quarterly railcar shipments of 2,397 vs. prior year of 2,140 - up 12% |
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• | Share Repurchase Program of up to $250 million approved by the Board of Directors |
St. Charles, MO, July 29, 2015 - American Railcar Industries, Inc. (ARI or the Company) (NASDAQ: ARII) today reported its second quarter 2015 financial results. Jeff Hollister, President and CEO of ARI, commented, “The second quarter of 2015 was strong for earnings due to high shipments, continued growth in leasing and improved operating margins. We continue to benefit from the growth of our lease fleet, our ability to efficiently produce high quality hopper and tank railcars and operate at healthy volumes of production at our facilities.”
“We continue to grow our railcar services segment by increasing efficiencies across our facilities and expanding certain facilities based on strong demand for services. The expansions at our Marmaduke facility and three repair plants are expected to be completed this year, increasing our capacity and flexibility supporting strong demand for repair work. The Marmaduke expansion will also improve our flexibility for tank railcar manufacturing going forward,” Hollister added.
Second Quarter Summary
Total consolidated revenues were $192.0 million for the second quarter of 2015, a decrease of 19% when compared to $237.5 million for the same period in 2014. This decrease was primarily driven by decreased manufacturing revenues due to a higher mix of railcars shipped for the Company's lease fleet relative to direct sale shipments. 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 $144.5 million for the second quarter of 2015, a decrease of 30% compared to the same period in 2014. During the second quarter of 2015, ARI shipped 1,378 direct sale railcars and 1,019 railcars built for the Company's lease fleet, compared to 1,670 direct sale railcars and 470 railcars built for the lease fleet during the same period in 2014. Railcars built for the lease fleet represented 43% of ARI’s railcar shipments during the second quarter of 2015 compared to 22% for the same period in 2014. In addition, hopper railcar shipments for direct sale increased while tank railcar shipments for direct sale decreased in the second 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 second quarter of 2015 exclude $123.7 million of estimated revenues related to railcars built for the Company's lease fleet, compared to $61.3 million for the same period in 2014. 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 second quarter of 2015 compared to the same period of 2014. 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 $28.2 million for the second quarter of 2015, an increase of 103% over the $13.9 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 9,399 railcars in its lease fleet as of June 30, 2015, compared to 5,390 railcars as of June 30, 2014.
Railcar services revenues were $19.3 million for the second quarter of 2015, an increase of 12% compared to $17.3 million for the same period in 2014. The primary reasons for the increase in revenue were an increase in demand and a favorable change in the mix of work at our repair facilities and the additional capacity resulting from our Brookhaven repair facility that became operational during the third quarter of 2014.
Consolidated earnings from operations were $55.3 million for the second quarter of 2015, an increase of 7% over the $51.9 million for the same period in 2014. The increase in consolidated earnings from operations was due to increased earnings in the Company's railcar leasing and railcar services segments as well as lower corporate expenses, partially offset by a decrease in earnings from the railcar manufacturing segment.
Consolidated operating margins increased to 28.8% for the second quarter of 2015, compared to 21.8% for the same period in 2014. This increase was primarily driven by the growth of the Company’s lease fleet, as well as higher margins in the Company's manufacturing and railcar services segments due to stronger operating efficiencies.
Manufacturing earnings from operations were $34.7 million for the second quarter of 2015 compared to $44.6 million for the same period in 2014. This decrease was due primarily to a higher mix of railcars shipped for our lease fleet relative to direct sale shipments and a higher mix of hopper railcars relative to tank railcars, as discussed above. Estimated profit on railcars built for the Company’s lease fleet was $35.2 million and $19.6 million for the second 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 $17.0 million for the second quarter of 2015 compared to $7.4 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 $3.9 million for the second quarter of 2015 compared to $3.1 million for the same period in 2014. This increase was primarily due to the increase in revenues driven by the increased demand and 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 $5.3 million for the second quarter of 2015 compared to $6.8 million for the same period in 2014. This $1.5 million decrease was primarily due to lower consulting costs and other corporate expenses.
EBITDA, adjusted to exclude share-based compensation expense (Adjusted EBITDA), was $68.5 million for the second quarter of 2015 compared to $60.2 million for the comparable quarter of 2014. The increase resulted primarily from increased earnings from operations as discussed above and earnings from joint ventures improving by $1.8 million for the second quarter of 2015 compared to the same 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 and improved efficiencies at our Axis joint venture. 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 second quarter of 2015 were $33.0 million, or $1.54 per share compared to $32.2 million, or $1.51 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.
Year-to-Date Results
Consolidated revenues for the first six months of 2015 were $455.8 million compared to $419.6 million for the comparable period in 2014. The Company shipped 3,395 direct sale railcars and 1,670 railcars built for the Company's lease fleet during the first half of 2015, compared to 2,800 direct sale railcars and 950 railcars built for the lease fleet during the same period in 2014. Railcars built for the lease fleet represented 33% of ARI's railcar shipments in the first six months of 2015, compared to 25% for the same period in 2014.
Consolidated earnings from operations for the first six months of 2015 were $115.3 million, and up by 30% from $88.4 million for the comparable period in 2014. Consolidated earnings from operations for the first six months of 2015 and 2014 excluded $60.9 million and $39.4 million, respectively, of profit on railcars built for the lease fleet that is eliminated in consolidation. Operating margins were 25.3% for the first six months of 2015, compared to 21.1% for the comparable period of 2014, primarily
due to increased earnings due to the growth in the lease fleet and strong efficiencies as a result of ramped up production for hopper railcars.
Adjusted EBITDA was $140.5 million for the first six months of 2015, and up by $32.7 million from $107.8 million for the comparable period in 2014. The increase resulted primarily from increased consolidated earnings from operations, in addition to an improvement of $4.2 million from earnings (loss) from joint ventures for the first six months of 2015 compared to the same period in 2014.
Net earnings for the first six months of 2015 were $67.9 million, or $3.18 per share, compared to $53.0 million, or $2.48 per share, for the comparable period in 2014, due to increased earnings from operations and improved joint venture earnings partially offset by increased interest expense.
Cash Flow and Liquidity
The Company’s strong earnings have contributed to cash flow from operations in the first six months of 2015 of $120.3 million. As of June 30, 2015, ARI had working capital of $322.0 million, including $236.3 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 June 30, 2015, ARI had $614.6 million of debt outstanding under the refinanced lease fleet financing facility.
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 16, 2015 that will be paid on September 30, 2015.
Stock Repurchase Program
On July 28, 2015, the Company's Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”) pursuant to which the Company may, from time to time, repurchase up to $250 million of its common stock. As part of the Stock Repurchase Program, shares may be purchased in open market transactions including through block purchases, through privately negotiated transactions, pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”), through tender offers or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act on terms to be determined from time to time.
The Stock Repurchase Program will end upon the earlier of the date on which the plan is terminated by the Board or when all authorized repurchases are completed. The Stock Repurchase Program does not obligate the Company to purchase any particular amount of common stock at any particular price or at all. The Stock Repurchase Program may be suspended, modified, or terminated by the Company's Board of Directors at any time for any reason.
Backlog
ARI's backlog as of June 30, 2015 was 8,454 railcars with an estimated value of $879.7 million. Of the total backlog, 1,454, or 17%, were railcars subject to lease with an estimated market value of $155.1 million. Management expects that the Company's lease fleet will exceed 10,000 railcars by the end of 2015.
Conference Call and Webcast
ARI will host a webcast and conference call on Thursday, July 30, 2015 at 10:00 am (Eastern Time) to discuss the Company’s second 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 the Company's intention to repurchase shares of its common stock under the Stock Repurchase Program, 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: 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 final regulations related to the transportation of flammable liquids by rail released on May 1, 2015; 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; 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, and certain of his affiliates; 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 sufficiency of our liquidity and capital resources, including long-term capital needs to further support the growth of our lease fleet; 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 and anticipated capital needs of, and production at the Company's 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)
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| | | | | | | |
| June 30,
2015 | | December 31,
2014 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 236,276 |
| | $ | 88,109 |
|
Restricted cash | 17,054 |
| | 7,178 |
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Accounts receivable, net | 31,446 |
| | 33,618 |
|
Accounts receivable, due from related parties | 17,565 |
| | 33,027 |
|
Income taxes receivable | 12,091 |
| | 33,879 |
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Inventories, net | 117,342 |
| | 117,007 |
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Deferred tax assets | 6,968 |
| | 7,688 |
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Prepaid expenses and other current assets | 6,148 |
| | 5,353 |
|
Total current assets | 444,890 |
| | 325,859 |
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Property, plant and equipment, net | 166,376 |
| | 160,787 |
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Railcars on leases, net | 784,083 |
| | 663,315 |
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Deferred debt issuance costs, net | 5,190 |
| | 2,148 |
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Goodwill | 7,169 |
| | 7,169 |
|
Investments in and loans to joint ventures | 30,565 |
| | 29,168 |
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Other assets | 7,544 |
| | 3,963 |
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Total assets | $ | 1,445,817 |
| | $ | 1,192,409 |
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Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 59,664 |
| | $ | 68,789 |
|
Accounts payable, due to related parties | 3,766 |
| | 2,793 |
|
Accrued expenses and taxes | 20,099 |
| | 5,208 |
|
Accrued compensation | 13,524 |
| | 15,046 |
|
Deferred revenue | 40 |
| | 16,723 |
|
Short-term debt, including current portion of long-term debt | 25,781 |
| | 110,612 |
|
Total current liabilities | 122,874 |
| | 219,171 |
|
Long-term debt, net of current portion | 588,783 |
| | 298,342 |
|
Deferred tax liability | 177,898 |
| | 168,349 |
|
Pension and post-retirement liabilities | 8,026 |
| | 8,544 |
|
Other liabilities | 2,538 |
| | 2,587 |
|
Total liabilities | 900,119 |
| | 696,993 |
|
Stockholders’ equity: | | | |
Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding as of June 30, 2015 and December 31, 2014 | 213 |
| | 213 |
|
Additional paid-in capital | 239,609 |
| | 239,609 |
|
Retained earnings | 311,807 |
| | 260,943 |
|
Accumulated other comprehensive loss | (5,931 | ) | | (5,349 | ) |
Total stockholders’ equity | 545,698 |
| | 495,416 |
|
Total liabilities and stockholders’ equity | $ | 1,445,817 |
| | $ | 1,192,409 |
|
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, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenues: | | | | | | | |
Manufacturing (including revenues from affiliates of $61,743 and $182,939 for the three and six months ended June 30, 2015, respectively, and $91,135 and $132,370 for the same periods in 2014) | $ | 144,481 |
| | $ | 206,364 |
| | $ | 366,292 |
| | $ | 360,327 |
|
Railcar leasing | 28,216 |
| | 13,885 |
| | 52,801 |
| | 25,631 |
|
Railcar services (including revenues from affiliates of $6,406 and $12,786 for the three and six months ended June 30, 2015, respectively, and $4,699 and $8,662 for the same periods in 2014) | 19,301 |
| | 17,260 |
| | 36,681 |
| | 33,666 |
|
Total revenues | 191,998 |
| | 237,509 |
| | 455,774 |
| | 419,624 |
|
Cost of revenues: | | | | | | | |
Manufacturing | (107,714 | ) | | (160,033 | ) | | (282,248 | ) | | (278,398 | ) |
Railcar leasing | (8,993 | ) | | (5,382 | ) | | (16,694 | ) | | (9,873 | ) |
Railcar services | (14,737 | ) | | (13,424 | ) | | (28,582 | ) | | (26,789 | ) |
Total cost of revenues | (131,444 | ) | | (178,839 | ) | | (327,524 | ) | | (315,060 | ) |
Gross profit | 60,554 |
| | 58,670 |
| | 128,250 |
| | 104,564 |
|
Selling, general and administrative | (5,315 | ) | | (6,820 | ) | | (12,996 | ) | | (16,207 | ) |
Net gains on disposition of leased railcars | 25 |
| | — |
| | 25 |
| | — |
|
Earnings from operations | 55,264 |
| | 51,850 |
| | 115,279 |
| | 88,357 |
|
Interest income (including income from related parties of $538 and $1,095 for the three and six months ended June 30, 2015, respectively, and $613 and $1,240 for the same periods in 2014) | 550 |
| | 619 |
| | 1,113 |
| | 1,260 |
|
Interest expense | (5,694 | ) | | (1,843 | ) | | (10,432 | ) | | (3,515 | ) |
Loss on debt extinguishment | — |
| | — |
| | (2,126 | ) | | (1,896 | ) |
Other Income | 5 |
| | 27 |
| | 11 |
| | 32 |
|
Earnings (Loss) from joint ventures | 2,141 |
| | 335 |
| | 3,938 |
| | (266 | ) |
Earnings before income taxes | 52,266 |
| | 50,988 |
| | 107,783 |
| | 83,972 |
|
Income tax expense | (19,297 | ) | | (18,772 | ) | | (39,838 | ) | | (30,986 | ) |
Net earnings | $ | 32,969 |
| | $ | 32,216 |
| | $ | 67,945 |
| | $ | 52,986 |
|
Net earnings per common share—basic and diluted | $ | 1.54 |
| | $ | 1.51 |
| | $ | 3.18 |
| | $ | 2.48 |
|
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 June 30, 2015 | | | | | | | | | | | |
Manufacturing | $ | 144,481 |
| | $ | 123,693 |
| | $ | 268,174 |
| | $ | 34,719 |
| | $ | 35,222 |
| | $ | 69,941 |
|
Railcar leasing | 28,216 |
| | — |
| | 28,216 |
| | 16,954 |
| | 22 |
| | 16,976 |
|
Railcar services | 19,301 |
| | 94 |
| | 19,395 |
| | 3,901 |
| | (21 | ) | | 3,880 |
|
Corporate/Eliminations | — |
| | (123,787 | ) | | (123,787 | ) | | (310 | ) | | (35,223 | ) | | (35,533 | ) |
Total Consolidated | $ | 191,998 |
| | $ | — |
| | $ | 191,998 |
| | $ | 55,264 |
| | $ | — |
| | $ | 55,264 |
|
Three Months Ended June 30, 2014 | | | | | | | | | | | |
Manufacturing | $ | 206,364 |
| | $ | 61,305 |
| | $ | 267,669 |
| | $ | 44,597 |
| | $ | 19,627 |
| | $ | 64,224 |
|
Railcar leasing | 13,885 |
| | — |
| | 13,885 |
| | 7,399 |
| | (64 | ) | | 7,335 |
|
Railcar services | 17,260 |
| | 52 |
| | 17,312 |
| | 3,116 |
| | 10 |
| | 3,126 |
|
Corporate/Eliminations | — |
| | (61,357 | ) | | (61,357 | ) | | (3,262 | ) | | (19,573 | ) | | (22,835 | ) |
Total Consolidated | $ | 237,509 |
| | $ | — |
| | $ | 237,509 |
| | $ | 51,850 |
| | $ | — |
| | $ | 51,850 |
|
Six Months Ended June 30, 2015 | | | | | | | | | | | |
Manufacturing | $ | 366,292 |
| | $ | 207,424 |
| | $ | 573,716 |
| | $ | 79,512 |
| | $ | 60,867 |
| | $ | 140,379 |
|
Railcar leasing | 52,801 |
| | — |
| | 52,801 |
| | 31,740 |
| | — |
| | 31,740 |
|
Railcar services | 36,681 |
| | 196 |
| | 36,877 |
| | 6,741 |
| | 6 |
| | 6,747 |
|
Corporate/Eliminations | — |
| | (207,620 | ) | | (207,620 | ) | | (2,714 | ) | | (60,873 | ) | | (63,587 | ) |
Total Consolidated | $ | 455,774 |
| | $ | — |
| | $ | 455,774 |
| | $ | 115,279 |
| | $ | — |
| | $ | 115,279 |
|
Six Months Ended June 30, 2014 | | | | | | | | | | | |
Manufacturing | $ | 360,327 |
| | $ | 125,334 |
| | $ | 485,661 |
| | $ | 78,252 |
| | $ | 39,357 |
| | $ | 117,609 |
|
Railcar leasing | 25,631 |
| | — |
| | 25,631 |
| | 13,629 |
| | (33 | ) | | 13,596 |
|
Railcar services | 33,666 |
| | 184 |
| | 33,850 |
| | 5,297 |
| | 48 |
| | 5,345 |
|
Corporate/Eliminations | — |
| | (125,518 | ) | | (125,518 | ) | | (8,821 | ) | | (39,372 | ) | | (48,193 | ) |
Total Consolidated | $ | 419,624 |
| | $ | — |
| | $ | 419,624 |
| | $ | 88,357 |
| | $ | — |
| | $ | 88,357 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
|
| | | | | | | |
| Six Months Ended |
| June 30, |
| 2015 | | 2014 |
Operating activities: | | | |
Net earnings | $ | 67,945 |
| | $ | 52,986 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation | 20,971 |
| | 15,672 |
|
Amortization of deferred costs | 228 |
| | 236 |
|
Loss (Gain) on disposal of property, plant, equipment and leased railcars | 2 |
| | (3 | ) |
(Earnings) Losses from joint ventures | (3,938 | ) | | 266 |
|
Provision for deferred income taxes | 10,129 |
| | 7,034 |
|
Provision for allowance for doubtful accounts receivable | (20 | ) | | (16 | ) |
Items related to financing activities: | | | |
Loss on debt extinguishment | 2,126 |
| | 1,896 |
|
Changes in operating assets and liabilities: | | | |
Accounts receivable, net | 2,164 |
| | (4,990 | ) |
Accounts receivable, due from related parties | 15,426 |
| | (5,105 | ) |
Income taxes receivable | 21,867 |
| | — |
|
Inventories, net | (431 | ) | | (2,171 | ) |
Prepaid expenses and other current assets | (881 | ) | | (2,942 | ) |
Accounts payable | (9,107 | ) | | 3,861 |
|
Accounts payable, due to related parties | 973 |
| | 512 |
|
Accrued expenses and taxes | (3,297 | ) | | (12,543 | ) |
Other | (3,848 | ) | | 2,900 |
|
Net cash provided by operating activities | 120,309 |
| | 57,593 |
|
Investing activities: | | | |
Purchases of property, plant and equipment | (15,354 | ) | | (7,482 | ) |
Capital expenditures - leased railcars | (132,578 | ) | | (86,521 | ) |
Proceeds from the sale of property, plant, equipment and leased railcars | 113 |
| | 243 |
|
Proceeds from repayments of loans by joint ventures | 2,500 |
| | 2,000 |
|
Net cash used in investing activities | (145,319 | ) | | (91,760 | ) |
Financing activities: | | | |
Repayments of long-term debt | (419,698 | ) | | (199,180 | ) |
Proceeds from long-term debt | 625,306 |
| | 318,682 |
|
Change in interest reserve related to long-term debt | (9,876 | ) | | (47 | ) |
Payment of common stock dividends | (17,082 | ) | | (17,082 | ) |
Debt issuance costs | (5,271 | ) | | (2,425 | ) |
Net cash provided by financing activities | 173,379 |
| | 99,948 |
|
Effect of exchange rate changes on cash and cash equivalents | (202 | ) | | 22 |
|
Increase in cash and cash equivalents | 148,167 |
| | 65,803 |
|
Cash and cash equivalents at beginning of period | 88,109 |
| | 97,252 |
|
Cash and cash equivalents at end of period | $ | 236,276 |
| | $ | 163,055 |
|
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, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net earnings | $ | 32,969 |
| | $ | 32,216 |
| | $ | 67,945 |
| | $ | 52,986 |
|
Income tax expense | 19,297 |
| | 18,772 |
| | 39,838 |
| | 30,986 |
|
Interest expense | 5,694 |
| | 1,843 |
| | 10,432 |
| | 3,515 |
|
Loss on debt extinguishment | — |
| | — |
| | 2,126 |
| | 1,896 |
|
Interest income | (550 | ) | | (619 | ) | | (1,113 | ) | | (1,260 | ) |
Depreciation | 10,910 |
| | 7,989 |
| | 20,971 |
| | 15,672 |
|
EBITDA | $ | 68,320 |
| | $ | 60,201 |
| | $ | 140,199 |
| | $ | 103,795 |
|
Expense related to stock appreciation rights compensation | 184 |
| | (34 | ) | | 291 |
| | 3,972 |
|
Adjusted EBITDA | $ | 68,504 |
| | $ | 60,167 |
| | $ | 140,490 |
| | $ | 107,767 |
|
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.
Exhibit 99.3
|
| | | |
| | | |
| | | |
PRESS RELEASE | | | AMERICAN RAILCAR INDUSTRIES, INC. 100 Clark Street, St. Charles, Missouri 63301 www.americanrailcar.com |
| | | 636.940.6000 |
| | | |
| | | Scott Hardin, Director of Communications Arkansas Economic Development Commission 501-682-7306, shardin@arkansasedc.com |
|
| | | | | | | |
FOR RELEASE: | July 29, 2015 | | | | | | |
| | | | | | | |
| | | | | | | |
American Railcar Industries, Inc. expands its Marmaduke tank railcar manufacturing facility
Company will add up to 75 employees and invest $10.5 million
MARMADUKE, Arkansas (July 29, 2015) - American Railcar Industries, Inc. (ARI or the Company), a leading North American designer and manufacturer of hopper and tank railcars, provided further details regarding its project to enhance its tank railcar manufacturing facility in Marmaduke, Arkansas (Greene County). As part of the expansion, the Company will invest $10.5 million in buildings and equipment and expects to hire up to 75 new full-time employees.
The expansion will allow ARI to retrofit tank railcars to meet stricter safety standards imposed by the final regulations related to tank railcars in flammable service released by the United States and Canada earlier this year.
Jeff Hollister, President and CEO of ARI, commented, “Our strong team of employees at our Marmaduke facility, as well as all of our facilities, continue to support the success of our business. The capital invested in our Marmaduke facility will serve to further diversify our business to meet current and anticipated demand for retrofits, tank certifications and railcar maintenance, while also providing additional flexibility for our new tank railcar production.”
“ARI has a long, successful history in Northeast Arkansas,” said Governor Asa Hutchinson. “The Company is making another significant investment that will bring competitive manufacturing jobs for the local workforce. Many Arkansas families will experience a better quality of life due to ARI's decision to expand this facility.”
In addition to its presence in Marmaduke, ARI opened a hopper railcar assembly factory in Paragould, Arkansas in 1995, the first major railcar assembly plant in their manufacturing network. The Marmaduke facility opened in 1999.
“ARI has been and continues to be a tremendous asset to Marmaduke,” said Mayor Steve Dixon. “This investment shows continued confidence in our community and we as the leaders here, appreciate that vote
of approval. We look forward to the continued growth of ARI in northeast Arkansas.”
About American Railcar Industries, Inc.
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.
Forward Looking Statement Disclaimer
This press release contains statements relating to expected and/or future business prospects, events and plans that are forward-looking statements. Forward-looking statements made by the Company represent the Company's estimates and assumptions only as of the date of this press release. Such statements include, without limitation, statements regarding expansion of the Company's Marmaduke facility and hiring expectations at the Marmaduke facility, as well as expectations about the amount of the Company's investment. 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. Potential risks and uncertainties include, among other things: 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 earlier this year; the Company's 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; 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; fluctuations in the costs of material and labor related to construction projects; 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 risk of being unable to market or remarket railcars for sale or lease at favorable prices or on favorable terms or at all; the sufficiency of ARI's liquidity and capital resources, including long-term capital needs to further support the growth of our lease fleet; 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 and anticipated capital needs of, and production at the Company's joint ventures; the risks, impact and anticipated benefits associated with potential joint ventures, acquisitions or new business endeavors; the implementation, integration with other systems and 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.
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