American Railcar Industries, Inc. (ARI or the Company)
(NASDAQ:ARII) today reported its first quarter 2017 financial
results. Jeff Hollister, President and CEO of ARI, commented,
“Despite lower production levels due to continued softness in the
North American railcar market, our manufacturing facilities
continue to operate efficiently, which we attribute to our skilled
workforce, our vertically integrated supply chain, and our flexible
operations. In addition, our railcar leasing and railcar
services segments continue to complement our core manufacturing
business and provide us with supplemental streams of revenue,
helping to partially offset the impact and current challenges of
operating in a soft market for new railcars.
"As announced previously, the sale of our
current lease fleet manager, American Railcar Leasing (ARL), is
expected to close during the second quarter of 2017. Accordingly,
we are working with ARL to transition the management of our lease
fleet operations to be handled in-house. Our focus and commitment
to the leasing business is shown by the continued increase in our
lease fleet. This past quarter, over half our production and
shipments were for lease. We continue to look for ways to partner
with our customers by providing railcars for lease and direct sale
and providing solutions to support their needs throughout the life
cycle of the railcar.”
First Quarter Revenue
Summary
Total consolidated revenues were $114.7 million
for the first quarter of 2017, a decrease of 35% when compared to
$176.2 million for the same period in 2016. This decrease was
due to decreased revenues in the manufacturing segment, partially
offset by increased revenues in the railcar leasing and railcar
services segments.
Manufacturing revenues were $60.7 million for
the first quarter of 2017, a decrease of 51% compared to $123.8
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 first
quarter of 2017. Railcar shipments during the first quarter of 2017
had a higher mix of hopper railcars sold, which generally have
lower average selling prices than tank railcars due to less
material and labor content. Furthermore, both railcar types
experienced a more competitive pricing environment during the first
quarter of 2017 compared to the same period in 2016. The Company
also continues to produce a large mix of specialty railcars for
both the hopper and tank railcar markets.
During the first quarter of 2017, ARI shipped
549 railcars for direct sale and 602 railcars for lease compared to
1,130 railcars for direct sale and 200 railcars for lease during
the same period in 2016. Railcars built for the lease fleet
represented 52% of ARI’s railcar shipments during the first quarter
of 2017 compared to 15% for the same period in 2016. Although
this rate is relatively high for a given quarter compared to our
historical average, these 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 to complement our manufacturing
and railcar services segments. Because revenues and earnings
related to leased railcars are recognized over the life of the
lease, ARI's quarterly results may vary depending on the mix of
lease versus direct sale railcars that the Company ships during a
given period.
Manufacturing revenues for the first quarter of
2017 exclude $60.1 million of revenues related to railcars built
for the Company's lease fleet compared to $23.6 million for the
same period in 2016. Revenues related to railcars built for
the Company's lease fleet increased due to a higher quantity of
railcars shipped for lease. Such revenues are based on an estimated
fair market value of the leased railcars as if they had been sold
to a third party, and are not recognized in consolidated revenues
as railcar sales. Rather lease revenues are recognized in
accordance with the terms of the contract over the life of the
lease.
Railcar leasing revenues were $33.8 million for
the first quarter of 2017, an increase of 3% over the $32.8 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 slight decline in weighted average
lease rates. ARI had 11,869 railcars in its lease fleet as of
March 31, 2017 compared to 10,556 railcars as of
March 31, 2016.
Railcar services revenues were $20.1 million for
the first quarter of 2017, an increase of 3% compared to $19.6
million for the same period in 2016. The primary reasons for the
increase in revenue were due to increased demand for our mobile
repair services and repair projects performed at our tank railcar
manufacturing facility, partially offset by an unfavorable mix of
repair work in the current quarter at certain other repair
facilities during 2017. Our tank car manufacturing facility
provides us the flexibility not only to produce 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
in the first quarter of 2017 that were not performed during the
comparable period of 2016.
First Quarter Earnings
Summary
Consolidated earnings from operations were $21.9
million for the first quarter of 2017, a decrease of 46% from the
$40.7 million for the same period in 2016. Consolidated operating
margins decreased to 19.1% for the first quarter of 2017 compared
to 23.1% for the same period in 2016. These decreases were
primarily driven by lower earnings from operations in the Company's
manufacturing and railcar services segments combined with slightly
lower earnings from operations in the railcar leasing segment.
Manufacturing earnings from operations were $3.0
million for the first quarter of 2017 compared to earnings of $19.3
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 $6.1 million and
$3.4 million for the first 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.
Railcar leasing earnings from operations were
$21.5 million for the first quarter of 2017 compared to $22.7
million for the same period in 2016. This decrease was primarily
due to increased maintenance costs associated with the Company's
lease fleet as well as slightly lower lease rates on certain
renewals.
Railcar services earnings from operations were
$1.7 million for the first quarter of 2017 compared to $3.2 million
for the same period in 2016. This decrease was primarily due to an
unfavorable mix of work causing inefficiencies at certain repair
facilities, partially offset by increased demand for our mobile
repair services.
Selling, general and administrative expenses
were $8.8 million for the first quarter of 2017 compared to $8.0
million for the same period in 2016. This $0.8 million
increase was primarily due to higher bad debt expense, compensation
costs, and depreciation.
Net earnings for the first quarter of 2017 were
$10.6 million, or $0.55 per share compared to $22.8 million, or
$1.16 per share, in the same period in 2016. This decrease
was 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 quarter of 2017 and
lower overall shipments.
EBITDA, adjusted to exclude share-based
compensation expense and other income related to short-term
investment activity (Adjusted EBITDA), was $36.1 million for the
first quarter of 2017 compared to $54.5 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.
Cash Flow and Liquidity
The Company’s earnings have contributed to cash
flow from operations in the first three months of 2017 of $42.4
million. As of March 31, 2017, ARI had working capital
of $206.1 million, including $151.2 million of cash and cash
equivalents.
As of March 31, 2017, the Company had
$564.7 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 $7.6 million
during the first three months of 2017. 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 16, 2017 that will be paid on
June 29, 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 March 31, 2017 was
3,286 railcars with an estimated market value of $304.1
million. Of the total backlog, we currently expect 1,199
railcars, or 37%, having an estimated market value of $111.1
million, will be placed into our lease fleet.
Conference Call and Webcast
ARI will host a webcast and conference call on
Tuesday, May 2, 2017 at 10:00 am (Eastern Time) to discuss the
Company’s first 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. 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 response to governmental directives, 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, our plans, and the industry's ability, to
address the Federal Railroad Administration (FRA) directive
released September 30, 2016 and subsequently revised and superseded
on November 18, 2016 (Directive), our plans to transition
management of our lease fleet in-house from ARL, expected future
trends relating to our industry, products and markets, the
potential impact of regulatory developments, including developments
related to the Directive, 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 projects to expand our manufacturing
flexibility and repair capacity, 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 Directive, any developments
related to the Directive and any costs or loss of revenue related
thereto; risks relating to timely and successfully transitioning
the management of our railcar leasing business in-house from ARL
and managing our lease fleet leading up to and after 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) |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
151,246 |
|
|
$ |
178,571 |
|
Restricted cash |
16,710 |
|
|
16,714 |
|
Short-term investments—available for sale securities |
7,518 |
|
|
8,958 |
|
Accounts
receivable, net |
25,320 |
|
|
39,727 |
|
Accounts
receivable, due from related parties |
6,483 |
|
|
4,790 |
|
Inventories, net |
78,811 |
|
|
75,028 |
|
Prepaid
expenses and other current assets |
8,624 |
|
|
8,623 |
|
Total
current assets |
294,712 |
|
|
332,411 |
|
Property, plant and
equipment, net |
173,069 |
|
|
177,051 |
|
Railcars on lease,
net |
955,622 |
|
|
908,010 |
|
Goodwill |
7,169 |
|
|
7,169 |
|
Investments in and
loans to joint ventures |
25,385 |
|
|
26,332 |
|
Other assets |
3,680 |
|
|
5,277 |
|
Total
assets |
$ |
1,459,637 |
|
|
$ |
1,456,250 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
30,217 |
|
|
$ |
29,314 |
|
Accounts
payable, due to related parties |
3,562 |
|
|
3,252 |
|
Accrued
expenses, including loss contingency of $10,045 and $10,127 at
March 31, 2017 and December 31, 2016, respectively |
17,079 |
|
|
15,411 |
|
Accrued
income taxes payable |
1,607 |
|
|
7,660 |
|
Accrued
compensation |
10,533 |
|
|
11,628 |
|
Short-term debt, including current portion of long-term debt |
25,649 |
|
|
25,588 |
|
Total
current liabilities |
88,647 |
|
|
92,853 |
|
Long-term debt, net of
unamortized debt issuance costs of $4,809 and $4,863 at March 31,
2017 and December 31, 2016, respectively |
539,076 |
|
|
545,392 |
|
Deferred tax
liability |
265,285 |
|
|
252,943 |
|
Pension and
post-retirement liabilities |
8,658 |
|
|
8,648 |
|
Other liabilities,
including loss contingency of $2,161 at both March 31, 2017 and
December 31, 2016 |
5,466 |
|
|
6,144 |
|
Total
liabilities |
907,132 |
|
|
905,980 |
|
Stockholders’
equity: |
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized, 19,083,878 shares outstanding
as of March 31, 2017 and December 31, 2016, respectively |
213 |
|
|
213 |
|
Additional paid-in
capital |
239,609 |
|
|
239,609 |
|
Retained Earnings |
405,744 |
|
|
402,810 |
|
Accumulated other
comprehensive loss |
(7,030 |
) |
|
(6,331 |
) |
Treasury Stock |
(86,031 |
) |
|
(86,031 |
) |
Total
stockholders’ equity |
552,505 |
|
|
550,270 |
|
Total
liabilities and stockholders’ equity |
$ |
1,459,637 |
|
|
$ |
1,456,250 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts, unaudited) |
|
|
Three Months Ended |
|
March 31, |
|
2017 |
|
2016 |
Revenues: |
|
|
|
Manufacturing
(including revenues from affiliates of zero and $553 for the three
months ended March 31, 2017 and 2016, respectively) |
$ |
60,726 |
|
|
$ |
123,792 |
|
Railcar leasing
(including revenues from affiliates of $224 and zero for the three
months ended March 31, 2017 and 2016, respectively) |
33,835 |
|
|
32,768 |
|
Railcar services
(including revenues from affiliates of $6,147 and $7,994 for the
three months ended March 31, 2017 and 2016, respectively) |
20,120 |
|
|
19,620 |
|
Total
revenues |
114,681 |
|
|
176,180 |
|
Cost of
revenues: |
|
|
|
Manufacturing |
(54,559 |
) |
|
(102,281 |
) |
Other
operating income |
31 |
|
|
— |
|
Railcar leasing |
(12,059 |
) |
|
(10,175 |
) |
Railcar services |
(17,390 |
) |
|
(15,237 |
) |
Total
cost of revenues |
(83,977 |
) |
|
(127,693 |
) |
Gross
profit |
30,704 |
|
|
48,487 |
|
Selling, general and
administrative |
(8,802 |
) |
|
(7,957 |
) |
Net gains on
disposition of leased railcars |
13 |
|
|
167 |
|
Earnings from operations |
21,915 |
|
|
40,697 |
|
Interest income
(including income from related parties of $336 and $457 for the
three months ended March 31, 2017 and 2016, respectively) |
373 |
|
|
478 |
|
Interest expense |
(5,531 |
) |
|
(5,906 |
) |
Other income |
54 |
|
|
— |
|
Earnings from joint
ventures |
550 |
|
|
1,486 |
|
Earnings
before income taxes |
17,361 |
|
|
36,755 |
|
Income tax expense |
(6,793 |
) |
|
(13,963 |
) |
Net earnings |
$ |
10,568 |
|
|
$ |
22,792 |
|
Net earnings per common
share—basic and diluted |
$ |
0.55 |
|
|
$ |
1.16 |
|
Weighted average common
shares outstanding—basic and diluted |
19,084 |
|
|
19,665 |
|
Cash dividends declared
per common share |
$ |
0.40 |
|
|
$ |
0.40 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
SEGMENT DATA |
(In thousands, unaudited) |
|
|
Three Months Ended March 31,
2017 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
60,726 |
|
|
$ |
60,104 |
|
|
$ |
120,830 |
|
|
$ |
9,151 |
|
Railcar leasing |
33,835 |
|
|
— |
|
|
33,835 |
|
|
18,810 |
|
Railcar services |
20,120 |
|
|
332 |
|
|
20,452 |
|
|
1,716 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,272 |
) |
Eliminations |
— |
|
|
(60,436 |
) |
|
(60,436 |
) |
|
(3,490 |
) |
Total Consolidated |
$ |
114,681 |
|
|
$ |
— |
|
|
$ |
114,681 |
|
|
$ |
21,915 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2016 |
|
Revenues |
|
|
|
External |
|
Intersegment |
|
Total |
|
Earnings (Loss) from Operations |
|
(in thousands) |
Manufacturing |
$ |
123,792 |
|
|
$ |
23,631 |
|
|
$ |
147,423 |
|
|
$ |
22,686 |
|
Railcar leasing |
32,768 |
|
|
— |
|
|
32,768 |
|
|
19,675 |
|
Railcar services |
19,620 |
|
|
959 |
|
|
20,579 |
|
|
3,508 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
(4,508 |
) |
Eliminations |
— |
|
|
(24,590 |
) |
|
(24,590 |
) |
|
(664 |
) |
Total Consolidated |
$ |
176,180 |
|
|
$ |
— |
|
|
$ |
176,180 |
|
|
$ |
40,697 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
Three Months Ended |
|
March 31, |
|
2017 |
|
2016 |
Operating
activities: |
|
|
|
Net
earnings |
$ |
10,568 |
|
|
$ |
22,792 |
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities: |
|
|
|
Depreciation |
13,873 |
|
|
12,655 |
|
Amortization of deferred costs |
125 |
|
|
126 |
|
(Gain)
loss on disposal of property, plant, equipment and leased
railcars |
(13 |
) |
|
25 |
|
Earnings
from joint ventures |
(550 |
) |
|
(1,486 |
) |
Provision
for deferred income taxes |
12,780 |
|
|
8,640 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable, net |
14,310 |
|
|
694 |
|
Accounts
receivable, due from related parties |
(1,680 |
) |
|
2,071 |
|
Income
taxes receivable |
(52 |
) |
|
1,246 |
|
Inventories, net |
(3,770 |
) |
|
21,429 |
|
Prepaid
expenses and other current assets |
52 |
|
|
(1,796 |
) |
Accounts
payable |
897 |
|
|
(9,786 |
) |
Accounts
payable, due to related parties |
311 |
|
|
(1,999 |
) |
Accrued
expenses and taxes |
(5,482 |
) |
|
3,674 |
|
Other |
1,050 |
|
|
(417 |
) |
Net cash provided by
operating activities |
42,419 |
|
|
57,868 |
|
Investing
activities: |
|
|
|
Purchases
of property, plant and equipment |
(1,550 |
) |
|
(4,367 |
) |
Grant
Proceeds |
100 |
|
|
— |
|
Capital
expenditures - leased railcars |
(55,909 |
) |
|
(20,620 |
) |
Proceeds
from the sale of property, plant, equipment and leased
railcars |
73 |
|
|
640 |
|
Proceeds
from repayments of loans and distributions from joint ventures |
1,477 |
|
|
1,477 |
|
Net cash used in
investing activities |
(55,809 |
) |
|
(22,870 |
) |
Financing
activities: |
|
|
|
Repayments of debt |
(6,310 |
) |
|
(106,402 |
) |
Change in
restricted cash related to long-term debt |
3 |
|
|
142 |
|
Stock
repurchases |
— |
|
|
(10,872 |
) |
Payment
of common stock dividends |
(7,633 |
) |
|
(7,825 |
) |
Debt
issuance costs |
— |
|
|
(10 |
) |
Net cash used in
financing activities |
(13,940 |
) |
|
(124,967 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
5 |
|
|
(14 |
) |
Decrease in cash and
cash equivalents |
(27,325 |
) |
|
(89,983 |
) |
Cash and cash
equivalents at beginning of period |
178,571 |
|
|
298,064 |
|
Cash and cash
equivalents at end of period |
$ |
151,246 |
|
|
$ |
208,081 |
|
AMERICAN RAILCAR INDUSTRIES, INC. AND
SUBSIDIARIES |
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED
EBITDA |
(In thousands, unaudited) |
|
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
Net earnings |
$ |
10,568 |
|
|
$ |
22,792 |
|
Income tax expense |
6,793 |
|
|
13,963 |
|
Interest expense |
5,531 |
|
|
5,906 |
|
Interest income |
(373 |
) |
|
(478 |
) |
Depreciation |
13,873 |
|
|
12,655 |
|
EBITDA |
$ |
36,392 |
|
|
$ |
54,838 |
|
Income related to stock
appreciation rights compensation |
(247 |
) |
|
(311 |
) |
Other Income on
short-term investment activity |
$ |
(54 |
) |
|
$ |
— |
|
Adjusted EBITDA |
$ |
36,091 |
|
|
$ |
54,527 |
|
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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