Third Quarter 2015 Highlights
- Quarterly revenues of
$172.7 million vs. prior year of$162.8 million - up 6% - Quarterly gross margin of 33.3% vs. prior year of 28.8%
-
Quarterly earnings per share of
$1.39 vs. prior year of$1.12 - up 24% -
Quarterly adjusted EBITDA of
$62.6 million vs. prior year of$48.6 million - up 29%
Third Quarter Summary
Total consolidated revenues were
Manufacturing revenues were
Manufacturing revenues for the third quarter of 2015 exclude
Railcar leasing revenues were
Railcar services revenues were
Consolidated earnings from operations were
Consolidated operating margins increased to 28.8% for the third quarter of 2015 compared to 24.1% 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 and focused cost reduction initiatives.
Manufacturing earnings from operations were
Railcar leasing earnings from operations were
Railcar services earnings from operations were
Selling, general and administrative expenses were
EBITDA, adjusted to exclude share-based compensation expense (Adjusted EBITDA), was
Net earnings for the third quarter of 2015 were
Year-to-Date Results
Consolidated revenues for the first nine months of 2015 were
Consolidated earnings from operations for the first nine months of 2015 were
Adjusted EBITDA was
Net earnings for the first nine months of 2015 were
Cash Flow and Liquidity
The Company's strong earnings have contributed to cash flow from operations in the first nine months of 2015 of
At the board meeting in October, the Company's board of directors declared a cash dividend of
Stock Repurchase Program
On
Backlog
ARI's backlog as of
Conference Call and Webcast
ARI will host a webcast and conference call on
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
Forward Looking Statement Disclaimer
This press release contains statements relating to expected financial performance and/or future business prospects, events and plans that are forward-looking statements. Forward-looking statements represent the Company's estimates and assumptions only as of the date of this press release. Such statements include, without limitation, statements regarding: our projects to expand our manufacturing flexibility and repair capacity, industry, product and market trends, potential 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 or plans regarding the growth of the Company's leasing business and the mix of railcars in our lease fleet, anticipated
benefits or plans regarding the Company's current and potential future efforts to expand its railcar repair business, anticipated future production rates, the sufficiency of the Company's short- and long-term liquidity, the Company's Stock Repurchase Program, the Company's plans regarding future dividends, the Company's backlog and any implication that the Company's backlog may be indicative of future revenues. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results described in or anticipated by the Company's forward-looking statements. The payment of future dividends, if any, and the amount thereof, will be at the discretion of ARI's board of directors and will depend upon the Company's operating results, strategic plans, capital requirements, financial condition, provisions of its
borrowing arrangements, applicable law and other factors the Company's board of directors considers relevant. Other potential risks and uncertainties include, among other things: the 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,
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(In thousands, except share and per share amounts) | ||
(unaudited) | ||
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 128,983 | $ 88,109 |
Restricted cash | 17,021 | 7,178 |
Accounts receivable, net | 39,440 | 33,618 |
Accounts receivable, due from related parties | 14,074 | 33,027 |
Income taxes receivable | 12,091 | 33,879 |
Inventories, net | 125,773 | 117,007 |
Deferred tax assets | 7,551 | 7,688 |
Prepaid expenses and other current assets | 6,113 | 5,353 |
Total current assets | 351,046 | 325,859 |
Property, plant and equipment, net | 171,636 | 160,787 |
Railcars on leases, net | 859,550 | 663,315 |
Deferred debt issuance costs, net | 5,135 | 2,148 |
7,169 | 7,169 | |
Investments in and loans to joint ventures | 28,696 | 29,168 |
Other assets | 7,509 | 3,963 |
Total assets | $ 1,430,741 | $ 1,192,409 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 64,688 | $ 68,789 |
Accounts payable, due to related parties | 2,848 | 2,793 |
Accrued expenses and taxes | 25,245 | 21,931 |
Accrued compensation | 14,156 | 15,046 |
Short-term debt, including current portion of long-term debt | 25,783 | 110,612 |
Total current liabilities | 132,720 | 219,171 |
Long-term debt, net of current portion | 582,331 | 298,342 |
Deferred tax liability | 190,374 | 168,349 |
Pension and post-retirement liabilities | 7,909 | 8,544 |
Other liabilities | 2,460 | 2,587 |
Total liabilities | 915,794 | 696,993 |
Stockholders' equity: | ||
Common stock, | 213 | 213 |
Additional paid-in capital | 239,609 | 239,609 |
Treasury Stock | (51,285) | — |
Retained earnings | 332,941 | 260,943 |
Accumulated other comprehensive loss | (6,531) | (5,349) |
Total stockholders' equity | 514,947 | 495,416 |
Total liabilities and stockholders' equity | $ 1,430,741 | $ 1,192,409 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share amounts, unaudited) | ||||
Three Months Ended |
Nine Months Ended | |||
2015 | 2014 | 2015 | 2014 | |
Revenues: | ||||
Manufacturing (including revenues from affiliates of | $ 123,318 | $ 128,270 | $ 489,610 | $ 488,597 |
Railcar leasing | 31,174 | 17,219 | 83,975 | 42,850 |
Railcar services (including revenues from affiliates of | 18,175 | 17,353 | 54,856 | 51,019 |
Total revenues | 172,667 | 162,842 | 628,441 | 582,466 |
Cost of revenues: | ||||
Manufacturing | (91,132) | (95,609) | (373,380) | (374,007) |
Railcar leasing | (9,714) | (6,319) | (26,408) | (16,192) |
Railcar services | (14,269) | (14,065) | (42,851) | (40,854) |
Total cost of revenues | (115,115) | (115,993) | (442,639) | (431,053) |
Gross profit | 57,552 | 46,849 | 185,802 | 151,413 |
Selling, general and administrative | (7,768) | (7,570) | (20,764) | (23,777) |
Net gains on disposition of leased railcars | — | — | 25 | — |
Earnings from operations | 49,784 | 39,279 | 165,063 | 127,636 |
Interest income (including income from related parties of | 542 | 608 | 1,655 | 1,868 |
Interest expense | (5,645) | (1,849) | (16,077) | (5,364) |
Loss on debt extinguishment | — | — | (2,126) | (1,896) |
Other Income | 3 | 63 | 14 | 95 |
Earnings (Loss) from joint ventures | 1,402 | 3 | 5,340 | (263) |
Earnings before income taxes | 46,086 | 38,104 | 153,869 | 122,076 |
Income tax expense | (16,729) | (14,280) | (56,567) | (45,266) |
Net earnings | $ 29,357 | $ 23,824 | $ 97,302 | $ 76,810 |
Net earnings per common share—basic and diluted | $ 1.39 | $ 1.12 | $ 4.58 | $ 3.60 |
SEGMENT DATA | ||||
(In thousands, unaudited) | ||||
Three Months Ended | ||||
Revenues | ||||
External | Intersegment | Total |
Earnings (Loss) from Operations | |
(in thousands) | ||||
Manufacturing | ||||
Railcar leasing | 31,174 | (153) | 31,021 | 18,450 |
Railcar services | 18,175 | 642 | 18,817 | 3,457 |
Corporate | — | — | — | (5,095) |
Eliminations | — | (107,030) | (107,030) | (22,012) |
Total Consolidated | $ — | |||
Three Months Ended | ||||
Revenues | ||||
External | Intersegment | Total |
Earnings (Loss) from Operations | |
(in thousands) | ||||
Manufacturing | $ 128,270 | $ 143,706 | $ 271,976 | $ 74,713 |
Railcar leasing | 17,219 | — | 17,219 | 9,466 |
Railcar services | 17,353 | 38 | 17,391 | 2,684 |
Corporate | — | — | — | (4,925) |
Eliminations | — | (143,744) | (143,744) | (42,659) |
Total Consolidated | $ 162,842 | $ — | $ 162,842 | $ 39,279 |
Nine Months Ended | ||||
Revenues | ||||
External | Intersegment | Total |
Earnings (Loss) from Operations | |
(in thousands) | ||||
Manufacturing | $ 489,610 | $ 313,965 | $ 803,575 | $ 195,363 |
Railcar leasing | 83,975 | (153) | 83,822 | 50,190 |
Railcar services | 54,856 | 838 | 55,694 | 10,204 |
Corporate | — | — | — | (11,944) |
Eliminations | — | (314,650) | (314,650) | (78,750) |
Total Consolidated | $ 628,441 | $ — | $ 628,441 | $ 165,063 |
Nine Months Ended | ||||
Revenues | ||||
External | Intersegment | Total |
Earnings (Loss) from Operations | |
(in thousands) | ||||
Manufacturing | $ 488,597 | $ 269,040 | $ 757,637 | $ 192,322 |
Railcar leasing | 42,850 | — | 42,850 | 23,062 |
Railcar services | 51,019 | 222 | 51,241 | 8,029 |
Corporate | — | — | — | (15,702) |
Eliminations | — | (269,262) | (269,262) | (80,075) |
Total Consolidated | $ 582,466 | $ — | $ 582,466 | $ 127,636 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(In thousands, unaudited) | ||
Nine Months Ended | ||
2015 | 2014 | |
Operating activities: | ||
Net earnings | $ 97,302 | $ 76,810 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation | 33,185 | 24,423 |
Amortization of deferred costs | 305 | 363 |
Loss (Gain) on disposal of property, plant, equipment and leased railcars | 45 | (72) |
(Earnings) Losses from joint ventures | (5,340) | 263 |
Provision for deferred income taxes | 21,892 | 11,182 |
Provision for allowance for doubtful accounts receivable | 65 | 905 |
Items related to financing activities: | ||
Loss on debt extinguishment | 2,126 | 1,896 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (5,970) | (7,987) |
Accounts receivable, due from related parties | 18,856 | (8,764) |
Income taxes receivable | 21,867 | — |
Inventories, net | (8,960) | (15,235) |
Prepaid expenses and other current assets | (848) | (1,734) |
Accounts payable | (5,890) | 20,634 |
Accounts payable, due to related parties | 55 | 1,538 |
Accrued expenses and taxes | 2,471 | 4,432 |
Other | (3,757) | 3,007 |
Net cash provided by operating activities | 167,404 | 111,661 |
Investing activities: | ||
Purchases of property, plant and equipment | (26,376) | (13,701) |
Capital expenditures - leased railcars | (215,096) | (187,861) |
Proceeds from the sale of property, plant, equipment and leased railcars | 118 | 575 |
Proceeds from repayments of loans and dividends by joint ventures | 5,750 | 2,875 |
Net cash used in investing activities | (235,604) | (198,112) |
Financing activities: | ||
Repayments of long-term debt | (426,150) | (201,833) |
Proceeds from long-term debt | 625,306 | 318,682 |
Change in interest reserve related to long-term debt | (9,843) | (26) |
Stock repurchases | (49,441) | — |
Payment of common stock dividends | (25,304) | (25,623) |
Debt issuance costs | (5,271) | (2,425) |
Net cash provided by financing activities | 109,297 | 88,775 |
Effect of exchange rate changes on cash and cash equivalents | (223) | (123) |
Increase in cash and cash equivalents | 40,874 | 2,201 |
Cash and cash equivalents at beginning of period | 88,109 | 97,252 |
Cash and cash equivalents at end of period | $ 128,983 | $ 99,453 |
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA | ||||
(In thousands, unaudited) | ||||
Three Months Ended |
Nine Months Ended | |||
2015 | 2014 | 2015 | 2014 | |
Net earnings | $ 29,357 | $ 23,824 | $ 97,302 | $ 76,810 |
Income tax expense | 16,729 | 14,280 | 56,567 | 45,266 |
Interest expense | 5,645 | 1,849 | 16,077 | 5,364 |
Loss on debt extinguishment | — | — | 2,126 | 1,896 |
Interest income | (542) | (608) | (1,655) | (1,868) |
Depreciation | 12,214 | 8,751 | 33,185 | 24,423 |
EBITDA | $ 63,403 | $ 48,096 | $ 203,602 | $ 151,891 |
(Income) Expense related to stock appreciation rights compensation | (762) | 540 | (471) | 4,512 |
Adjusted EBITDA | $ 62,641 | $ 48,636 | $ 203,131 | $ 156,403 |
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 (income) 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 (income) 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.
CONTACT:AMERICAN RAILCAR INDUSTRIES, INC. 100 Clark Street ,St. Charles, Missouri 63301 www.americanrailcar.com 636.940.6000
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