updated 4/27/2011 7:16:39 PM ET 2011-04-27T23:16:39

ST. CHARLES, Mo., April 27, 2011 (GLOBE NEWSWIRE) -- American Railcar Industries, Inc. (ARI or the Company) (Nasdaq:ARII) today reported its first quarter 2011 financial results.

First Quarter Highlights

  • Manufacturing Operations revenues for the first quarter of 2011 were $68.7 million as compared to $35.6 million for the first quarter of 2010.
  • Railcar shipments for the first quarter of 2011 were approximately 670 railcars as compared to approximately 340 railcars for the same period in 2010.
  • Gross profit was $4.9 million for the first quarter of 2011 as compared to $1.0 million for the same period in 2010.
  • Adjusted EBITDA was $3.7 million for the first quarter of 2011 as compared to an Adjusted EBITDA loss of $0.3 million for the same period in 2010.
  • The Company's backlog increased to approximately 5,630 railcars at March 31, 2011 from approximately 1,050 at December 31, 2010. The Company's backlog at March 31, 2011 includes approximately 280 railcars for lease.

Message from our President and CEO

"I am excited to announce that both our revenues and shipments increased in the first quarter of 2011 as compared to the same period in 2010. Industry reports show that railcar loadings have increased and a significant number of stored railcars have returned to service indicating that the railcar industry continues to gain momentum. In turn, we received orders for over 5,000 railcars during the first three months of 2011," said James Cowan, President and CEO of ARI. "Our railcar services segment also reported strong results with revenues of $16.1 million and a gross profit margin of almost 18% for the first quarter of 2011."

Discussion of Results

For the three months ended March 31, 2011, revenues were $84.8 million as compared to $52.3 million for the three months ended March 31, 2010. Revenues increased primarily due to an increase in railcar shipments, partially offset by a decrease in railcar services revenues. The decrease in railcar services revenues was primarily attributable to a reduction in railcar repair projects performed at the Company's railcar manufacturing facilities.

EBITDA, adjusted to exclude investment activity and stock based compensation (Adjusted EBITDA), was $3.7 million in the first quarter of 2011 compared to an Adjusted EBITDA loss of $0.3 million in the first quarter of 2010. The increase resulted primarily from an increase in revenues, an increase in gross profit margin and a decrease in selling, administrative and other costs, exclusive of stock based compensation. The Company's gross profit margin increase is primarily attributable to strong volumes and a good mix of work for both the manufacturing operations and railcar services segments. Selling, administrative and other costs decreased primarily due to a decrease in incentive compensation. These decreases were partially offset by an increase in losses from our joint ventures. The increase in joint venture losses was primarily attributable to an increase in our axle joint venture losses and the losses of our Indian joint venture. A reconciliation of the Company's net loss to EBITDA and Adjusted EBITDA (both non-GAAP financial measures) is set forth in the supplemental disclosure attached to this press release.

The Company reported a net loss of $5.3 million or $0.25 per share for the first quarter of 2011 as compared to a net loss of $7.0 million or $0.33 per share for the same period in 2010. The Company's net loss decreased due to the factors mentioned above and a decrease in net interest expense.

ARI will host a webcast and conference call on Thursday, April 28, 2011 at 10:00 am (Eastern Time) to discuss the Company's first quarter 2011 financial results. 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 American Railcar Industries, Inc.

American Railcar Industries, Inc. is a leading North American designer and manufacturer of hopper and tank railcars. ARI also leases, repairs and refurbishes railcars, provides fleet management services and designs and manufactures certain railcar and industrial components. ARI provides its railcar customers with integrated solutions through a comprehensive set of high quality products and related services.

Forward Looking Statement Disclaimer

This press release contains statements relating to our 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 potential improvements in our business and the overall railcar industry, the potential for increased order activity, anticipated future production rates, the Company's backlog and any implication that the Company's backlog may be indicative of future sales. 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 our forward-looking statements. Other potential risks and uncertainties include, among other things: the impact of the recent economic downturn, adverse market conditions and restricted credit markets, and the impact of the continuation of these conditions; our reliance upon a small number of customers that represent a large percentage of our revenues and backlog; the health of and prospects for the overall railcar industry; our prospects in light of the cyclical nature of the railcar manufacturing business and the current economic environment; anticipated trends relating to our shipments, leasing, revenues, financial condition or results of operations; our ability to manage overhead and production slowdowns; the highly competitive nature of the railcar manufacturing industry; 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 ARI uses in railcar manufacturing; anticipated production schedules for our products and the anticipated financing needs, construction and production schedules of our joint ventures; the risks associated with potential joint ventures, potential acquisitions or new business endeavors; the international economic and political risks related to our joint ventures' current and potential international operations; the risk of the lack of acceptance of new railcar offerings by our customers and the risk of initial production costs for our new railcar offerings being significantly higher than expected; the sufficiency of our liquidity and capital resources; the conversion of our railcar backlog into revenues; compliance with covenants contained in our unsecured senior notes; the impact and anticipated benefits of any acquisitions we may complete; the impact and costs and expenses of any litigation we may be subject to now or in the future; the ongoing benefits and risks related to our relationship with Mr. Carl Icahn (the chairman of our board of directors and, through his holdings of Icahn Enterprises LP, our principal beneficial stockholder) and certain of his affiliates; and the additional risk factors described in our filings with the Securities and Exchange Commission. We expressly disclaim 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.

 
 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(In thousands, except share amounts) As of
  March 31, 2011 December 31, 2010
  (unaudited)  
Assets    
Current assets:    
Cash and cash equivalents  $ 314,225  $ 318,758
Accounts receivable, net  19,603  21,002
Accounts receivable, due from related parties  2,539  4,981
Income taxes receivable  14,806  14,939
Inventories, net  59,069  50,033
Deferred tax assets  2,599  3,029
Prepaid expenses and other current assets  3,751  2,654
Total current assets  416,592  415,396
     
Property, plant and equipment, net  176,379  181,255
Deferred debt issuance costs  1,797  1,951
Interest receivable, due from related parties  228  187
Goodwill  7,169  7,169
Investments in and loans to joint ventures  46,545  48,169
Other assets  282  240
Total assets  $ 648,992  $ 654,367
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable  $ 32,560  $ 29,334
Accounts payable, due to related parties  883  275
Accrued expenses and taxes  6,063  5,095
Accrued compensation  14,554  11,054
Accrued interest expense  1,719  6,875
Total current liabilities  55,779  52,633
     
Senior unsecured notes  275,000  275,000
Deferred tax liability  4,287  7,938
Pension and post-retirement liabilities  6,370  6,707
Other liabilities  4,277  4,313
Total liabilities  345,713  346,591
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock, $.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding at March 31, 2011 and 21,316,296 shares issued and outstanding at December 31, 2010  214  213
Additional paid-in capital  239,608  238,947
Retained earnings  61,880  67,209
Accumulated other comprehensive income  1,577  1,407
Total stockholders' equity  303,279  307,776
Total liabilities and stockholders' equity  $ 648,992  $ 654,367
   
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share amounts, unaudited)    
  For the Three Months Ended
  March 31,
  2011 2010
   
Revenues:    
Manufacturing operations (including revenues from affiliates of $1,221 and $12,575 for the three months ended March 31, 2011 and 2010, respectively)  $ 68,696  $ 35,635
     
Railcar services (including revenues from affiliates of $5,537 and $2,841 for the three months ended March 31, 2011 and 2010, respectively)  16,147  16,676
Total revenues  84,843  52,311
     
Cost of revenues:    
Manufacturing operations  (66,581)  (37,387)
Railcar services  (13,318)  (13,968)
Total cost of revenues  (79,899)  (51,355)
Gross profit  4,944  956
     
Selling, administrative and other (including costs to a related party of $145 and $154 for the three months ended March 31, 2011 and 2010, respectively)  (6,882)  (6,087)
Loss from operations  (1,938)  (5,131)
     
Interest income (including income from related parties of $679 and $607 for the three months ended March 31, 2011 and 2010, respectively)  916  730
Interest expense  (5,335)  (5,321)
     
Other income (including income from a related party of $4 for both the three months ended March 31, 2011 and 2010)  4  85
Loss from joint ventures  (2,242)  (1,782)
Loss before income taxes  (8,595)  (11,419)
Income tax benefit  3,266  4,396
Net loss  $ (5,329)  $ (7,023)
     
Net loss per common share - basic and diluted  $ (0.25)  $ (0.33)
Weighted average common shares outstanding - basic and diluted  21,349  21,302
     
Dividends declared per common share  $ --   $ -- 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)  
  For the Three Months Ended
  March 31,
  2011 2010
     
Operating activities:  
Net loss  $ (5,329)  $ (7,023)
Adjustments to reconcile net earnings to net cash used in operating activities:    
Depreciation  5,766  5,915
Amortization of deferred costs  175  175
Loss on disposal of property, plant and equipment  63  --
Stock based compensation  2,148  700
Change in interest receivable, due from related parties  (41)  (608)
Change in investments in joint ventures as a result of loss  2,242  1,782
Realized gain on short-term investments - available-for-sale securities  --  (81)
Deferred income taxes benefit  (3,224)  (4,423)
Recovery for doubtful accounts receivable  (46)  (26)
Changes in operating assets and liabilities:  
Accounts receivable, net  1,455  (1,442)
Accounts receivable, due from related parties  2,446  (2,746)
Income taxes receivable  133  304
Inventories, net  (9,014)  (1,617)
Prepaid expenses  (1,095)  (54)
Accounts payable  3,221  1,259
Accounts payable, due to related parties  609  (119)
Accrued expenses and taxes  (2,877)  (4,960)
Other  (559)  (744)
Net cash used in operating activities  (3,927)  (13,708)
Investing activities:    
Purchases of property, plant and equipment  (729)  (1,491)
Sale of short-term investments - available-for-sale securities  --  1,832
Investments in and loans to joint ventures  (639)  (10,205)
Net cash used in investing activities  (1,368)  (9,864)
Financing activities:  
Proceeds from stock option exercises  756  --
Net cash provided by financing activities  756  --
Effect of exchange rate changes on cash and cash equivalents  6  5
Decrease in cash and cash equivalents  (4,533)  (23,567)
Cash and cash equivalents at beginning of period  318,758  347,290
Cash and cash equivalents at end of period  $ 314,225  $ 323,723
     
     
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA    
(In thousands, unaudited)    
     
  Three months ended 
  March 31,
  2011 2010
     
     
Net loss  $ (5,329)  $ (7,023)
Income tax benefit  (3,266)  (4,396)
Interest expense  5,335  5,321
Interest income  (916)  (730)
Depreciation  5,766  5,915
EBITDA   $ 1,590  $ (913)
Expense related to stock appreciation rights compensation 1  2,148  700
Other income on short-term investment activity  --  (81)
Adjusted EBITDA  $ 3,738  $ (294)
     
1 SARs are cash settled at time of exercise    

EBITDA represents net loss before income tax benefit, 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 loss, cash flows used in operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.

Adjusted EBITDA represents EBITDA before stock based compensation expense related to stock appreciation rights (SARs), and before income on investments. We believe that Adjusted EBITDA is useful to investors evaluating our operating performance, and management also uses Adjusted EBITDA for that purpose. Our SARs (which settle in cash) are revalued each quarter based primarily upon changes in our stock price. Management believes that eliminating the expense or income associated with our stock based compensation and investments allows us and our investors to understand better our operating results independent of financial changes caused by the fluctuating price and value of our common stock and investments. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net loss, cash flows used in operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.

CONTACT: Dale C. Davies
         Michael Obertop
         636.940.6000

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