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First Quarter 2012 Highlights
First Quarter Summary
Total revenues were
Net earnings were
EBITDA, adjusted to exclude stock based compensation (Adjusted EBITDA), was
ARI's backlog as of
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 leases railcars manufactured by the Company to certain markets. In addition, ARI 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 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 customer demand for the Company's products, the Company's strategic objectives and long-term strategies, potential improvements in ARI's business and the overall railcar industry, the potential for increased order activity, improved pricing, anticipated future production rates, the Company's joint ventures, 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 the Company's 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; ARI's reliance upon a small number of customers that represent a large percentage of revenues and backlog; the health of and prospects for the overall railcar industry; prospects in light of the cyclical nature of the railcar manufacturing business and the current economic environment; anticipated trends relating to shipments, leasing, railcar services, revenues, financial condition or results of operations; the Company's ability to manage overhead and variations in production rates; 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 that ARI uses in railcar manufacturing; anticipated production schedules for products and the anticipated financing needs, construction and production schedules of ARI's joint ventures; the risks associated with potential joint ventures, potential acquisitions or new business endeavors; the implementation, integration with other systems or ongoing management of the Company's new enterprise resource planning system; the international economic and political risks related to ARI's joint ventures' current and potential international operations; the risk of the lack of acceptance of new railcar offerings by ARI's customers and the risk of initial production costs for the Company's new railcar
offerings being significantly higher than expected; the sufficiency of the Company's liquidity and capital resources; the conversion of ARI's railcar backlog into revenues; compliance with covenants contained in the Company's unsecured senior notes; the impact and anticipated benefits of any acquisitions ARI may complete; the impact and costs and expenses of any litigation ARI may be subject to now or in the future; the ongoing benefits and risks related to the Company's relationship with Mr. Carl Icahn (the chairman of the Company's board of directors and, through his holdings of Icahn Enterprises L.P., the Company's principal beneficial stockholder) and certain of his affiliates; and the additional risk factors described in ARI's filings with the
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands, except share and per share amounts) | As of | |
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| 2012 | 2011 | |
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 272,887 | $ 307,172 |
| Accounts receivable, net | 44,834 | 33,626 |
| Accounts receivable, due from related parties | 4,460 | 6,106 |
| Income taxes receivable | 4,074 | 4,074 |
| Inventories, net | 104,997 | 95,827 |
| Deferred tax assets | 2,110 | 3,203 |
| Prepaid expenses and other current assets | 5,173 | 4,539 |
| Total current assets | 438,535 | 454,547 |
| Property, plant and equipment, net | 230,406 | 194,242 |
| Deferred debt issuance costs | 1,181 | 1,335 |
| Interest receivable, due from related parties | 297 | 292 |
| Goodwill | 7,169 | 7,169 |
| Investments in and loans to joint ventures | 46,097 | 45,122 |
| Other assets | 1,238 | 1,063 |
| Total assets | $ 724,923 | $ 703,770 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 66,892 | $ 62,318 |
| Accounts payable, due to related parties | 471 | 800 |
| Accrued expenses and taxes | 9,119 | 5,879 |
| Accrued compensation | 15,382 | 14,446 |
| Accrued interest expense | 1,719 | 6,875 |
| Total current liabilities | 93,583 | 90,318 |
| Senior unsecured notes | 275,000 | 275,000 |
| Deferred tax liability | 21,537 | 14,923 |
| Pension and post-retirement liabilities | 8,945 | 9,280 |
| Other liabilities | 3,532 | 4,080 |
| Total liabilities | 402,597 | 393,601 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
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Common stock, |
213 | 213 |
| Additional paid-in capital | 239,609 | 239,609 |
| Retained earnings | 83,549 | 71,545 |
| Accumulated other comprehensive loss | (1,045) | (1,198) |
| Total stockholders' equity | 322,326 | 310,169 |
| Total liabilities and stockholders' equity | $ 724,923 | $ 703,770 |
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| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In thousands, except per share amounts, unaudited) | ||
| For the Three Months Ended | ||
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| 2012 | 2011 | |
| Revenues: | ||
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Manufacturing (including revenues from affiliates of |
$ 164,313 | $ 68,502 |
| Railcar leasing | 1,380 | 194 |
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Railcar services (including revenues from affiliates of |
15,906 | 16,147 |
| Total revenues | 181,599 | 84,843 |
| Cost of revenues: | ||
| Manufacturing | (137,561) | (66,474) |
| Railcar leasing | (741) | (107) |
| Railcar services | (12,928) | (13,318) |
| Total cost of revenues | (151,230) | (79,899) |
| Gross profit | 30,369 | 4,944 |
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Selling, general and administrative (including costs to a related party of |
(6,564) | (6,882) |
| Earnings (loss) from operations | 23,805 | (1,938) |
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Interest income (including income from related parties of |
778 | 916 |
| Interest expense | (5,126) | (5,335) |
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Other income (including income from a related party of |
3 | 4 |
| Earnings (loss) from joint ventures | 414 | (2,242) |
| Earnings (loss) before income taxes | 19,874 | (8,595) |
| Income tax (expense) benefit | (7,870) | 3,266 |
| Net earnings (loss) | $ 12,004 | $ (5,329) |
| Net earnings (loss) per common share - basic and diluted | $ 0.56 | $ (0.25) |
| Weighted average common shares outstanding - basic and diluted | 21,352 | 21,349 |
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| CONDENSED SEGMENT DATA | ||||
| (In thousands, unaudited) | ||||
| Revenues | ||||
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For the Three Months Ended |
External | Intersegment | Total |
Earnings (Loss) from Operations |
| Manufacturing | $ 164,313 | $ 47,549 | $ 211,862 | $ 34,076 |
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1,380 | -- | 1,380 | 602 |
| Railcar Services | 15,906 | 29 | 15,935 | 2,336 |
| Corporate | -- | -- | -- | (4,286) |
| Eliminations | -- | (47,578) | (47,578) | (8,923) |
| Total Consolidated | $ 181,599 | $ -- | $ 181,599 | $ 23,805 |
| Revenues | ||||
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For the Three Months Ended |
External | Intersegment | Total |
Earnings (Loss) from Operations |
| Manufacturing | $ 68,502 | $ 223 | $ 68,725 | $ 716 |
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194 | -- | 194 | 57 |
| Railcar Services | 16,147 | 119 | 16,266 | 2,349 |
| Corporate | -- | -- | -- | (4,987) |
| Eliminations | -- | (342) | (342) | (73) |
| Total Consolidated | $ 84,843 | $ -- | $ 84,843 | $ (1,938) |
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| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In thousands, unaudited) | ||
| For the Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| Operating activities: | ||
| Net earnings (loss) | $ 12,004 | $ (5,329) |
| Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation | 5,402 | 5,766 |
| Amortization of deferred costs | 175 | 175 |
| (Gain) loss on disposal of property, plant and equipment | (34) | 63 |
| Stock-based compensation | 696 | 2,148 |
| Change in interest receivable, due from related parties | -- | (41) |
| (Earnings) loss from joint ventures | (414) | 2,242 |
| Provision (benefit) for deferred income taxes | 7,705 | (3,224) |
| Adjustment to provision for losses on accounts receivable | (17) | (46) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable, net | (11,184) | 1,455 |
| Accounts receivable, due from related parties | 1,651 | 2,446 |
| Income taxes receivable | -- | 133 |
| Inventories, net | (9,153) | (9,014) |
| Prepaid expenses and other current assets | (633) | (1,095) |
| Accounts payable | 4,571 | 3,221 |
| Accounts payable, due to related parties | (329) | 609 |
| Accrued expenses and taxes | (2,225) | (2,877) |
| Other | (566) | (559) |
| Net cash provided by (used in) operating activities | 7,649 | (3,927) |
| Investing activities: | ||
| Purchases of property, plant and equipment | (1,337) | (729) |
| Capital expenditures - leased railcars | (40,072) | -- |
| Proceeds from the sale of property, plant and equipment | 38 | -- |
| Investments in and loans to joint ventures | (583) | (639) |
| Net cash used in investing activities | (41,954) | (1,368) |
| 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 | 20 | 6 |
| Decrease in cash and cash equivalents | (34,285) | (4,533) |
| Cash and cash equivalents at beginning of period | 307,172 | 318,758 |
| Cash and cash equivalents at end of period | $ 272,887 | $ 314,225 |
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| RECONCILIATION OF NET EARNINGS (LOSS) TO EBITDA AND ADJUSTED EBITDA | ||
| (In thousands, unaudited) | ||
| For the Three Months Ended | ||
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| 2012 | 2011 | |
| Net earnings (loss) | $ 12,004 | $ (5,329) |
| Income tax expense (benefit) | 7,870 | (3,266) |
| Interest expense | 5,126 | 5,335 |
| Interest income | (778) | (916) |
| Depreciation | 5,402 | 5,766 |
| EBITDA | $ 29,624 | $ 1,590 |
| Expense related to stock appreciation rights compensation 1 | 696 | 2,148 |
| Adjusted EBITDA | $ 30,320 | $ 3,738 |
| 1 SARs are cash settled at time of exercise | ||
EBITDA represents net earnings (loss) before income tax expense (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 earnings (loss), cash flows provided by (used in) operating activities or other statements of operations or statements of 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 stock based compensation 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 (income) associated with stock-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. 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 (loss), cash flows provided by (used in) operating activities or other statements of operations or statements of 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:Source:Dale C. Davies Michael Obertop 636.940.6000
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