(Source: Business Wire)
American Railcar Industries, Inc. (ARI or the Company) (NASDAQ: ARII) today reported its first quarter 2009 financial results.
"Despite the impact of a weak economy on the freight railcar market, we shipped 1,491 railcars in the first quarter of 2009. Our current level of operations resulted in EBITDA of $14.1 million and net earnings of $2.7 million in the first quarter of 2009," said James Cowan, President and CEO of ARI."In addition to a solid manufacturing performance, our railcar services segment remained strong with $12.3 million of revenue for the first quarter of 2009. We are pleased with first quarter results, but the impact on railcar demand from the weak economy will require a slowing of new railcar shipments. We will continue to evaluate production levels at all locations and seek to align the workforce with industry demand. Our balance sheet continues to be a source of strength with $261.1 million in cash and $31.6 million in short-term investments."
For the three months ended March 31, 2009, revenues were $156.9 million and net earnings were $2.7 million or $0.13 per diluted share. In comparison, for the three months ended March 31, 2008, revenues were $184.0 million and net earnings were $10.1 million or $0.48 per diluted share. Net interest expense increased $0.9 million, after-tax, or $0.04 per diluted share, primarily due to lower interest income, other income decreased $2.0 million, after-tax, or $0.09 per diluted share, primarily as a result of gains in 2008 on derivatives and income from joint ventures decreased $0.7 million, after-tax, or $0.03 per diluted share primarily due to costs of preparing our new axle joint venture for operations.
Revenues were lower in the first quarter of 2009 when compared to the same period of 2008 primarily due to lower railcar shipments, partially offset by increased average railcar selling prices due to a change in product mix. During the three months ended March 31, 2009, the Company shipped 1,491 railcars compared to 1,902 railcars in the same period of 2008.
EBITDA was $14.1 million in the first quarter of 2009 compared to EBITDA of $23.6 million in the first quarter of 2008. The decrease in EBITDA resulted primarily from decreased volume, as discussed above, a decrease in gross profit margin and a decrease in other income. The Company's gross profit margin decline is primarily attributable to lower shipments and market conditions that resulted in competitive pricing. To control costs, workforce levels have been reduced. Other income decreased to a loss in the first quarter of 2009. Other income in the first quarter of 2008 included income related to total return swaps, which were settled in the third quarter of 2008. A reconciliation of the Company's net earnings to EBITDA (a non-GAAP financial measure) is set forth in the supplemental disclosure attached to this press release.
Our backlog was reduced to 2,752 railcars as of March 31, 2009. This reduction resulted primarily from weak demand for railcars, driven primarily by a weak economy and a difficult credit environment. The Company has been and will continue to competitively quote railcar orders including coal railcars for which the Company has two prototypes that were placed in service.
ARI will host a webcast and conference call on Thursday, May 7, 2009 at 10:00 am (Eastern Time) to discuss the Company's first quarter 2009 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 800-599-9816 and use participant code 24927014. Participants are asked to logon 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 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 anticipated future production rates, expectations about the continued rate of operation of manufacturing sites, statements about seeking to align our workforce with industry demand, statements about the causes and effects of weak demand for railcars, the weak economy and a difficult credit environment, statements regarding prospects for orders and new railcar products and statements regarding 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 current economic downturn, adverse market conditions and restricted credit markets, and the impact of the continuation of these conditions; the health of and prospects for the overall railcar industry; our prospects in light of the cyclical nature of its railcar manufacturing business and the current economic environment; our reliance upon a small number of customers that represent a large percentage of our revenues; our ability to manage overhead and production slow downs; 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; risks associated with potential acquisitions or joint ventures; the risk of lack of acceptance of our new railcar offerings by our customers; the sufficiency of our liquidity and capital resources; the conversion of our railcar backlog into revenues; anticipated production schedules for our products and the anticipated construction and production schedules of our joint ventures; 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; compliance with covenants contained in our unsecured senior notes and in our revolving credit facility; the ongoing benefits and risks related to our relationship with Mr. Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, 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) March 31, December 31, 2009 2008 (unaudited) Assets Current assets: Cash and cash equivalents $ 261,091 $ 291,788 Short term investments - available-for-sale securities 31,642 2,565 Accounts receivable, net 29,188 39,725 Accounts receivable, due from affiliates 15,114 10,283 Inventories, net 81,366 97,245 Prepaid expenses and other current assets 5,569 5,314 Deferred tax assets 1,729 2,297 Total current assets 425,699 449,217 Property, plant and equipment, net 206,087 206,936 Deferred debt issuance costs 3,073 3,204 Goodwill 7,169 7,169 Other assets 37 37 Investments in joint ventures 13,533 13,091 Total assets $ 655,598 $ 679,654 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 32,758 42,201 Accounts payable, due to affiliates 3,730 5,193 Accrued expenses and taxes 5,571 7,758 Accrued compensation 10,365 10,413 Accrued interest expense 1,751 6,907 Accrued dividends 639 639 Total current liabilities 54,814 73,111 Senior unsecured notes 275,000 275,000 Deferred tax liability 2,125 4,683 Pension and post-retirement liabilities 8,967 9,024 Other liabilities 3,046 3,111 Total liabilities 343,952 364,929 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value, 50,000,000 shares authorized, 21,302,296 shares issued and outstanding at March 31, 2009 and December 31, 2008 213 213 Additional paid-in capital 239,617 239,617 Retained earnings 82,122 80,035 Accumulated other comprehensive loss (10,306 ) (5,140 ) Total stockholders' equity 311,646 314,725 Total liabilities and stockholders' equity $ 655,598 $ 679,654 -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited) For the Three Months Ended March 31, March 31, 2009 2008 Revenues: Manufacturing operations (including revenues from affiliates of $48,405 and $34,689 for the three months ended March 31, 2009 and 2008, respectively) $ 144,670 $ 170,784 Railcar services (including revenues from affiliates of $3,533 and $4,053 for the three months ended March 31, 2009 and 2008, respectively) 12,277 13,265 Total revenues 156,947 184,049 Cost of revenue: Manufacturing operations (130,098 ) (150,890 ) Railcar services (10,472 ) (10,867 ) Total cost of revenue (140,570 ) (161,757 ) Gross profit 16,377 22,292 Selling, administrative and other (including costs related to affiliates of $151 both for the three months ended March 31, 2009 and 2008) (7,013 ) (6,841 ) Earnings from operations 9,364 15,451 Interest income (including income related to affiliates of $5 and $11 for the three months ended March 31, 2009 and 2008, respectively) 1,183 2,557 Interest expense (5,140 ) (5,043 ) Other (loss) income (96 ) 3,199 (Loss) earnings from joint ventures (842 ) 304 Earnings before income tax expense 4,469 16,468 Income tax expense (1,743 ) (6,340 ) Net earnings $ 2,726 $ 10,128 Net earnings per common share - basic $ 0.13 $ 0.48 Net earnings per common share - diluted $ 0.13 $ 0.48 Weighted average common shares outstanding - basic 21,302 21,302 Weighted average common shares outstanding - diluted 21,302 21,302 Dividends declared per common share $ 0.03 $ 0.03 -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) For the Three Months Ended March 31, March 31, 2009 2008 Operating activities: Net earnings $ 2,726 $ 10,128 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation 5,644 4,652 Amortization of deferred costs 171 203 Loss on disposal of property, plant and equipment 71 1 Stock based compensation (35 ) 293 Change in investments in joint ventures as a result of loss (earnings) 842 (304 ) Unrealized loss (gain) on derivatives 91 (3,135 ) Provision for deferred income taxes 712 1,571 (Benefit) provision for doubtful accounts receivable (37 ) 11 Investing activities reclassified from operating activities: Interest income on short-term investments - available-for-sale securities (647 ) - Realized loss on derivatives 20 - Dividends received from short-term investments - available-for-sale securities (15 ) - Changes in operating assets and liabilities: Accounts receivable, net 10,574 (14,851 ) Accounts receivable, due from affiliate (4,831 ) 13,215 Inventories, net 15,879 (4,268 ) Prepaid expenses (344 ) 284 Accounts payable (9,443 ) 11,099 Accounts payable, due to affiliate (1,464 ) (617 ) Accrued expenses and taxes (7,368 ) (3,272 ) Other (92 ) (138 ) Net cash provided by operating activities 12,454 14,872 Investing activities: Purchases of property, plant and equipment (4,949 ) (14,766 ) Purchases of short-term investments - available-for-sale securities (36,841 ) (27,857 ) Interest income on short-term investments - available-for-sale securities 647 - Realized loss on derivatives (20 ) - Dividends received from short-term investments - available-for-sale securities 15 - Proceeds from repayment of note receivable from affiliate - 165 Investments in joint ventures (1,324 ) (356 ) Sale of investment in joint venture - 1,875 Restricted cash - (1,186 ) Net cash used in investing activities (42,472 ) (42,125 ) Financing activities: Common stock dividends (639 ) (639 ) Finance fees related to new credit facility (40 ) (40 ) Repayment of debt - (8 ) Net cash used in financing activities (679 ) (687 ) Decrease in cash and cash equivalents (30,697 ) (27,940 ) Cash and cash equivalents at beginning of period 291,788 303,882 Cash and cash equivalents at end of period $ 261,091 $ 275,942 -------------------------------------------------------------------------------
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA (In thousands, unaudited) Three months ended March 31, 2009 2008 Net earnings $ 2,726 $ 10,128 Income tax expense 1,743 6,340 Interest expense 5,140 5,043 Interest income (1,183 ) (2,557 ) Depreciation 5,644 4,652 EBITDA $ 14,070 $ 23,606 Stock-based compensation expense - 188 Stock appreciation rights compensation (income) expense (1) (35 ) 105 Other loss (income) - unrealized gain on derivatives 96 (3,135 ) Adjusted EBITDA $ 14,131 $ 20,764 (1) SARs are cash settled at time of exercise -------------------------------------------------------------------------------
EBITDA represents net earnings before income tax expense, interest expense (income), net of depreciation of property, plant and equipment. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our 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, or U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net earnings, cash flows from 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 share based compensation expense related to stock options and stock appreciation rights (SARs), and before gains or losses on investments. We believe that Adjusted EBITDA is useful to investors evaluating our operating performance, and management also uses Adjusted EBITDA for that purpose. The charges related to our grants of stock options are non-cash charges that are excluded from our calculation of EBITDA under our unsecured senior notes. Our SARs (which settle in cash) are revalued each quarter based upon changes in our stock price. Management believes that eliminating the charges associated with our share based compensation and our investments allows us and our investors to understand better our operating results independent of financial changes caused by the fluctuating price of our common stock and our 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 earnings, cash flows from 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.
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