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American Railcar Industries, Inc. Reports Record Quarterly Earnings From Operations and Earnings Per Share



American Railcar Industries, Inc. Reports Record Quarterly Earnings From
Operations and Earnings Per Share

Third Quarter 2012 Highlights

  * Revenues of $168.2 million reflect strong railcar sales and increasing
    railcar lease revenues
  * Adjusted EBITDA of $36.7 million, a new quarterly record
  * Net earnings of $14.0 million, or $0.66 per share, a new quarterly record
  * Backlog increased to 7,630 railcars
  * Railcar shipments of approximately 1,460 railcars, including 310 railcars
    to leasing customers
  * Partial redemption of $100.0 million on the $275.0 million, 7.5% senior
    notes

ST. CHARLES, Mo., Oct. 24, 2012 (GLOBE NEWSWIRE) -- American Railcar
Industries, Inc. (ARI or the Company) (Nasdaq:ARII) today reported its third
quarter 2012 financial results. "We are pleased with our strong financial
performance, operating results and continued growth of our fleet of leased
railcars," said James Cowan, President and CEO of ARI. "The market for tank
railcars remains very strong, which provided us with a favorable sales mix
during the quarter. Strong tank railcar volumes generated operational leverage
and efficiencies which were partially offset by softer demand for hopper
railcars. During the quarter we received orders for 2,290 railcars, increasing
our backlog to 7,630 railcars."

Third Quarter Results

Consolidated revenues for the third quarter of 2012 were $168.2 million, up
significantly when compared to the $125.8 million for the third quarter of
2011. The increase in revenues was primarily due to an increase in
manufacturing segment revenues. The Company shipped approximately 1,460
railcars during the third quarter of 2012, including approximately 310
railcars to leasing customers, compared to the approximately 1,340 railcars
shipped during the third quarter of 2011, of which approximately 90 were to
leasing customers.

Manufacturing segment revenues were $185.4 million for the third quarter of
2012, an increase of 58% over the $117.5 million for the third quarter of
2011. The primary reasons for the increase were an increase in railcar
shipments, improved pricing and a shift in the sales mix to more tank
railcars. The increase in railcar shipments was driven by strong leasing
customer demand, partially offset by a decline in direct sale shipments.
Manufacturing segment revenues for the third quarter of 2012 included
estimated revenues of $38.2 million related to railcars built for our lease
fleet, compared to $9.1 million in the third quarter of 2011. 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 eliminated in consolidation. Revenues
for railcars built for the Company's lease fleet are not recognized in
consolidated revenues as a railcar sale, but are recognized over the term of
the lease in accordance with the monthly lease revenues. Railcars built for
the lease fleet represented over 20% of ARI's railcar shipments during the
third quarter of 2012 compared to 7% for the third quarter of 2011.

Consolidated earnings from operations for the third quarter of 2012 set a new
quarterly record of $30.3 million, an increase of 152% over the $12.0 million
for the third quarter of 2011. Operating margins were 18% for the third
quarter of 2012 compared to 10% for the comparable quarter of 2011. The
increase in consolidated earnings was primarily due to an increase in
manufacturing earnings from operations. Manufacturing earnings from operations
were $34.2 million for the third quarter of 2012 compared to $8.7 million for
the same period in 2011. This increase is due predominately to the increased
volumes, improved sales mix and pricing discussed above, as well as operating
leverage and efficiencies achieved as a result of strong tank railcar
production volumes, partially offset by softer hopper railcar volumes. The
Company also continues to benefit from cost savings achieved by the vertical
integration projects put in place during the past several years. Manufacturing
earnings from operations for the third quarter of 2012 included $5.0 million
of estimated profit on railcars built for our lease fleet that is eliminated
in consolidation and 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.

The Company recorded a loss from joint ventures of $0.8 million for the third
quarter of 2012 compared to a loss of $2.2 million for the third quarter of
2011. The improvements from prior year reflect the impact of increased
production volumes of railcar castings and axles, which have both followed
industry demand for new railcars. Consistent with the sequential decline in
volumes for hopper railcars, the industry is also experiencing softness with
respect to other car types that the Company does not manufacture but for which
our domestic joint ventures provide components.

Adjusted EBITDA, which excludes stock based compensation, was a quarterly
record of $36.7 million for the third quarter of 2012, compared to $12.2
million for the third quarter of 2011. Stock based compensation expense was
$1.0 million for the third quarter of 2012 compared to income of $3.1 million
for the third quarter of 2011. Stock based compensation fluctuates with
changes in the Company's stock price.

Net interest expense was $4.4 million for the third quarter of 2012 compared
to $4.5 million for the third quarter of 2011. Interest expense primarily
relates to the Company's 7.5% Senior Notes due in 2014 (the Notes). In
September of 2012, the Company redeemed $100.0 million of principal on the
Notes at a redemption price of 101.875% utilizing available cash on hand. In
conjunction with the partial redemption and the related decrease to interest
expense, the Company incurred a $2.3 million charge shown on the consolidated
statement of operations in loss on debt extinguishment. The charge was
comprised of $1.9 million for the premium the Company paid and a non-cash
charge of $0.4 million related to the write-off of deferred financing fees.
The impact of the debt redemption, net of cost savings related to lower
interest expense for the month of September, reduced the third quarter 2012
net earnings by $1.0 million or by $0.04 per share.

Net earnings for the third quarter of 2012 were a quarterly record of $14.0
million, or $0.66 per share; compared to $4.0 million, or $0.19 per share, for
the third quarter of 2011.

Year-to-Date Results

Consolidated revenues for the first nine months of 2012 were $504.0 million
compared to $322.5 million for the comparable period in 2011. The increase in
revenues was primarily due to an increase in manufacturing segment revenues.
The Company shipped approximately 5,870 railcars, including approximately
1,690 railcars to leasing customers during the first nine months of 2012,
which was nearly double the approximately 3,060 railcars shipped during the
comparable period in 2011, of which approximately 90 were to leasing
customers.

Manufacturing segment revenues were $616.5 million for the first nine months
of 2012 compared to $280.9 million for the comparable period in 2011. The
primary reasons for the revenues increase include increased volumes of
shipments, improved pricing and a shift in the sales mix to more tank
railcars. The increase in shipments included those shipped for our leasing
business. Manufacturing segment revenues for the first nine months of 2012
included estimated revenues of $170.3 million relating to railcars built for
the lease fleet, compared to $9.6 million in the comparable period in 2011.
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 eliminated in
consolidation. Revenues for railcars built for the Company's lease fleet are
not recognized in consolidated revenues as a railcar sale, but are recognized
over the term of the lease in accordance with the monthly lease revenues.
Railcars built for the lease fleet represented over 28% of ARI's railcar
shipments in the first nine months of 2012 compared to 3% for the nine months
ended September 30, 2011.

Consolidated earnings from operations for the nine months ended September 30,
2012 were $80.1 million, up substantially from $18.3 million for the same
period in 2011. Operating margins were 16% for the first nine months of 2012
compared to 6% for the same period in 2011. The increase in consolidated
earnings was primarily due to an increase in manufacturing earnings from
operations. Manufacturing earnings from operations were $109.0 million for the
third quarter 2012 compared to $16.5 million for the same period in 2011. This
increase is due predominately to increased volumes, improved sales mix,
pricing and operating leverage and efficiencies as a result of strong
production volumes. The Company also continues to benefit from cost savings
achieved by the vertical integration projects put in place during the past
several years. The increase in volumes included railcars produced for our
leasing business. Manufacturing earnings from operations for the first nine
months of 2012 included $28.3 million of profit on railcars built for the
lease fleet that is eliminated in consolidation and 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.

The Company recorded break-even earnings from joint ventures for the first
nine months of 2012 compared to a loss of $7.2 million for the same period in
2011.

Adjusted EBITDA was $101.5 million for the first nine months of 2012, up by
nearly $75 million from $26.8 million for the comparable period in 2011.

Net earnings for the first nine months of 2012 were $39.4 million, or $1.84
per share, compared to a loss of ($0.7) million, or ($0.03) per share, for the
same period of 2011.

A reconciliation of the Company's segment revenues and earnings (loss) from
operations, used for corporate management and resource allocation purposes, to
the consolidated revenues and earnings (loss) from operations is set forth in
the supplemental disclosure attached to this press release. A reconciliation
of the Company's net earnings (loss) to EBITDA and Adjusted EBITDA (both
non-GAAP financial measures) is set forth in the supplemental disclosure
attached to this press release.

ARI will host a webcast and conference call on Thursday, October 25, 2012 at
10:00 am (Eastern Time) to discuss the Company's third quarter 2012 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 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, the growth of the
Company's leasing business, improved pricing, anticipated future production
rates, anticipated benefits of the partial redemption of the Company's Notes,
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 an economic
downturn, adverse market conditions and restricted credit markets; 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 sufficiency of the Company's liquidity
and capital resources, particularly in light of the Company's recent use of
cash to partially redeem the Notes and current plans to expand the Company's
lease fleet; 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 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 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)
                                                                   
                                                    September 30, December 31,
                                                    2012          2011
                                                    (unaudited)    
Assets                                                             
Current assets:                                                    
Cash and cash equivalents                            $ 99,195      $ 307,172
Accounts receivable, net                             35,513        33,626
Accounts receivable, due from related parties        7,562         6,106
Income taxes receivable                              4,760         4,074
Inventories, net                                     132,350       95,827
Deferred tax assets                                  3,334         3,203
Prepaid expenses and other current assets            5,294         4,539
Total current assets                                 288,008       454,547
                                                                   
Property, plant and equipment, net                   330,469       194,242
Deferred debt issuance costs                         556           1,335
Interest receivable, due from related parties        --            292
Goodwill                                             7,169         7,169
Investments in and loans to joint ventures           45,150        45,122
Other assets                                         1,123         1,063
Total assets                                         $ 672,475     $ 703,770
                                                                   
Liabilities and Stockholders' Equity                               
Current liabilities:                                               
Accounts payable                                     $ 67,434      $ 62,318
Accounts payable, due to related parties             950           800
Accrued expenses and taxes                           9,267         5,879
Accrued compensation                                 16,801        14,446
Accrued interest expense                             1,094         6,875
Total current liabilities                            95,546        90,318
                                                                   
Senior unsecured notes                               175,000       275,000
Deferred tax liability                               39,969        14,923
Pension and post-retirement liabilities              8,704         9,280
Other liabilities                                    3,525         4,080
Total liabilities                                    322,744       393,601
                                                                   
Commitments and contingencies                                      
                                                                   
Stockholders' equity:                                              
Common stock, $0.01 par value, 50,000,000 shares
authorized, 21,352,297 shares issued and             213           213
outstanding as of both September 30, 2012 and
December 31, 2011
Additional paid-in capital                           239,609       239,609
Retained earnings                                    110,920       71,545
Accumulated other comprehensive loss                 (1,011)       (1,198)
Total stockholders' equity                           349,731       310,169
Total liabilities and stockholders' equity           $ 672,475     $ 703,770

 
 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
                                                                   
                                                    For the Three Months Ended
                                                    September 30,
                                                    2012          2011
Revenues:                                                          
Manufacturing (including revenues from affiliates
of $49,962 and $0 for the three months ended         $ 147,212     $ 108,356
September 30, 2012 and 2011, respectively)
Railcar leasing                                      4,267         259
Railcar services (including revenues from
affiliates of $5,855 and $6,916 for the three        16,751        17,169
months ended September 30, 2012 and 2011,
respectively)
Total revenues                                       168,230       125,784
                                                                   
Cost of revenues:                                                  
Manufacturing                                        (116,497)     (98,069)
Railcar leasing                                      (1,854)       (142)
Railcar services                                     (13,181)      (12,618)
Total cost of revenues                               (131,532)     (110,829)
Gross profit                                         36,698        14,955
                                                                   
Selling, general and administrative (including
costs to a related party of $146 and $145 for the    (6,360)       (2,934)
three months ended September 30, 2012 and 2011,
respectively)
Earnings from operations                             30,338        12,021
                                                                   
Interest income (including income from related
parties of $727 and $717 for the three months ended  750           1,005
September 30, 2012 and 2011, respectively)
Interest expense                                     (4,414)       (4,478)
Loss on debt extinguishment                          (2,267)       --
Other income (including income from a related party
of $4 for both the three months ended September 30,  18            5
2012 and 2011)
Earnings (loss) from joint ventures                  (849)         (2,170)
Earnings before income taxes                         23,576        6,383
Income tax expense                                   (9,566)       (2,357)
Net earnings                                         $ 14,010      $ 4,026
                                                                   
Net earnings per common share - basic and diluted    $ 0.66        $ 0.19
Weighted average common shares outstanding - basic   21,352        21,352
and diluted

 
 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
                                                                   
                                                     For the Nine Months Ended
                                                     September 30,
                                                     2012         2011
                                                      
Revenues:                                                          
Manufacturing (including revenues from affiliates of
$60,859 and $1,221 for the nine months ended          $ 446,273    $ 271,260
September 30, 2012 and 2011, respectively)
Railcar leasing                                       8,315        648
Railcar services (including revenues from affiliates
of $16,858 and $19,049 for the nine months ended      49,455       50,632
September 30, 2012 and 2011, respectively)
Total revenues                                        504,043      322,540
                                                                   
Cost of revenues:                                                  
Manufacturing                                         (360,507)    (250,546)
Railcar leasing                                       (4,196)      (346)
Railcar services                                      (38,849)     (38,493)
Total cost of revenues                                (403,552)    (289,385)
Gross profit                                          100,491      33,155
                                                                   
Selling, general and administrative (including costs
to a related party of $441 and $436 for the nine      (20,388)     (14,878)
months ended September 30, 2012 and 2011,
respectively)
Earnings from operations                              80,103       18,277
                                                                   
Interest income (including income from related
parties of $2,201 and $2,111 for the nine months      2,297        2,865
ended September 30, 2012 and 2011, respectively)
Interest expense                                      (14,630)     (15,143)
Loss on debt extinguishment                           (2,267)      --
Other income (including income from a related party
of $10 and $11 for the nine months ended September    37           24
30, 2012 and 2011, respectively)
Earnings (loss) from joint ventures                   31           (7,241)
Earnings (loss) before income taxes                   65,571       (1,218)
Income tax (expense) benefit                          (26,196)     484
Net earnings (loss)                                   $ 39,375     $ (734)
                                                                   
Net earnings (loss) per common share - basic and      $ 1.84       $ (0.03)
diluted
Weighted average common shares outstanding - basic    21,352       21,351
and diluted

 
 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED SEGMENT DATA
(In thousands, unaudited)
                                                                          
               Revenues                          Earnings (Loss) from Operations 
               External  Intersegment  Total     External  Intersegment  Total
For the Three
Months Ended                                                              
September 30,
2012
Manufacturing  $ 147,212 $ 38,178      $ 185,390 $ 29,206  $ 5,012       $ 34,218
Railcar        4,267      --           4,267     2,377     6             2,383
Leasing
Railcar        16,751    221           16,972    2,955     (46)          2,909
Services
Corporate       --        --            --       (4,200)    --           (4,200)
Eliminations    --       (38,399)      (38,399)   --       (4,972)       (4,972)
Total          $ 168,230  $ --         $ 168,230 $ 30,338   $ --         $ 30,338
Consolidated
For the Three
Months Ended                                                              
September 30,
2011
Manufacturing  $ 108,356 $ 9,118       $ 117,474 $ 8,561   $ 174         $ 8,735
Railcar        259        --           259       62         --           62
Leasing
Railcar        17,169    50            17,219    4,021     (9)           4,012
Services
Corporate       --        --            --       (623)      --           (623)
Eliminations    --       (9,168)       (9,168)    --       (165)         (165)
Total          $ 125,784  $ --         $ 125,784 $ 12,021   $ --         $ 12,021
Consolidated
For the Nine
Months Ended                                                              
September 30,
2012
Manufacturing  $ 446,273 $ 170,267     $ 616,540 $ 80,692  $ 28,280      $
                                                                         108,972
Railcar        8,315      --           8,315     3,994     19            4,013
Leasing
Railcar        49,455    441           49,896    8,694     (96)          8,598
Services
Corporate       --        --            --       (13,277)   --           (13,277)
Eliminations    --       (170,708)     (170,708)  --       (28,203)      (28,203)
Total          $ 504,043  $ --         $ 504,043 $ 80,103   $ --         $ 80,103
Consolidated
For the Nine
Months Ended                                                              
September 30,
2011
Manufacturing  $ 271,260 $ 9,617       $ 280,877 $ 16,255  $ 227         $ 16,482
Railcar        648        --           648       188        --           188
Leasing
Railcar        50,632    217           50,849    10,635    (10)          10,625
Services
Corporate       --        --            --       (8,801)    --           (8,801)
Eliminations    --       (9,834)       (9,834)    --       (217)         (217)
Total          $ 322,540  $ --         $ 322,540 $ 18,277   $ --         $ 18,277
Consolidated

 
 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                                                                   
                                                     For the Nine Months Ended
                                                     September 30,
                                                     2012         2011
                                                      
Operating activities:                                              
Net earnings (loss)                                   $ 39,375     $ (734)
Adjustments to reconcile net earnings (loss) to net                
cash provided by (used in) operating activities:
Depreciation                                          17,506       16,872
Amortization of deferred costs                        487          524
Loss on debt extinguishment                           2,267        --
(Gain) loss on disposal of property, plant and        --           82
equipment
Stock-based compensation                              3,810        (1,128)
Change in interest receivable, due from related       292          (120)
parties
(Earnings) loss from joint ventures                   (31)         7,241
Provision (benefit) for deferred income taxes         24,703       (312)
Adjustment to provision for losses on accounts        108          (26)
receivable
Changes in operating assets and liabilities:                       
Accounts receivable, net                              (1,995)      (11,437)
Accounts receivable, due from related parties         (1,428)      1,448
Income taxes receivable                               (282)        (12)
Inventories, net                                      (36,486)     (64,633)
Prepaid expenses and other current assets             (754)        (848)
Accounts payable                                      5,114        37,091
Accounts payable, due to related parties              150          224
Accrued expenses and taxes                            (5,119)      (1,989)
Other                                                 (364)        (1,463)
Net cash provided by (used in) operating activities   47,353       (19,220)
Investing activities:                                              
Purchases of property, plant and equipment            (10,444)     (3,817)
Capital expenditures - leased railcars                (143,242)    (8,019)
Proceeds from the sale of property, plant and         254          117
equipment
Proceeds from the repayments of loans by joint        1,592        775
ventures
Investments in and loans to joint ventures            (1,652)      (5,228)
Net cash used in investing activities                 (153,492)    (16,172)
Financing activities:                                              
Repayment of long-term debt                           (100,000)    --
Premium on debt redemption                            (1,875)      --
Proceeds from stock option exercises                  --           756
Net cash provided by financing activities             (101,875)    756
Effect of exchange rate changes on cash and cash      37           (23)
equivalents
Decrease in cash and cash equivalents                 (207,977)    (34,659)
Cash and cash equivalents at beginning of period      307,172      318,758
Cash and cash equivalents at end of period            $ 99,195     $ 284,099

 
 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS (LOSS) TO EBITDA AND ADJUSTED EBITDA
(In thousands, unaudited)
                        For the Three Months Ended  For the Nine Months Ended 
                        September 30,               September 30,
                        2012          2011          2012          2011
                                                                   
                                                                   
Net earnings (loss)      $ 14,010      $ 4,026       $ 39,375      $ (734)
Income tax expense       9,566         2,357         26,196        (484)
(benefit)
Interest expense         4,414         4,478         14,630        15,143
Loss on debt             2,267         --            2,267         --
extinguishment
Interest income          (750)         (1,005)       (2,297)       (2,865)
Depreciation             6,220         5,418         17,506        16,872
EBITDA                   $ 35,727      $ 15,274      $ 97,677      $ 27,932
Expense (income)
related to stock         997           (3,087)       3,810         (1,128)
appreciation rights
compensation ^1
Adjusted EBITDA          $ 36,724      $ 12,187      $ 101,487     $ 26,804
                                                                   
^1 SARs are cash
settled at time of                                                 
exercise

EBITDA represents net earnings (loss) before income tax expense (benefit),
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 (loss), cash flows provided by (used in)
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 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 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: Dale C. Davies
         Michael Obertop
         636.940.6000
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