American Railcar Industries, Inc. Reports First Quarter Results

American Railcar Industries, Inc. Reports First Quarter Results

First Quarter 2014 Highlights

  *Quarterly Earnings Per Share of $0.97 vs. prior year of $0.84 - up 15%
  *Quarterly Adjusted EBITDA of $47.6 million vs. prior year of $42.8 million
    - up 11%
  *Quarterly Operating Margin of 20% vs. prior year of 16%
  *1,610 railcars shipped in Q1 2014

ST. CHARLES, Mo., April 30, 2014 (GLOBE NEWSWIRE) -- American Railcar
Industries, Inc. (ARI or the Company) (Nasdaq:ARII) today reported its first
quarter 2014 financial results. "We are pleased with another quarter of strong
earnings and operating results driven by the continued strength of tank
railcar shipments. During the first quarter we had a high mix of tank railcars
added to our lease fleet at favorable lease rates. The investment in more tank
railcars for our lease fleet is expected to provide significant future cash
flow and earnings for our Company." said Jeff Hollister, President and Interim
CEO of ARI.

First Quarter Summary

Total consolidated revenues were $182.1 million for the first quarter of 2014.
Consolidated revenues exclude $64.0 million of estimated revenues related to
railcars built for our lease fleet. Estimated revenues related to railcars
built for the Company's lease fleet increased due to a higher quantity of tank
railcars shipped for lease, partially offset by a lower quantity of hopper
railcars shipped for the Company's lease fleet. 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 not recognized in consolidated revenues as railcar
sales, but rather as lease revenues in accordance with the terms of the
contract over the life of the lease.

Total consolidated revenues for the first quarter of 2014 decreased by $13.0
million compared to the first quarter of 2013 primarily due to decreased
revenues for the Manufacturing segment, which were driven by an increased
amount of tank railcars shipped for our lease fleet relative to direct sale
shipments and the timing of certain hopper railcar shipments.The decrease in
our Manufacturing segment was partially offset by increases in revenues for
our Railcar Leasing and Railcar Services segments.

Manufacturing revenues were $154.0 million for the first quarter of 2014, a
decrease of $19.0 million compared to the same period in 2013, for the reasons
noted above.During the first quarter of 2014, ARI shipped approximately 1,130
direct sale railcars and approximately 480 railcars built for the Company's
lease fleet, compared to approximately 1,370 direct sale railcars and
approximately 530 railcars built for the lease fleet during the same period in
2013.Railcars built for the lease fleet represented 30% of ARI's railcar
shipments during the first quarter of 2014 compared to 28% for the same period
in 2013.

Railcar Leasing revenues were $11.7 million for the first quarter of 2014, an
increase of 80% over the $6.5 million for the comparable period in 2013. The
primary reasons for the increase in revenue were an increase in the number of
railcars on lease and higher average lease rates. ARI had approximately 4,930
railcars in its lease fleet as of March 31, 2014, compared to approximately
3,120 railcars as of March 31, 2013.

Railcar Services revenues for the first quarter of 2014 were $16.4 million, an
increase of 5% over the $15.6 million for the same period in 2013.The
increase is largely a result of higher demand for paint and lining work at the
Company's repair facilities.

Consolidated earnings from operations for the first quarter of 2014 were $36.5
million, an increase of 17% over the $31.2 million for the same period in
2013. Consolidated operating margins were 20% for the first quarter of 2014
compared to 16% for the comparable quarter of 2013. The increase in
consolidated earnings from operations was primarily due to increased earnings
in the Company's Railcar Leasing segment and a decrease in the Company's
selling, general and administrative expenses, as discussed below.

Manufacturing earnings from operations were $33.7 million for the first
quarter of 2014 compared to $34.0 million for the same period in 2013. This
decrease was due primarily to lower direct sale railcar shipments, as
discussed above, partially offset by strong general market conditions for tank
railcars. Estimated profit on railcars built for the Company's lease fleet of
$19.7 million and $9.8 million are excluded from manufacturing earnings from
operations for the first quarter of 2014 and 2013, respectively.Profit on
railcars built for the Company's lease fleet 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.

Railcar Leasing earnings from operations were $6.2 million for the first
quarter of 2014 compared to $2.2 million for the same period in 2013.This
increase was due to the growth in the number of railcars in the Company's
lease fleet and higher average lease rates.

The Company's total consolidated selling, general and administrative costs
decreased by 17% for the three months ended March 31, 2014, compared to the
same period in 2013.This decrease was driven by a decrease in share-based
compensation expense.While the Company's share-based compensation expense
fluctuates with the stock price, past exercises of stock appreciation rights
(SARs) have resulted in fewer SARs outstanding, which has reduced the impact
that the stock price has on the Company's financial results.

EBITDA, adjusted to exclude share-based compensation expense and other income
related to the Company's short-term investments (Adjusted EBITDA), was $47.6
million for the first quarter of 2014 compared to $42.8 million for the
comparable quarter of 2013. The increase resulted primarily from increased
consolidated earnings from operations.A reconciliation of the Company's net
earnings to EBITDA and Adjusted EBITDA (both non-GAAP financial measures) is
set forth in the supplemental disclosure attached to this press release.

Interest expense was $1.7 million for the first quarter of 2014 compared to
$3.0 million in the comparable period in 2013. The decrease was the result of
a more favorable rate obtained on the Company's refinanced lease fleet
financing facility, partially offset by a higher average debt balance, as a
result of increased borrowings under the Company's refinanced facility, as
discussed below.The refinancing transaction during the first quarter of 2014
resulted in a $1.9 million non-cash charge related to the accelerated
write-off of deferred debt issuance costs incurred in connection with the
original 2012 lease fleet financing.During the first quarter of 2013, the
Company redeemed $175.0 million of the aggregate principal amount of its 7.5%
senior unsecured notes (Notes), resulting in a $0.4 million non-cash charge
related to the accelerated write-off of the remainder of deferred debt
issuance costs incurred in connection with the Notes.

Net earnings for the first quarter of 2014 were $20.8 million, or $0.97 per
share, compared to $17.9 million, or $0.84 per share in the same period in
2013.This increase was driven primarily by increased consolidated earnings
from operations, as discussed above.

Cash Flow and Liquidity

As of March 31, 2014, ARI had working capital of $245.3 million, including
$154.5 million of cash and cash equivalents.Net cash used during the first
quarter of 2014 was $7.4 million primarily due to changes in various operating
assets and liabilities, including accounts receivable and inventories, due to
the timing of shipments and customer payments. In January 2014, the Company
refinanced its original 2012 lease fleet financing facility to increase
borrowing capacity, extend the term and lower the interest rate.The
refinancing provided the Company with net cash of $122.2 million.As of March
31, 2014, ARI had $316.9 million of debt outstanding under the refinanced
lease fleet financing facility.

At the board meeting in April, the Company's board of directors declared a
cash dividend of $0.40 per share of common stock of the Company to
shareholders of record as of June 17, 2014 that will be paid on July 1, 2014.

Backlog

ARI's backlog as of March31, 2014 was approximately 8,600 railcars, including
approximately 2,840 railcars for lease.ARI had approximately 8,560 railcars
in its backlog as of December31, 2013, including approximately 2,330 railcars
for lease.

Conference Call and Webcast

ARI will host a webcast and conference call on Thursday, May1, 2014 at 10:00
am (Eastern Time) to discuss the Company's first quarter 2014 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 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 sell and lease railcars
manufactured by the Company to certain markets. In addition, ARI provides
railcar services consisting of railcar repair services, engineering and field
services, and fleet management services. More information about American
Railcar Industries, Inc. is available on its website at
www.americanrailcar.com.

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 industry trends,
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, anticipated benefits regarding the
growth of the Company's leasing business and the mix of railcars in our lease
fleet, anticipated future production rates, 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: basing financial or other information on
judgments or estimates based on future performance or events; the impact of an
economic downturn, adverse market conditions and restricted credit markets;
prospects in light of the cyclical nature of ARI's business; the health of and
prospects for the overall railcar industry; the highly competitive nature of
the manufacturing, railcar leasing and railcar services industries; ARI's
reliance upon a small number of customers that represent a large percentage of
revenues and backlog; the conversion of ARI's railcar backlog into revenues;
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; 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; the ongoing benefits
and risks related to ARI's relationship with Mr. Carl Icahn, the chairman of
ARI's board of directors and, through Icahn Enterprises L.P., ARI's principal
beneficial stockholder, and certain of his affiliates; the anticipated
production schedules for our products and the anticipated capital needs, and
production schedules of our joint ventures; the risks associated with the
Company's current joint ventures; the risks, impact and anticipated benefits
associated with potential joint ventures, acquisitions or new business
endeavors; the risk of the lack of acceptance of new railcar offerings by
ARI's customers, 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 risks associated with the
Company's on-going compliance with environmental, health, safety, and
regulatory laws and regulations, which may be subject to change; the risk of
being unable to market or remarket railcars for sale or lease at favorable
prices or on favorable terms or at all; the implementation, integration with
other systems or ongoing management of the Company's new enterprise resource
planning system; risks related to our indebtedness and compliance with
covenants contained in the Company's financing arrangement; the impact and
costs and expenses of any litigation ARI may be subject to now or in the
future; 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)

                                                     March 31,   December 31,
                                                      2014       2013
                                                     (unaudited) 
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                             $ 154,488   $ 97,252
Restricted cash                                       7,277       3,908
Accounts receivable, net                              62,742      21,939
Accounts receivable, due from related parties         15,308      16,402
Inventories, net                                      106,012     90,185
Deferred tax assets                                   7,688       9,060
Prepaid expenses and other current assets             6,460       6,500
Total current assets                                  359,975     245,246
Property, plant and equipment, net                    158,269     159,375
Railcars on operating leases, net                     413,168     372,551
Deferred debt issuance costs                          2,445       2,026
Goodwill                                              7,169       7,169
Investments in and loans to joint ventures            29,684      31,430
Other assets                                          4,064       7,812
Total assets                                          $ 974,774   $ 825,609
Liabilities and Stockholders' Equity                             
Current liabilities:                                             
Accounts payable                                      $ 63,190    $ 52,772
Accounts payable, due to related parties              1,917       1,410
Accrued expenses and taxes                            22,358      20,216
Accrued compensation                                  16,592      16,071
Short-term debt, including current portion of         10,612      6,655
long-term debt
Total current liabilities                             114,669     97,124
Long-term debt, net of current portion                306,301     188,103
Deferred tax liability                                101,749     99,212
Pension and post-retirement liabilities               4,343       4,718
Other liabilities                                     2,006       2,550
Total liabilities                                     529,068     391,707
Stockholders' equity:                                            
Common stock, $0.01 par value, 50,000,000 shares
authorized, 21,352,297 shares issued and outstanding  213         213
as of both March 31, 2014 and December 31, 2013
Additional paid-in capital                            239,609     239,609
Retained earnings                                     207,803     195,574
Accumulated other comprehensive loss                  (1,919)     (1,494)
Total stockholders' equity                            445,706     433,902
Total liabilities and stockholders' equity            $ 974,774   $ 825,609


AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)

                                                          Three Months Ended
                                                          March 31,
                                                          2014      2013
Revenues:                                                           
Manufacturing (including revenues from affiliates of
$41,235 and $63,078 for the three months ended March 31,   $ 153,963 $ 172,975
2014 and 2013, respectively)
Railcar Leasing                                            11,746    6,543
Railcar Services (including revenues from affiliates of
$3,963 and $4,608 for the three months ended March 31,     16,406    15,592
2014 and 2013, respectively)
Total revenues                                             182,115   195,110
Cost of revenues:                                                   
Manufacturing                                              (118,365) (137,123)
Railcar Leasing                                            (4,491)   (2,904)
Railcar Services                                           (13,365)  (12,589)
Total cost of revenues                                     (136,221) (152,616)
Gross profit                                               45,894    42,494
Selling, general and administrative                        (9,387)   (11,265)
Earnings from operations                                   36,507    31,229
Interest income (including income from related parties of
$627 and $681 for the three months ended March 31, 2014    641       691
and 2013, respectively)
Interest expense                                           (1,672)   (3,000)
Loss on debt extinguishment                                (1,896)   (392)
Other income                                               5         1,996
Loss from joint ventures                                   (601)     (973)
Earnings before income taxes                               32,984    29,551
Income tax expense                                         (12,214)  (11,614)
Net earnings                                               $ 20,770  $ 17,937
Net earnings per common share—basic and diluted            $ 0.97    $ 0.84


AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT DATA
(In thousands, unaudited)

                      Revenues                       Earnings (Loss) from
                                                      Operations
                      External Intersegment Total    External Intersegment Total
                      (in thousands)
Three Months Ended                                                     
March 31, 2014
Manufacturing          $        $ 64,029     $        $ 33,655 $ 19,730     $ 53,385
                       153,963               217,992
Railcar Leasing        11,746   —            11,746   6,230    31           6,261
Railcar Services       16,406   132          16,538   2,181    38           2,219
Corporate/Eliminations —        (64,161)     (64,161) (5,559)  (19,799)     (25,358)
Total Consolidated     $        $ —          $        $ 36,507 $ —          $ 36,507
                       182,115               182,115
Three Months Ended                                                     
March 31, 2013
Manufacturing          $        $ 55,408     $        $ 33,979 $ 9,782      $ 43,761
                       172,975               228,383
Railcar Leasing        6,543    —            6,543    2,163    4            2,167
Railcar Services       15,592   49           15,641   2,305    43           2,348
Corporate/Eliminations —        (55,457)     (55,457) (7,218)  (9,829)      (17,047)
Total Consolidated     $        $ —          $        $ 31,229 $ —          $ 31,229
                       195,110               195,110


AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

                                                          Three Months Ended
                                                          March 31,
                                                          2014      2013
Operating activities:                                               
Net earnings                                               $ 20,770  $ 17,937
Adjustments to reconcile net earnings to net cash provided          
by (used in) operating activities:
Depreciation                                               7,683     6,535
Amortization of deferred costs                             109       183
Loss on disposal of property, plant and equipment          45        —
Loss from joint ventures                                   601       973
Provision for deferred income taxes                        3,892     10,287
Adjustment to allowance for doubtful accounts receivable   31        (12)
Items related to investing activities:                              
Realized and unrealized gains on short-term investments -  —         (141)
available for sale securities
Items related to financing activities:                              
Loss on debt extinguishment                                1,896     392
Changes in operating assets and liabilities:                        
Accounts receivable, net                                   (40,846)  3,754
Accounts receivable, due from related parties              1,035     (10,128)
Inventories, net                                           (15,874)  23,793
Prepaid expenses and other current assets                  (3,243)   (2,877)
Accounts payable                                           10,423    (20,441)
Accounts payable, due to related parties                   507       (2,061)
Accrued expenses and taxes                                 2,679     (4,572)
Other                                                      2,883     (5,046)
Net cash (used in) provided by operating activities        (7,409)   18,576
Investing activities:                                               
Purchases of property, plant and equipment                 (3,585)   (6,141)
Capital expenditures - leased railcars                     (43,947)  (43,619)
Proceeds from the sale of short-term investments -         —         12,699
available for sale securities
Proceeds from repayments of loans by joint ventures        1,125     500
Investments in and loans to joint ventures                 —         (136)
Net cash used in investing activities                      (46,407)  (36,697)
Financing activities:                                               
Repayments of long-term debt                               (196,527) (175,328)
Proceeds from long-term debt                               318,682   50,000
Change in interest reserve related to long-term debt       (87)      —
Payment of common stock dividends                          (8,541)   (5,338)
Debt issuance costs                                        (2,403)   (212)
Net cash provided by (used in) financing activities        111,124   (130,878)
Effect of exchange rate changes on cash and cash           (72)      (42)
equivalents
Increase (Decrease) in cash and cash equivalents           57,236    (149,041)
Cash and cash equivalents at beginning of period           97,252    205,045
Cash and cash equivalents at end of period                 $ 154,488 $ 56,004


AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA
(In thousands, unaudited)

                                                         Three Months Ended
                                                          March 31,
                                                         2014      2013
Net earnings                                              $ 20,770  $ 17,937
Income tax expense                                        12,214    11,614
Interest expense                                          1,672     3,000
Loss on debt extinguishment                               1,896     392
Interest income                                           (641)     (691)
Depreciation                                              7,683     6,535
EBITDA                                                    $ 43,594  $ 38,787
Other income related to short-term investments            —         (2,008)
Expense related to stock appreciation rights compensation 4,006     6,008
Adjusted EBITDA                                           $ 47,600  $ 42,787

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 expense
related to stock appreciation rights (SARs) and other income related to our
short-term investments. 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 associated with
share-based compensation, and income associated with short-term investments
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, short-term investments 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: Dale C. Davies
         636.940.6000
 
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