First Quarter 2016 Highlights
  • Quarterly gross margin of 27.5% vs. prior year of 25.7%
  • Fully utilized lease fleet reaches 10,556 railcars vs. prior year of 8,381 - up 26% 
  • Current liquidity of $408.1 million, including $200.0 million available under revolving credit facility
  • Railcar services business gains momentum with revenue growth of 11% vs. Q4 2015
ST. CHARLES, Mo., April 28, 2016 (GLOBE NEWSWIRE) -- American Railcar Industries, Inc. (ARI or the Company) (NASDAQ:ARII) today reported its first quarter 2016 financial results. Jeff Hollister, President and CEO of ARI, commented, “In response to customer demand, both our hopper and tank railcar manufacturing facilities are producing more specialized railcars from our family of unique product offerings.  As a result, our shipments in 2016 will likely be lower than the record levels set in 2015. Even though we are currently at lower production and shipment levels, we continue to efficiently produce high quality railcars while increasing our flexibility and repair capacity.  Investments in our railcar services and railcar leasing segments continue to complement our manufacturing business and both segments serve to partially offset the lower volume of new railcar shipments.  Our railcar services segment is gaining momentum as it takes advantage of the additional capacity that has resulted from the completion of multiple expansion projects. In addition, our gross margins continue to benefit from the sustained returns from our railcar services business and the successful growth of our lease fleet which continues to be 100% utilized.  This momentum combined with our ability to maintain efficient production at our vertically integrated facilities should better enable us to remain competitive in the future.” First Quarter Summary Total consolidated revenues for the first quarter of 2016 were $176.2 million, a decrease of 33% when compared to $263.8 million for the comparable period in 2015. This decrease was primarily driven by lower manufacturing revenues, partially offset by increased revenues in the railcar leasing and railcar services segments. Manufacturing revenues were $123.8 million for the first quarter of 2016, a decrease of 44% compared to the same period in 2015.  This decrease was primarily driven by fewer railcar shipments for direct sale and an overall decrease in average selling prices with a higher mix of hopper railcars sold, which generally have lower average selling prices than tank railcars due to less material and labor content. Tank railcar shipments for direct sale have decreased as that market continues to soften.  Also impacting both hopper and tank railcar shipments for direct sale is a shift in production to a larger mix of specialty railcars.  During the first quarter of 2016, ARI shipped 1,130 direct sale railcars and 200 railcars built for the Company's lease fleet compared to 2,017 direct sale railcars and 651 railcars built for the lease fleet during the same period in 2015.  Railcars built for the lease fleet represented 15% of ARI’s railcar shipments during the first quarter of 2016 compared to 24% for the same period in 2015.  Because revenues and earnings related to leased railcars are recognized over the life of the lease, ARI's quarterly results may vary depending on the mix of lease versus direct sale railcars that the Company ships during a given period.  Manufacturing revenues for the first quarter of 2016 exclude $23.6 million of estimated revenues related to railcars built for the Company's lease fleet compared to $83.7 million for the same period in 2015.  Estimated revenues related to railcars built for the Company's lease fleet decreased primarily due to lower quantities of both tank and hopper railcars shipped for lease. 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.  Rather lease revenues are recognized in accordance with the terms of the contract over the life of the lease. Railcar leasing revenues were $32.8 million for the first quarter of 2016, an increase of 33% over the $24.6 million for the comparable period in 2015. The primary reason for the increase in revenue was an increase in the number of railcars on lease. ARI had 10,556 railcars in its lease fleet as of March 31, 2016 compared to 8,381 railcars as of March 31, 2015. Railcar services revenues were $19.6 million for the first quarter of 2016, an increase of 13% over the $17.4 million for the same period in 2015.  The primary reasons for the increase in revenue were an increase in demand, a favorable change in the mix of work at our repair facilities and the additional capacity resulting from expansion projects that became operational during the second half of 2015.  Consolidated earnings from operations were $40.7 million for the first quarter of 2016, a decrease of 32% compared to the $60.0 million for the same period in 2015. The decrease in consolidated earnings from operations was primarily driven by decreased earnings in the manufacturing segment. Consolidated operating margins increased to 23.1% for the first quarter of 2016 compared to 22.8% for the same period in 2015.  This increase was primarily driven by an increase in the railcar leasing segment's contribution to earnings with the continued growth of the Company's lease fleet, partially offset by lower margins in the manufacturing segment. Manufacturing earnings from operations were $19.3 million for the first quarter of 2016 compared to $44.8 million for the same period in 2015. This decrease was due primarily to fewer direct sale shipments, as discussed above, and more competitive pricing on both hopper and tank railcars, partially offset by stronger efficiencies and cost reduction initiatives.  Estimated profit on railcars built for the Company’s lease fleet was $3.4 million and $25.6 million for the first quarter of 2016 and 2015, respectively, and is excluded from manufacturing earnings from operations.  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 $22.7 million for the first quarter of 2016 compared to $16.7 million for the same period in 2015.  This increase was due to the growth in the number of railcars in the Company's lease fleet. Railcar services earnings from operations were $3.2 million for the first quarter of 2016 compared to $2.8 million for the same period in 2015.  This increase was primarily due to the increase in revenues driven by increased demand, a favorable change in the mix of work and the additional capacity from our expansion projects, as discussed above. Selling, general and administrative expenses were $8.0 million for the first quarter of 2016 compared to $7.7 million for the same period in 2015.  This $0.3 million increase was driven by higher depreciation related to the Company's new enterprise resource planning system and increased legal costs, partially offset by lower share-based compensation expense. EBITDA, adjusted to exclude share-based compensation expense (Adjusted EBITDA), was $54.5 million for the first quarter of 2016 compared to $72.0 million for the comparable quarter of 2015. The decrease resulted primarily from decreased earnings from operations as discussed above.  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. Net earnings for the first quarter of 2016 were $22.8 million, or $1.16 per share compared to $35.0 million, or $1.64 per share, in the same period in 2015.  This decrease was driven primarily by decreased consolidated earnings from operations combined with an increase in interest expense due to a higher average debt balance, partially offset by the loss on debt extinguishment in the first quarter of 2015.           Cash Flow and Liquidity The Company’s strong earnings have contributed to cash flow from operations in the first quarter of 2016 of $57.9 million.  As of March 31, 2016, ARI had working capital of $267.9 million, including $208.1 million of cash and cash equivalents. The Company paid dividends totaling $7.8 million during the first quarter of 2016. 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, 2016 that will be paid on June 30, 2016. During the first quarter of 2016, the Company repurchased 283,320 shares of common stock at a cost of $10.9 million under its stock repurchase program. Board authorization for approximately $181.7 million remains available for further share repurchases. Backlog ARI's backlog as of March 31, 2016 was 5,958 railcars with an estimated value of $569.1 million.  Of the total backlog, 1,359 railcars, or 23%, were subject to lease with an estimated market value of $132.3 million.