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American Railcar Industries, Inc. Reports Strong First Quarter 2013

EBITDA, adjusted to exclude share-based compensation and other income on short term investments (Adjusted EBITDA), was $42.8 million for the first quarter of 2013 compared to $30.3 million for the comparable quarter of 2012. The increase resulted primarily from increased earnings from operations, partially offset by losses incurred by the Company's joint ventures. The joint venture loss is largely due to softer railcar demand for railcar types other than tank railcars, which adversely impacted demand for the Company's domestic joint venture products. 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.

Cash Flow and Liquidity

The Company's strong earnings have contributed to cash flow from operations in the first quarter of 2013 of $18.6 million. As a result of continued growth of the Company's lease fleet and redemption of the remaining $175 million of senior unsecured notes during the first quarter of 2013, the Company's cash balance was $56.0 million at March 31, 2013. The Company anticipates making the final draw of $50 million in May 2013 under the lease fleet financing put in place in December 2012.

At the board meeting in April, the Company's board of directors declared a cash dividend of $0.25 per share of common stock of the Company to shareholders of record as of June 17, 2013 that will be paid on June 27, 2013.

Backlog

ARI's backlog as of March 31, 2013 was approximately 6,400 railcars, including approximately 2,080 railcars for lease. ARI had approximately 7,060 railcars in its backlog as of December 31, 2012, including approximately 1,810 railcars for lease. 

Conference Call and Webcast

ARI will host a webcast and conference call on Thursday, April 25, 2013 at 10:00 am (Eastern Time) to discuss the Company's first quarter 2013 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 and its subsidiaries sell and lease 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. 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, customer demand for the Company's products, the Company's strategic objectives and long-term strategies, the growth of the Company's leasing business, anticipated future production rates, the Company's plans regarding future dividends, the Company's joint ventures, 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; 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; the highly competitive nature of the railcar manufacturing industry; 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 risk of being unable to market or remarket railcars for sale or lease at favorable prices or on favorable terms or at all; the anticipated financing needs, 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; the anticipated production schedules for our products and the anticipated financing needs, construction and production schedules of our 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; compliance with covenants contained in the Company's Lease Fleet Financing; 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; 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,
  2013 2012
  (unaudited)  
Assets    
Current assets:    
 Cash and cash equivalents  $ 56,004  $ 205,045
 Short-term investments - available for sale securities  --  12,557
 Accounts receivable, net  32,348  36,100
 Accounts receivable, due from related parties  13,659  3,539
 Income taxes receivable  1,581  --
 Inventories, net  86,263  110,075
 Deferred tax assets  9,126  4,114
 Prepaid expenses and other current assets  5,149  3,917
Total current assets  204,130  375,347
     
Property, plant and equipment, net  157,376  155,893
Railcars on operating lease, net  261,845  220,282
Deferred debt issuance costs  2,032  2,374
Goodwill  7,169  7,169
Investments in and loans to joint ventures  43,179  44,536
Other assets  7,774  4,157
Total assets  $ 683,505  $ 809,758
     
Liabilities and Stockholders' Equity    
Current liabilities:    
 Accounts payable  $ 44,526  $ 64,971
 Accounts payable, due to related parties  770  2,831
 Accrued expenses and taxes  8,728  8,432
 Accrued compensation  17,261  17,940
 Accrued interest expense  271  4,465
 Short-term debt, including current portion of long-term debt  4,995  2,755
Total current liabilities  76,551  101,394
     
Long-term debt, net of current portion  144,677  272,245
Deferred tax liability  68,141  53,466
Pension and post-retirement liabilities  9,151  9,518
Other liabilities  4,335  3,670
Total liabilities  302,855  440,293
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding as of both March 31, 2013 and December 31, 2012  213  213
Additional paid-in capital  239,609  239,609
Retained earnings  142,629  130,030
Accumulated other comprehensive loss  (1,801)  (387)
Total stockholders' equity  380,650  369,465
Total liabilities and stockholders' equity  $ 683,505  $ 809,758
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
     
  For the Three Months Ended
  March 31,
  2013 2012
   
Revenues:    
Manufacturing (including revenues from affiliates of $63,078 and $0 for the three months ended March 31, 2013 and 2012, respectively)  $ 172,975  $ 164,313
Railcar leasing  6,543  1,380
Railcar services (including revenues from affiliates of $4,608 and $5,171 for the three months ended March 31, 2013 and 2012, respectively)  15,592  15,906
 Total revenues  195,110  181,599
     
Cost of revenues:    
Manufacturing   (137,123)  (137,561)
Railcar leasing  (2,904)  (741)
Railcar services  (12,589)  (12,928)
 Total cost of revenues  (152,616)  (151,230)
 Gross profit  42,494  30,369
     
Selling, general and administrative (including costs to related parties of $380 and $145 for the three months ended March 31, 2013 and 2012, respectively)  (11,265)  (6,564)
 Earnings from operations  31,229  23,805
     
Interest income (including income from related parties of $681 and $745 for the three months ended March 31, 2013 and 2012, respectively)  691  778
Interest expense  (3,000)  (5,126)
Loss on debt extinguishment  (392)  --
Other income (including income from a related party of $4 and $3 for the three months ended March 31, 2013 and 2012, respectively)  1,996  3
Earnings (loss) from joint ventures  (973)  414
 Earnings before income taxes  29,551  19,874
Income tax expense  (11,614)  (7,870)
 Net earnings  $ 17,937  $ 12,004
     
Net earnings per common share - basic and diluted  $ 0.84  $ 0.56
Weighted average common shares outstanding - basic and diluted  21,352  21,352
     
Cash dividends paid per common share  $ 0.25  $ -- 
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT DATA
(In thousands, unaudited)
             
  Revenues Earnings (Loss) from Operations 
  External  Intersegment  Total External  Intersegment  Total
For the Three Months Ended March 31, 2013            
Manufacturing   $ 172,975  $ 55,408  $ 228,383  $ 33,979  $ 9,782  $ 43,761
Railcar Leasing  6,543  --   6,543  2,163  4  2,167
Railcar Services  15,592  49  15,641  2,305  43  2,348
Corporate  --   --   --   (7,218)  --   (7,218)
Eliminations  --   (55,457)  (55,457)  --   (9,829)  (9,829)
Total Consolidated  $ 195,110  $ --   $ 195,110  $ 31,229  $ --   $ 31,229
For the Three Months Ended March 31, 2012            
Manufacturing   $ 164,313  $ 47,549  $ 211,862  $ 25,152  $ 8,922  $ 34,074
Railcar Leasing  1,380  --   1,380  596  6  602
Railcar Services  15,906  29  15,935  2,343  (6)  2,337
Corporate  --   --   --   (4,286)  --   (4,286)
Eliminations  --   (47,578)  (47,578)  --   (8,922)  (8,922)
Total Consolidated  $ 181,599  $ --   $ 181,599  $ 23,805  $ --   $ 23,805
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
     
  For the Three Months Ended
  March 31, 
  2013 2012
   
Operating activities:    
Net earnings  $ 17,937  $ 12,004
Adjustments to reconcile net earnings to net cash provided by operating activities:    
Depreciation  6,535  5,402
Amortization of deferred costs  183  175
Gain on disposal of property, plant and equipment  --  (34)
Share-based compensation  6,008  696
(Earnings) loss from joint ventures  973  (414)
Provision for deferred income taxes  10,287  7,705
Adjustment to provision for losses on accounts receivable  (12)  (17)
Items related to investing activities:    
Realized again on sale of short-term investments - available for sale securities  (2,008)  --
Items related to financing activities:    
Loss on debt extinguishment  392  --
Changes in operating assets and liabilities:    
Accounts receivable, net  3,754  (11,184)
Accounts receivable, due from related parties  (10,128)  1,651
Income taxes receivable  (1,645)  --
Inventories, net  23,793  (9,153)
Prepaid expenses and other current assets  (1,232)  (633)
Accounts payable  (20,441)  4,571
Accounts payable, due to related parties  (2,061)  (329)
Accrued expenses and taxes  (9,939)  (2,225)
Other  (3,820)  (566)
Net cash provided by operating activities  18,576  7,649
Investing activities:    
Purchases of property, plant and equipment  (6,141)  (1,337)
Capital expenditures - leased railcars  (43,619)  (40,072)
Proceeds from the sale of property, plant and equipment  --  38
Proceeds from the sale of short-term investments - available for sale securities  12,699  --
Proceeds from repayments of loans by joint ventures  500  --
Investments in and loans to joint ventures  (136)  (583)
Net cash used in investing activities  (36,697)  (41,954)
Financing activities:    
Repayment of long-term debt  (175,328)  --
Proceeds from long-term debt  50,000  --
Payment of common stock dividends  (5,338)  --
Debt issuance costs  (212)  --
Net cash used in financing activities  (130,878)  --
Effect of exchange rate changes on cash and cash equivalents  (42)  20
Decrease in cash and cash equivalents  (149,041)  (34,285)
Cash and cash equivalents at beginning of period  205,045  307,172
Cash and cash equivalents at end of period  $ 56,004  $ 272,887
 
AMERICAN RAILCAR INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA AND ADJUSTED EBITDA
(In thousands, unaudited)
     
  For the Three Months Ended 
  March 31,
  2013 2012
     
     
Net earnings  $ 17,937  $ 12,004
Income tax expense  11,614  7,870
Interest expense  3,000  5,126
Loss on debt extinguishment  392  --
Interest income  (691)  (778)
Depreciation  6,535  5,402
EBITDA   $ 38,787  $ 29,624
Other income related to short-term investments  (2,008)  --
Expense related to stock appreciation rights compensation 1  6,008  696
Adjusted EBITDA  $ 42,787  $ 30,320
     
1 SARs are cash settled at time of exercise    

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.

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