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This conference call includes forward-looking statements including statements such as estimates, expectations, intentions and predictions of future financial performance based on currently available information. Participants are directed to our SEC filings and press releases for a description of certain business issues and risks.As a change in any one could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Also, please note that the company does not undertake any obligation to update any forward-looking statements made during the call. EBITDA and adjusted EBITDA are non-GAAP financial measures we will discuss today that are reconciled through our net earnings in our press release which was issued yesterday. The press release is available through the Investor Relations page of our website. Now it is my pleasure to introduce Jim Cowan. Jim Cowan Thank you Dale and good morning. Demand for railcars in North America remained strong. The industry reported that approximately 17,900 railcars were delivered and 16,400 railcars were ordered during the second quarter of 2012, producing a book-to-build ratio or 0.92. Industry backlog was approximately 58,700 railcars at the end of June. Approximately 84% of the industry backlog is for tank and hopper railcars, which bodes well for ARI. Going forward, one industry forecast for North America expects new railcar deliveries to be approximately 62,000 cars in 2012 or a very strong year. Demand for tank railcars in North America continues to be very strong. The industry reported that approximately 4,170 tank railcars were delivered and 13,720 tank railcars were ordered during the second quarter of 2012 producing a book-to-build ratio of 3.3. Industry backlog for tank railcars was approximately 42,370 at the end of June or over 70% of the industry backlog. The strength in demand for tank railcars continues to be driven by the oil and gas markets.
There has been a recent slowdown of orders for covered hoppers and railcar builders are managing production rates to focus on fulfilling orders in the existing backlog. A recent report by the Chemical Weekly indicated that significant new ethanol capacity in the form of new plants will be coming online between 2013 and 2017. These new plants are expected to add over 20 billion pounds of capacity to the market. We expect this will generate new orders for classic covered hopper railcars as the industry currently has a shortage of this railcar type.ARI’s backlog continues to remain strong with 6,800 railcars on order for both sale and lease at the end of June. We received orders for approximately 2,810 railcars during the second quarter of 2012. At the end of June, we had approximately 1,620 railcars in our backlog to be manufactured for our lease customers. We continue to heavily invest in our railcar lease fleet, offering to our customers another avenue to use our quality products. We have booked our first hopper orders to be delivered in the first quarter of 2013 and we’re quoting new tank car railcar orders for delivery in late 2013 and into 2014. We continue to benefit from vertical integration projects that we put in place over the past several years significantly improving margins as production volumes have reached higher levels. These projects included internally manufactured tank heads, railcar axels and castings producing other railcar fabricated components and assembling our own wheel sets. During the past 18 to 24 months, we have hired a significant number of employees to ramp our production to current levels. These workers have been well trained and are working efficiently. Our railcar manufacturing facilities are in close proximity giving us the additional flexibility to move workers between hopper and tank railcar manufacturing plants as demand requires.
Our railcar services team has seen a recent improvement in work volume. We expect to see continued good performance from this group and are currently working to expand the business with the addition of a new repair facility by mid 2013.Read the rest of this transcript for free on seekingalpha.com