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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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North Dakota
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43-1481791
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(State of
Incorporation)
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(I.R.S. Employer
Identification No.)
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100 Clark Street, St. Charles, Missouri
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63301
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
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Smaller Reporting Company
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¨
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Item Number
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Page
Number
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Condensed Consolidated Balance Sheets as of
March 31, 2015 (Unaudited) and December 31, 2014
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Condensed Consolidated Statements of Operations (Unaudited) for the
Three Months Ended March 31, 2015 and 2014
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three
Months Ended March 31, 2015 and 2014
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Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Three Months Ended March 31, 2015 and 2014
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Exhibit 31.1
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Exhibit 31.2
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Exhibit 32.1
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EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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EX-101 DEFINITION LINKBASE DOCUMENT
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March 31,
2015 |
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December 31,
2014 |
||||
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(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
310,056
|
|
|
$
|
88,109
|
|
Restricted cash
|
16,972
|
|
|
7,178
|
|
||
Accounts receivable, net
|
39,735
|
|
|
33,618
|
|
||
Accounts receivable, due from related parties
|
12,593
|
|
|
33,027
|
|
||
Income taxes receivable
|
11,607
|
|
|
33,879
|
|
||
Inventories, net
|
121,623
|
|
|
117,007
|
|
||
Deferred tax assets
|
6,600
|
|
|
7,688
|
|
||
Prepaid expenses and other current assets
|
6,164
|
|
|
5,353
|
|
||
Total current assets
|
525,350
|
|
|
325,859
|
|
||
Property, plant and equipment, net
|
160,593
|
|
|
160,787
|
|
||
Railcars on leases, net
|
705,919
|
|
|
663,315
|
|
||
Deferred debt issuance costs, net
|
5,244
|
|
|
2,148
|
|
||
Goodwill
|
7,169
|
|
|
7,169
|
|
||
Investments in and loans to joint ventures
|
29,694
|
|
|
29,168
|
|
||
Other assets
|
7,587
|
|
|
3,963
|
|
||
Total assets
|
$
|
1,441,556
|
|
|
$
|
1,192,409
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
77,569
|
|
|
$
|
68,789
|
|
Accounts payable, due to related parties
|
3,304
|
|
|
2,793
|
|
||
Accrued expenses and taxes
|
19,946
|
|
|
5,208
|
|
||
Accrued compensation
|
15,759
|
|
|
15,046
|
|
||
Deferred revenue
|
176
|
|
|
16,723
|
|
||
Short-term debt, including current portion of long-term debt
|
25,772
|
|
|
110,612
|
|
||
Total current liabilities
|
142,526
|
|
|
219,171
|
|
||
Long-term debt, net of current portion
|
595,214
|
|
|
298,342
|
|
||
Deferred tax liability
|
172,042
|
|
|
168,349
|
|
||
Pension and post-retirement liabilities
|
8,145
|
|
|
8,544
|
|
||
Other liabilities
|
2,649
|
|
|
2,587
|
|
||
Total liabilities
|
920,576
|
|
|
696,993
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 shares issued and outstanding as of March 31, 2015 and December 31, 2014
|
213
|
|
|
213
|
|
||
Additional paid-in capital
|
239,609
|
|
|
239,609
|
|
||
Retained earnings
|
287,378
|
|
|
260,943
|
|
||
Accumulated other comprehensive loss
|
(6,220
|
)
|
|
(5,349
|
)
|
||
Total stockholders’ equity
|
520,980
|
|
|
495,416
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,441,556
|
|
|
$
|
1,192,409
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
||||
Manufacturing (including revenues from affiliates of $121,196 and $41,235 for the three months ended March 31, 2015 and 2014, respectively)
|
$
|
221,811
|
|
|
$
|
153,963
|
|
Railcar leasing
|
24,585
|
|
|
11,746
|
|
||
Railcar services (including revenues from affiliates of $6,380 and $3,963 for the three months ended March 31, 2015 and 2014, respectively)
|
17,380
|
|
|
16,406
|
|
||
Total revenues
|
263,776
|
|
|
182,115
|
|
||
Cost of revenues:
|
|
|
|
||||
Manufacturing
|
(174,534
|
)
|
|
(118,365
|
)
|
||
Railcar leasing
|
(7,701
|
)
|
|
(4,491
|
)
|
||
Railcar services
|
(13,845
|
)
|
|
(13,365
|
)
|
||
Total cost of revenues
|
(196,080
|
)
|
|
(136,221
|
)
|
||
Gross profit
|
67,696
|
|
|
45,894
|
|
||
Selling, general and administrative
|
(7,681
|
)
|
|
(9,387
|
)
|
||
Earnings from operations
|
60,015
|
|
|
36,507
|
|
||
Interest income (including income from related parties of $557 and $627 for the three months ended March 31, 2015 and 2014, respectively)
|
563
|
|
|
641
|
|
||
Interest expense
|
(4,738
|
)
|
|
(1,672
|
)
|
||
Loss on debt extinguishment
|
(2,126
|
)
|
|
(1,896
|
)
|
||
Other Income
|
6
|
|
|
5
|
|
||
Earnings (Loss) from joint ventures
|
1,797
|
|
|
(601
|
)
|
||
Earnings before income taxes
|
55,517
|
|
|
32,984
|
|
||
Income tax expense
|
(20,541
|
)
|
|
(12,214
|
)
|
||
Net earnings
|
$
|
34,976
|
|
|
$
|
20,770
|
|
Net earnings per common share—basic and diluted
|
$
|
1.64
|
|
|
$
|
0.97
|
|
Weighted average common shares outstanding—basic and diluted
|
21,352
|
|
|
21,352
|
|
||
Cash dividends declared per common share
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net earnings
|
$
|
34,976
|
|
|
$
|
20,770
|
|
Currency translation
|
(985
|
)
|
|
(459
|
)
|
||
Postretirement plans
|
189
|
|
|
55
|
|
||
Comprehensive income
|
$
|
34,180
|
|
|
$
|
20,366
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
||||
Net earnings
|
$
|
34,976
|
|
|
$
|
20,770
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
10,061
|
|
|
7,683
|
|
||
Amortization of deferred costs
|
152
|
|
|
109
|
|
||
Loss on disposal of property, plant, equipment and leased railcars
|
—
|
|
|
45
|
|
||
(Earnings) Losses from joint ventures
|
(1,797
|
)
|
|
601
|
|
||
Provision for deferred income taxes
|
4,717
|
|
|
3,892
|
|
||
Provision for allowance for doubtful accounts receivable
|
(16
|
)
|
|
31
|
|
||
Items related to financing activities:
|
|
|
|
||||
Loss on debt extinguishment
|
2,126
|
|
|
1,896
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(6,149
|
)
|
|
(40,846
|
)
|
||
Accounts receivable, due from related parties
|
20,391
|
|
|
1,035
|
|
||
Income taxes receivable
|
22,272
|
|
|
1,904
|
|
||
Inventories, net
|
(4,730
|
)
|
|
(15,874
|
)
|
||
Prepaid expenses and other current assets
|
(897
|
)
|
|
(5,147
|
)
|
||
Accounts payable
|
8,804
|
|
|
10,423
|
|
||
Accounts payable, due to related parties
|
511
|
|
|
507
|
|
||
Accrued expenses and taxes
|
(1,077
|
)
|
|
2,679
|
|
||
Other
|
(3,770
|
)
|
|
2,883
|
|
||
Net cash provided by (used in) operating activities
|
85,574
|
|
|
(7,409
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(4,972
|
)
|
|
(3,585
|
)
|
||
Capital expenditures - leased railcars
|
(48,095
|
)
|
|
(43,947
|
)
|
||
Proceeds from repayments of loans by joint ventures
|
1,250
|
|
|
1,125
|
|
||
Net cash used in investing activities
|
(51,817
|
)
|
|
(46,407
|
)
|
||
Financing activities:
|
|
|
|
||||
Repayments of long-term debt
|
(413,275
|
)
|
|
(196,527
|
)
|
||
Proceeds from long-term debt
|
625,306
|
|
|
318,682
|
|
||
Change in interest reserve related to long-term debt
|
(9,794
|
)
|
|
(87
|
)
|
||
Payment of common stock dividends
|
(8,541
|
)
|
|
(8,541
|
)
|
||
Debt issuance costs
|
(5,271
|
)
|
|
(2,403
|
)
|
||
Net cash provided by financing activities
|
188,425
|
|
|
111,124
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(235
|
)
|
|
(72
|
)
|
||
Increase in cash and cash equivalents
|
221,947
|
|
|
57,236
|
|
||
Cash and cash equivalents at beginning of period
|
88,109
|
|
|
97,252
|
|
||
Cash and cash equivalents at end of period
|
$
|
310,056
|
|
|
$
|
154,488
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Accounts receivable, gross
|
$
|
40,890
|
|
|
$
|
34,790
|
|
Less allowance for doubtful accounts
|
(1,155
|
)
|
|
(1,172
|
)
|
||
Total accounts receivable, net
|
$
|
39,735
|
|
|
$
|
33,618
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
89,614
|
|
|
$
|
78,924
|
|
Work-in-process
|
19,696
|
|
|
16,195
|
|
||
Finished products
|
14,967
|
|
|
24,441
|
|
||
Total inventories
|
124,277
|
|
|
119,560
|
|
||
Less reserves
|
(2,654
|
)
|
|
(2,553
|
)
|
||
Total inventories, net
|
$
|
121,623
|
|
|
$
|
117,007
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Operations / Corporate:
|
|
|
|
||||
Buildings
|
$
|
163,372
|
|
|
$
|
164,087
|
|
Machinery and equipment
|
197,081
|
|
|
196,768
|
|
||
Land
|
3,537
|
|
|
3,537
|
|
||
Construction in process
|
15,968
|
|
|
11,612
|
|
||
|
379,958
|
|
|
376,004
|
|
||
Less accumulated depreciation
|
(219,365
|
)
|
|
(215,217
|
)
|
||
Property, plant and equipment, net
|
$
|
160,593
|
|
|
$
|
160,787
|
|
Railcar Leasing:
|
|
|
|
||||
Railcars on leases
|
$
|
743,321
|
|
|
$
|
695,226
|
|
Less accumulated depreciation
|
(37,402
|
)
|
|
(31,911
|
)
|
||
Railcars on leases, net
|
$
|
705,919
|
|
|
$
|
663,315
|
|
Remaining 9 months of 2015
|
$
|
79,272
|
|
2016
|
104,002
|
|
|
2017
|
89,039
|
|
|
2018
|
75,638
|
|
|
2019
|
57,936
|
|
|
2020 and thereafter
|
47,702
|
|
|
Total
|
$
|
453,589
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Total depreciation expense
|
$
|
10,061
|
|
|
$
|
7,683
|
|
Depreciation expense on leased railcars
|
$
|
5,491
|
|
|
$
|
3,331
|
|
•
|
The North American railcar market has been, and ARI expects it to continue to be, highly cyclical. The railcar industry continues to experience high levels of demand with a December 31, 2014 backlog at its highest point in history. Based upon third party forecasts for the industry over the next several years, the Company expects demand to remain at healthy levels.
|
•
|
ARI is subject to various laws and regulations. No significant assessments have been made by the various regulatory agencies against ARI.
|
•
|
The railcar manufacturing industry has historically been extremely competitive.
|
•
|
ARI experienced three strong years of railcar order activity in 2012, 2013 and 2014. The Company expects order activity to remain at healthy levels, as mentioned above.
|
•
|
The primary long-lived assets at the reporting unit are machines with uses in various applications for numerous markets and industries. As such, management does not believe that there has been a significant decrease in the market value of the reporting unit’s long-lived assets.
|
•
|
The reporting unit has a history of positive operating cash flows that is expected to continue.
|
•
|
No part of the reporting unit’s net income is comprised of significant non-operating or non-recurring gains or losses, and no significant changes in balance sheet accruals were noted.
|
•
|
In addition, during 2014 there were no significant changes in the following with regard to the reporting unit that we expect to impact future results:
|
•
|
Key personnel;
|
•
|
Business strategy;
|
•
|
Buyer or supplier bargaining power; and
|
•
|
Legal factors.
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Carrying amount of investments in and loans to joint ventures
|
|
|
|
||||
Ohio Castings
|
$
|
9,656
|
|
|
$
|
9,194
|
|
Axis
|
20,038
|
|
|
19,974
|
|
||
Total investments in and loans to joint ventures
|
$
|
29,694
|
|
|
$
|
29,168
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Results of operations
|
|
|
|
||||
Revenues
|
$
|
23,388
|
|
|
$
|
14,009
|
|
Gross profit
|
$
|
2,048
|
|
|
$
|
147
|
|
Net earnings (loss)
|
$
|
1,132
|
|
|
$
|
(569
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Results of operations
|
|
|
|
||||
Revenues
|
$
|
20,340
|
|
|
$
|
14,851
|
|
Gross profit
|
$
|
5,063
|
|
|
$
|
312
|
|
Earnings before interest
|
$
|
4,789
|
|
|
$
|
72
|
|
Net earnings (loss)
|
$
|
3,664
|
|
|
$
|
(1,191
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Liability, beginning of period
|
$
|
953
|
|
|
$
|
1,385
|
|
Provision for warranties issued during the year, net of adjustments
|
608
|
|
|
289
|
|
||
Adjustments to warranties issued during previous years
|
(4
|
)
|
|
(37
|
)
|
||
Warranty claims
|
(217
|
)
|
|
(139
|
)
|
||
Liability, end of period
|
$
|
1,340
|
|
|
$
|
1,498
|
|
Remaining 9 months of 2015
|
$
|
54,025
|
|
2016
|
70,340
|
|
|
2017
|
55,398
|
|
|
2018
|
42,406
|
|
|
2019
|
28,533
|
|
|
2020 and thereafter
|
31,405
|
|
|
Total
|
$
|
282,107
|
|
Remaining 9 months of 2015
|
$
|
19,370
|
|
2016
|
25,783
|
|
|
2017
|
25,588
|
|
|
2018
|
25,590
|
|
|
2019
|
25,507
|
|
|
2020 and thereafter
|
499,328
|
|
|
Total
|
$
|
621,166
|
|
|
Pension Benefits
|
||||||
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Service cost
|
$
|
44
|
|
|
$
|
57
|
|
Interest cost
|
237
|
|
|
243
|
|
||
Expected return on plan assets
|
(320
|
)
|
|
(313
|
)
|
||
Amortization of net actuarial loss/prior service cost
|
202
|
|
|
69
|
|
||
Net periodic cost recognized
|
$
|
163
|
|
|
$
|
56
|
|
|
Postretirement Benefits
|
||||||
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
1
|
|
|
1
|
|
||
Amortization of net actuarial gain/prior service credit
|
(12
|
)
|
|
(14
|
)
|
||
Net periodic benefit recognized
|
$
|
(11
|
)
|
|
$
|
(13
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Share-based compensation expense
|
|
|
|
||||
Cost of revenues: Manufacturing
|
$
|
48
|
|
|
$
|
856
|
|
Cost of revenues: Railcar services
|
—
|
|
|
278
|
|
||
Selling, general and administrative
|
59
|
|
|
2,872
|
|
||
Total share-based compensation expense
|
$
|
107
|
|
|
$
|
4,006
|
|
|
Accumulated
Currency
Translation
|
|
Accumulated
Postretirement
Transactions
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||
|
|
||||||||||
Balance December 31, 2013
|
$
|
760
|
|
|
$
|
(2,254
|
)
|
|
$
|
(1,494
|
)
|
Currency translation
|
(459
|
)
|
|
—
|
|
|
(459
|
)
|
|||
Reclassifications related to pension and postretirement plans, net of tax effect of $21 (1)
|
—
|
|
|
34
|
|
|
34
|
|
|||
Balance March 31, 2014
|
$
|
301
|
|
|
$
|
(2,220
|
)
|
|
$
|
(1,919
|
)
|
|
|
|
|
|
|
||||||
Balance December 31, 2014
|
$
|
(275
|
)
|
|
$
|
(5,074
|
)
|
|
$
|
(5,349
|
)
|
Currency translation
|
(985
|
)
|
|
—
|
|
|
(985
|
)
|
|||
Reclassifications related to pension and postretirement plans, net of tax effect of $75 (1)
|
—
|
|
|
114
|
|
|
114
|
|
|||
Balance March 31, 2015
|
$
|
(1,260
|
)
|
|
$
|
(4,960
|
)
|
|
$
|
(6,220
|
)
|
(1)—
|
These accumulated other comprehensive income components relate to amortization of actuarial loss/(gain) and prior period service costs/(benefits) and are included in the computation of net periodic costs for our pension and postretirement plans. See Note 11 for further details and pre-tax amounts.
|
|
Revenues
|
|
Earnings (Loss) from Operations
|
||||||||||||||||||||
|
External
|
|
Intersegment
|
|
Total
|
|
External
|
|
Intersegment
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Manufacturing
|
$
|
221,811
|
|
|
$
|
83,731
|
|
|
$
|
305,542
|
|
|
$
|
44,793
|
|
|
$
|
25,645
|
|
|
$
|
70,438
|
|
Railcar leasing
|
24,585
|
|
|
—
|
|
|
24,585
|
|
|
14,786
|
|
|
(22
|
)
|
|
14,764
|
|
||||||
Railcar services
|
17,380
|
|
|
102
|
|
|
17,482
|
|
|
2,840
|
|
|
27
|
|
|
2,867
|
|
||||||
Corporate/Eliminations
|
—
|
|
|
(83,833
|
)
|
|
(83,833
|
)
|
|
(2,404
|
)
|
|
(25,650
|
)
|
|
(28,054
|
)
|
||||||
Total Consolidated
|
$
|
263,776
|
|
|
$
|
—
|
|
|
$
|
263,776
|
|
|
$
|
60,015
|
|
|
$
|
—
|
|
|
$
|
60,015
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Manufacturing
|
$
|
153,963
|
|
|
$
|
64,029
|
|
|
$
|
217,992
|
|
|
$
|
33,655
|
|
|
$
|
19,730
|
|
|
$
|
53,385
|
|
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
|
$
|
182,115
|
|
|
$
|
—
|
|
|
$
|
182,115
|
|
|
$
|
36,507
|
|
|
$
|
—
|
|
|
$
|
36,507
|
|
Total Assets
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Manufacturing
|
$
|
347,055
|
|
|
$
|
356,720
|
|
Railcar leasing
|
979,613
|
|
|
908,010
|
|
||
Railcar services
|
52,418
|
|
|
52,639
|
|
||
Corporate/Eliminations
|
62,470
|
|
|
(124,960
|
)
|
||
Total Consolidated
|
$
|
1,441,556
|
|
|
$
|
1,192,409
|
|
|
Three Months Ended
March 31, |
||||
|
2015
|
|
2014
|
||
Manufacturing
|
45.9
|
%
|
|
22.6
|
%
|
Railcar leasing
|
—
|
%
|
|
—
|
%
|
Railcar services
|
2.4
|
%
|
|
2.2
|
%
|
|
Three Months Ended
March 31, |
||||
|
2015
|
|
2014
|
||
Manufacturing revenues from significant customers
|
62.2
|
%
|
|
41.4
|
%
|
|
March 31,
2015 |
|
December 31,
2014 |
||
Manufacturing receivables from significant customers
|
53.7
|
%
|
|
60.5
|
%
|
•
|
risks relating to our compliance with, and the overall railcar industry's implementation of, United States and Canadian final regulations related to the transportation of flammable liquids by rail released on May 1, 2015;
|
•
|
our prospects in light of the cyclical nature of our business;
|
•
|
the health of and prospects for the overall railcar industry;
|
•
|
fluctuations in commodity prices, including oil and gas;
|
•
|
the highly competitive nature of the manufacturing, railcar leasing and railcar services industries;
|
•
|
the variable purchase patterns of our railcar customers and the timing of completion, customer acceptance and shipment of orders;
|
•
|
our ability to manage overhead and variations in production rates;
|
•
|
our ability to recruit, retain and train adequate numbers of qualified personnel;
|
•
|
our reliance upon a small number of customers that represent a large percentage of our revenues and backlog;
|
•
|
fluctuations in the 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 we use in railcar manufacturing;
|
•
|
the impact of an economic downturn, adverse market conditions and restricted credit markets;
|
•
|
the ongoing benefits and risks related to our relationship with Mr. Carl Icahn, our principal beneficial stockholder through Icahn Enterprises L.P. (IELP), and certain of his affiliates;
|
•
|
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 sufficiency of our liquidity and capital resources, including long-term capital needs to further support the growth of our lease fleet;
|
•
|
the impact, costs and expenses of any litigation we may be subject to now or in the future;
|
•
|
the risks associated with ongoing compliance with environmental, health, safety, and regulatory laws and regulations, which may be subject to change;
|
•
|
the conversion of our railcar backlog into revenues;
|
•
|
the risks associated with our current joint ventures and anticipated capital needs of, and production at our joint ventures;
|
•
|
the risks, impact and anticipated benefits associated with potential joint ventures, acquisitions or new business endeavors;
|
•
|
the implementation, integration with other systems and ongoing management of our new enterprise resource planning system; and
|
•
|
the risks related to our and our subsidiaries' indebtedness and compliance with covenants contained in our and our subsidiaries' financing arrangements.
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
$
|
|
%
|
|||||||||
|
2015
|
|
2014
|
|
Change
|
|
Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Manufacturing
|
$
|
221,811
|
|
|
$
|
153,963
|
|
|
$
|
67,848
|
|
|
44.1
|
|
Railcar leasing
|
24,585
|
|
|
11,746
|
|
|
12,839
|
|
|
109.3
|
|
|||
Railcar services
|
17,380
|
|
|
16,406
|
|
|
974
|
|
|
5.9
|
|
|||
Total revenues
|
$
|
263,776
|
|
|
$
|
182,115
|
|
|
$
|
81,661
|
|
|
44.8
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|||||||
Manufacturing
|
$
|
(174,534
|
)
|
|
$
|
(118,365
|
)
|
|
$
|
(56,169
|
)
|
|
(47.5
|
)
|
Railcar leasing
|
(7,701
|
)
|
|
(4,491
|
)
|
|
$
|
(3,210
|
)
|
|
(71.5
|
)
|
||
Railcar services
|
(13,845
|
)
|
|
(13,365
|
)
|
|
$
|
(480
|
)
|
|
(3.6
|
)
|
||
Total cost of revenues
|
$
|
(196,080
|
)
|
|
$
|
(136,221
|
)
|
|
$
|
(59,859
|
)
|
|
(43.9
|
)
|
Selling, general and administrative
|
(7,681
|
)
|
|
(9,387
|
)
|
|
1,706
|
|
|
18.2
|
|
|||
Earnings from operations
|
$
|
60,015
|
|
|
$
|
36,507
|
|
|
$
|
23,508
|
|
|
64.4
|
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2015
|
|
2014
|
|
Change
|
||||||
|
(in thousands)
|
|
|
||||||||
Ohio Castings
|
$
|
462
|
|
|
$
|
(190
|
)
|
|
$
|
652
|
|
Axis
|
1,335
|
|
|
(411
|
)
|
|
1,746
|
|
|||
Total Earnings (Loss) from Joint Ventures
|
$
|
1,797
|
|
|
$
|
(601
|
)
|
|
$
|
2,398
|
|
|
Three Months Ended March 31,
|
|
|
||||||||||||||||||||||||
|
2015
|
|
2014
|
|
|
||||||||||||||||||||||
|
(in thousands)
|
|
|
||||||||||||||||||||||||
|
External
|
|
Intersegment
|
|
Total
|
|
External
|
|
Intersegment
|
|
Total
|
|
Change
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Manufacturing
|
$
|
221,811
|
|
|
$
|
83,731
|
|
|
$
|
305,542
|
|
|
$
|
153,963
|
|
|
$
|
64,029
|
|
|
$
|
217,992
|
|
|
$
|
87,550
|
|
Railcar leasing
|
24,585
|
|
|
—
|
|
|
24,585
|
|
|
11,746
|
|
|
—
|
|
|
11,746
|
|
|
12,839
|
|
|||||||
Railcar services
|
17,380
|
|
|
102
|
|
|
17,482
|
|
|
16,406
|
|
|
132
|
|
|
16,538
|
|
|
944
|
|
|||||||
Eliminations
|
—
|
|
|
(83,833
|
)
|
|
(83,833
|
)
|
|
—
|
|
|
(64,161
|
)
|
|
(64,161
|
)
|
|
(19,672
|
)
|
|||||||
Total Consolidated
|
$
|
263,776
|
|
|
$
|
—
|
|
|
$
|
263,776
|
|
|
$
|
182,115
|
|
|
$
|
—
|
|
|
$
|
182,115
|
|
|
$
|
81,661
|
|
Earnings (Loss) from Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Manufacturing
|
$
|
44,793
|
|
|
$
|
25,645
|
|
|
$
|
70,438
|
|
|
$
|
33,655
|
|
|
$
|
19,730
|
|
|
$
|
53,385
|
|
|
$
|
17,053
|
|
Railcar leasing
|
14,786
|
|
|
(22
|
)
|
|
14,764
|
|
|
6,230
|
|
|
31
|
|
|
6,261
|
|
|
8,503
|
|
|||||||
Railcar services
|
2,840
|
|
|
27
|
|
|
2,867
|
|
|
2,181
|
|
|
38
|
|
|
2,219
|
|
|
648
|
|
|||||||
Corporate/Eliminations
|
(2,404
|
)
|
|
(25,650
|
)
|
|
(28,054
|
)
|
|
(5,559
|
)
|
|
(19,799
|
)
|
|
(25,358
|
)
|
|
(2,696
|
)
|
|||||||
Total Consolidated
|
$
|
60,015
|
|
|
$
|
—
|
|
|
$
|
60,015
|
|
|
$
|
36,507
|
|
|
$
|
—
|
|
|
$
|
36,507
|
|
|
$
|
23,508
|
|
|
Three Months Ended
March 31, |
||||
|
2015
|
|
2014
|
||
Segment Operating Margins
|
|
|
|
||
Manufacturing
|
23.1
|
%
|
|
24.5
|
%
|
Railcar leasing
|
60.1
|
%
|
|
53.3
|
%
|
Railcar services
|
16.4
|
%
|
|
13.4
|
%
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2015
|
|
2014
|
|
Change
|
||||||
|
(in thousands)
|
|
|
||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
85,574
|
|
|
$
|
(7,409
|
)
|
|
$
|
92,983
|
|
Investing activities
|
(51,817
|
)
|
|
(46,407
|
)
|
|
(5,410
|
)
|
|||
Financing activities
|
188,425
|
|
|
111,124
|
|
|
77,301
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(235
|
)
|
|
(72
|
)
|
|
(163
|
)
|
|||
Increase in cash and cash equivalents
|
$
|
221,947
|
|
|
$
|
57,236
|
|
|
$
|
164,711
|
|
•
|
increase our vulnerability to general economic and industry conditions;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments of our indebtedness, which would reduce the availability of our cash flow to fund working capital, capital expenditures, expansion efforts and other general corporate purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
place us at a competitive disadvantage compared to our competitors that have less debt; and
|
•
|
limit, among other things, our ability to borrow additional funds for working capital, capital expenditures, general corporate purposes or acquisitions.
|
•
|
cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our revenues;
|
•
|
pay substantial damages for past use of the asserted intellectual property;
|
•
|
obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and
|
•
|
redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may be costly and time-consuming, even if possible.
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
10.1
|
|
Form of 2014 Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.1 to ARI's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the SEC on May 5, 2014). #
|
|
|
|
10.2
|
|
Repair Services and Support Agreement dated as of April 24, 2015 by and between American Railcar Industries, Inc. and ACF Industries, LLC*^
|
|
|
|
10.3
|
|
Parts Purchasing and Sale Agreement dated as of April 24, 2015 by and between American Railcar Industries, Inc. and ACF Industries, LLC*^
|
|
|
|
31.1
|
|
Rule 13a-14(a), 15d-14(a) Certification of the Chief Executive Officer*
|
|
|
|
31.2
|
|
Rule 13a-14(a), 15d-14(a) Certification of the Chief Financial Officer*
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32.1
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
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101.INS
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XBRL Instance Document*
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101.SCH
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XBRL Taxonomy Extension Schema Document*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document*
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101.PRE
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XBRL Taxonomy Presentation Linkbase Document*
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101.DEF
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XBRL Taxonomy Definition Linkbase Document*
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*
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Filed herewith
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**
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Furnished herewith
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#
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Indicates management contract or compensatory plan or arrangement.
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^
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Indicates confidential treatment has been requested for certain provisions of this Exhibit pursuant to Exchange Act Rule 24b-2. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission.
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AMERICAN RAILCAR INDUSTRIES, INC.
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Date:
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5/6/2015
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By:
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/s/ Jeffrey S. Hollister
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Jeffrey S. Hollister, President and Chief Executive Officer
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By:
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/s/ Umesh Choksi
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Umesh Choksi, Senior Vice President,
Chief Financial Officer and Treasurer
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Exhibit No.
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Description of Exhibit
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10.1
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Form of 2014 Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.1 to ARI's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the SEC on May 5, 2014). #
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10.2
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Repair Services and Support Agreement dated as of April 24, 2015 by and between American Railcar Industries, Inc. and ACF Industries, LLC*^
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10.3
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Parts Purchasing and Sale Agreement dated as of April 24, 2015 by and between American Railcar Industries, Inc. and ACF Industries, LLC*^
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31.1
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Rule 13a-14(a), 15d-14(a) Certification of the Chief Executive Officer*
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31.2
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Rule 13a-14(a), 15d-14(a) Certification of the Chief Financial Officer*
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32.1
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
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101.INS
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XBRL Instance Document*
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101.SCH
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XBRL Taxonomy Extension Schema Document*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document*
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101.PRE
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XBRL Taxonomy Presentation Linkbase Document*
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101.DEF
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XBRL Taxonomy Definition Linkbase Document*
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*
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Filed herewith
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**
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Furnished herewith
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#
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Indicates management contract or compensatory plan or arrangement.
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^
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Indicates confidential treatment has been requested for certain provisions of this Exhibit pursuant to Exchange Act Rule 24b-2. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission.
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(a)
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Acknowledgments by the Parties.
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(a)
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Acknowledgments by the Parties.
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1.
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I have reviewed this quarterly report on Form 10-Q of American Railcar Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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5/6/2015
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/s/ Jeffrey S. Hollister
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Jeffrey S. Hollister, President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of American Railcar Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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5/6/2015
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/s/ Umesh Choksi
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Umesh Choksi, Senior Vice President,
Chief Financial Officer and Treasurer
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1.
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the quarterly report on Form 10-Q of the Company for the three months ended
March 31, 2015
(the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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5/6/2015
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/s/ Jeffrey S. Hollister
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Jeffrey S. Hollister, President and Chief Executive Officer
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1.
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the quarterly report on Form 10-Q of the Company for the three months ended
March 31, 2015
(the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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5/6/2015
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/s/ Umesh Choksi
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Umesh Choksi, Senior Vice President,
Chief Financial Officer and Treasurer
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