Thursday, July 29, 2010

ARI 2Q loss belies “modest improvement in demand”

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American Railcar Industries, Inc. Wednesday reported a second-quarter 2010 net loss of $5.9 million, or 28 cents per share, on revenue of $61.2 million, compared with net earnings of $1.1 million, or 5 cents per share, on revenue of $109.9 million in the year-ago quarter.

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ARI attributed the revenue decline “primarily due to lower railcar shipments and a change in product mix. The decrease was partially offset by increased railcar repair volumes primarily due to the company’s completed railcar repair facility expansions and the utilization of its railcar manufacturing facilities for railcar repair projects.”

ARI said it “shipped approximately 370 railcars [in the second quarter] as compared to approximately 980 railcars in the same period of 2009. Our backlog increased to approximately 1,210 railcars as of June 30, 2010.”

“The railcar industry has begun to see a modest improvement in demand during 2010,” said ARI President and CEO James Cowan. “Railcar orders have improved, railcar loadings have increased, and railcars are being returned to service from storage. We received orders for approximately 1,080 railcars during the second quarter of 2010. To fulfill the new railcar orders we will begin modestly ramping up production rates. Our railcar services segment continues to be strong, with revenues growing 25% year-over-year, to $34.6 million for the six months ended June 30, 2010. This growth resulted from higher volumes driven by repair plant expansions and repair work performed at our railcar manufacturing plants.” 

“From an order standpoint, the 1,080 railcars booked represents the best quarter since 2Q07, and more cars were ordered in 2Q10 than in the prior 10 quarters combined,” commented Steve Barger, director, Industrial Manufacturers, for KeyBanc CapitalMarkets, Inc., in a note.

ARI said its net loss for the six months ended June 30, 2010 was affected by lower operating earnings, an increase in netinterest expense, and increased losses from joint ventures, all partially offset by a decrease in selling, administrative, and other costs.