ARI 4Q earnings disappoint Street

St. Charles. Mo.-based American Railcar Industries Inc. reported fourth-quarter net income of $22.7 million, or $1.06 per share, late Wednesday, Feb. 18, 2015, after the closing bell on Wall Street. Net income was up 3% from the comparable quarter in 2013. The results fell short of Wall Street analyst consensus expectations of $1.09 per share.

ARI logged $150.5 million in the fourth quarter, also falling short of Wall Street expecations of $172 million.

For the full year 2014, ARI reported a profit of $99.5 million, or $4.66 per share, on revenue of $733 million.

“For the quarter, ARII delivered a total of 2,117 railcars, including 893 direct sale cars and 1,224 railcars built for the lease fleet (vs. our expectation of 1,000 direct sale cars and 1,250 cars for the lease fleet),” said KeyBanc Capital Markets Inc. analyst Steve Barger, in a note to clients Wednesday. “ARII took orders for 2,431 railcars in the quarter for a unit book:bill of 1.1x vs. the industry of 2.0x. At quarter end, ARII’s backlog stands at 11,732 railcars, which we estimate provides about 5.5 quarters of production visibility at current rates. ARII noted that ~24% of the cars in backlog was subject to lease.”

Barger added, “ARII does not provide numerical guidance, though we would expect management to continue its commitment to grow its lease fleet in FY15, which is likely to hinder EPS growth in the near term.”

Barger noted revenue from railcar services declined 7% in 2014 to $16.6 million, “primarily on account of certain repair projects being performed at the company’s hopper railcar manufacturing facility during 4Q13 that did not continue into 2014. ARII noted that production of hopper railcars has ramped up due to increased demand; thus, repair projects are no longer being performed at this facility.”