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| 8-K - FORM 8-K - American Railcar Industries, Inc. | d8k.htm |
 Exhibit 99.1
American Railcar Industries, Inc.
June 2010 |
 Forward
Looking Disclaimer Agile Responsive Innovative
Safe Harbor Statement
This presentation contains statements relating to our expected financial
performance and 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 presentation. Such statements
include, without limitation, statements regarding our strategic objectives
and long-term strategies, statements regarding our joint ventures,
statements regarding potential improvements in the railcar industry, the potential
for increased order activity, anticipated
future
production
rates
and
any
implication
that
the
Company’s
backlog
may
be
indicative
of
future
sales.
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 our forward-looking statements. Other
potential risks and uncertainties include, among other things: the impact of the
current economic downturn, adverse market conditions and restricted credit
markets, and the impact of the continuation of these conditions; our reliance
upon a small number of customers that represent a large percentage of our revenues
and backlog; the health of and prospects for the overall railcar industry;
our prospects in light of the cyclical nature of the railcar manufacturing
business and the current economic environment; anticipated trends relating to our
shipments, revenues, financial condition or results of operations; our
ability to manage overhead and production slowdowns; the highly competitive
nature of the railcar manufacturing industry; 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
the
Company
uses
in
railcar
manufacturing;
anticipated
production
schedules
for
our
products
and
the
anticipated financing needs, construction and production schedules of our joint
ventures; risks associated with potential joint ventures or acquisitions;
the risk of lack of acceptance of our new railcar offerings by our customers;
the sufficiency of our liquidity and capital resources; the conversion of our
railcar backlog into revenues; compliance with covenants contained in our
unsecured senior notes; the impact and anticipated benefits of any acquisitions we
may complete; the impact and costs and expenses of any litigation we may be subject
to now or in the future; the ongoing
benefits
and
risks
related
to
our
relationship
with
Mr.
Carl
C.
Icahn
(the
chairman
of
our
board
of
directors
and,
through
his
holdings
of
Icahn
Enterprises
LP,
our
principal
beneficial
stockholder)
and
certain
of
his
affiliates;
and the additional risk factors described in our filings with the Securities and
Exchange Commission. We expressly disclaim any duty to provide updates to
any forward-looking statements made in this presentation, whether as a result
of new information, future events or otherwise. |
 Leadership
James Cowan –
President and CEO
Dale C. Davies –
Sr. Vice President and CFO
Chief Executive Officer since April 2009
Executive Vice President and Chief Operating Officer
from December 2005 –
April 2009
30 years of industry experience
President and COO –
Maverick Tube Corporation
President and CEO –
Vallurec
and Mannesmann
Chief Financial Officer since June 2008
Vice President Finance from June 2005 –
June 2008
30+ years finance and manufacturing experience
Director Portfolio Analysis –
Solutia, Inc.
Corporate
Manager
Business
Analysis
–
Monsanto
Co.
Agile Responsive Innovative |
 Our
senior operations management team has an average of over 25 years of relevant
industry experience Management Team
Agile Responsive Innovative
Leadership |
 Cyclical
Industry Trends Source: Global Insight Freight Car Outlook.
Agile Responsive Innovative
Shipments of New Freight Railcars |
 Industry
Trends Note:
We
have
built
and
sold
a
prototype
intermodal
railcar
and
aluminum
coal
railcar
bottom
discharge
rotary
dump,
and
have
the
ability
to
build
these
products
at
our
railcar
manufacturing
facilities.
Covered Hopper Delivery Trends
Tank Railcar Delivery Trends
Intermodal Delivery Trends
Aluminum Coal Railcar Delivery Trends
Agile Responsive Innovative
Source: Global Insight Freight Car Outlook. |
 Freight
Railcar Market Overview Our
Company’s
focus
is
in
the
two
largest
segments
of
the
railcar
industry:
covered
hopper
and
tank
railcars,
which
accounted
for
66%
of
the
new
freight
railcars
delivered
in
the
12
months
ended
March
31,
2010.
Industry Railcar Backlog as of 3/31/2010
Industry Railcar Deliveries TTM 3/31/2010
Agile Responsive Innovative
Source: Global Insight Freight Car Outlook. |
 Key Railcar
Markets Hopper Railcars –
Second largest product
segment of new shipments in the railcar industry.
Product offerings include carbon or
stainless steel railcars that can carry:
Plastic pellet
Grain (including DDG)
Cement
Food service
Tank Railcars -
Largest product segment
of new shipments in the railcar industry.
Product offerings include general
service or pressurized, coiled, lined
and insulated and capable of
transporting:
Chemicals
Propane
Ethanol
Asphalt
Corn Syrup
Agile Responsive Innovative |
 Agile Responsive Innovative
ARI’s
Footprint |
 Main
Facilities •
Strategic locations
•
Near customers and major rail lines
•
Flexible and vertically integrated facilities
•
Produce multiple railcar types
•
Painting/lining capabilities
•
Rolling mill and fabrication plant
•
Non-union workforce
•
Ability to change manpower quickly to control cost
•
Railcar Components
•
Wheel and axle assembly plant
•
Tank head press
•
Component manufacturing facilities with extensive railcar
component product line
•
Aluminum and steel foundry plants
•
Axle Manufacturing Joint Venture (Axis, LLC)
•
Castings Joint Venture (Ohio Castings, LLC)
Agile Responsive Innovative
Flexible Railcar Manufacturing Plants
Component Manufacturing Plants |
 Preferential
Access to Components Vertically integrated supply chain provides ARI cost
savings Manufacture valves, discharge outlets, manway
covers, and valve
body castings for industrial and railroad customers
Maintain extensive joint venture and other strategic sourcing
arrangements
Ohio Castings, LLC (ARI 33% owner)
Joint venture that manufactures bolsters, sideframes,
couplers, yokes
Axis, LLC (ARI 42% owner)
Joint venture that manufactures railcar axles
Agile Responsive Innovative |
 Agile Responsive Innovative
Freight Railcar Joint Ventures
Axis, LLC
•
Axle manufacturing joint
venture
•
Produces and ships axles
both domestically and
internationally
•
ARI owns 42%
•
Located next to ARI’s
Paragould railcar facility
Ohio Castings, LLC
•
Castings Manufacturing
Joint Venture
•
Capacity to Produce
sideframes, bolsters and
other railcar components
•
ARI owns 33%
•
Located in Alliance, Ohio |
 Agile Responsive Innovative
Passenger Railcar Joint Venture
US Railcar Company, LLC
•
Passenger Railcar Manufacturing Joint
Venture
•
DMUs (Diesel Multiple Units) |
 International
Joint
Ventures
Amtek
Railcar Industries, Private
Limited
•
Indian Railcar Manufacturing Joint
Venture
•
ARI owns 50%
•
Facility to be constructed
•
Expected first production 3Q-11
Agile Responsive Innovative |
 Complementary Railcar Services to Diversify Revenue Mix
Integrated offering provides ARI with insights into customers’
needs and a
revenue stream not dependent on railcar production cycle
Railcar repair & refurbishment
light/heavy railcar repairs
exterior painting
interior lining and cleaning
safety valve testing
railcar inspections
wheel and axle replacement
railcar certification
Railcar fleet management services
mileage accounting
rolling stock taxes
regulatory compliance
engineering services
online service access
maintenance planning
Corporate Headquarters
Full service Shops
Mini Shop/Mobile Units
Agile Responsive Innovative
ARI Railcar Services Offering
Repair Locations |
 ARI’s
Key Processes Open communication among executives,
management and plant personnel allows for
efficient operations and all employees striving
to achieve one common goal of providing a
high quality product or service that exceeds
our customers’
expectations.
Agile Responsive Innovative |
 Agile Responsive Innovative
Growth History
2006
2007
2008
2009
•January IPO
•Purchase of Custom
Steel
•Fabrication facility at
Paragould
•Capacity expansion at
Marmaduke
•New Flexible railcar
production line at
Marmaduke
became
operational
•Formed Axis, LLC Joint
Venture for axle
manufacturing
•Wheel & Axle Assembly
Shop begins operation
•Tank Head Press
began operation
•Formed Joint Venture
for India railcar
production
•Record Revenue of
$800 million, record
EBITDA* and record
railcar shipments of
nearly 8,000
•Sarnia Repair paint
and lining shop
expansion
•Longview Repair tank
railcar lining shop
expansion
•Start up of Axis, LLC
Joint Venture
*
Please
see
reconciliation
of
net
earnings
to
EBITDA
on
exhibit
A. |
 Objectives
and Long-Term Strategies Agile Responsive Innovative
|
 •Formed Joint
Venture to
produce DMUs
•
India Joint Venture
construction to
begin
2010
•
Evaluating CIS
opportunities
•
Expect to produce
DMU railcars
•
India Joint Venture
operations start-up
expected
2011
Growth Projects
Agile Responsive Innovative |
 Repair Expansions
Axis, LLC Joint Venture
Tank Head Press
Marmaduke
Expansion
New Car Types Introduced
India Joint Venture
DMU Joint Venture
Potential CIS Opportunities
Growth and Cost Reduction Initiatives
Agile Responsive Innovative
Wheel & Axle Assembly
*
Please
see
reconciliation
of
net
earnings
to
EBITDA
on
exhibit
A. |
 Agile Responsive Innovative
Our Financial History
Revenue ($mil)
Segment Revenue (2009)
EBITDA ($mil) *
CAPEX
*Adjusted to exclude short-term investment activity and stock based
compensation expense. Please see reconciliation of net earnings to EBITDA on
Exhibit A. |
 Agile Responsive Innovative
Quarterly Financial Comparison
Revenue ($mil)
Segment Revenue (Q1 2010)
EBITDA ($mil) *
CAPEX
*Adjusted to exclude short-term investment activity and stock based
compensation expense. Please see reconciliation of net earnings to EBITDA on
Exhibit A. |
 2004
2005
2006
2007
2008
2009
Net (loss) earnings
$ 1,921
$ 14,768
$ 35,204
$ 37,264
$ 31,382
$ 15,458
Income tax (benefit) expense
2,191
9,356
20,752
22,104
18,403
6,568
Interest expense
3,667
4,846
1,372
17,027
20,299
20,909
Interest income
(4,422)
(1,658)
(1,504)
(13,829)
(7,835)
(6,613)
Depreciation
5,865
6,521
10,674
14,085
20,148
23,405
EBITDA
$ 9,222
$ 33,833
$ 66,498
$ 76,651
$ 82,397
$ 59,727
Expense related to stock option
compensation
$
-
$
- $ 8,116
$ 1,628
$ 109
$
- Expense (income) related to stock
appreciation rights compensation
-
-
-
299
(47)
1,174
Gain on asset conversion, net
-
-
(4,323)
-
-
-
Retirement benefit plan expense
-
10,911
-
-
-
-
Other (income) loss on short-term
investment activity
-
-
-
-
(3,657)
(20,858)
Adjusted EBITDA
$ 9,222
$ 44,744
$ 70,291
$ 78,578
$ 78,802
$ 40,043
Exhibit
A –
EBITDA Reconciliation
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Net (loss) earnings
$ 2,726
$ 1,132
$ 1,092
$ 10,508
$ (7,023)
Income tax (benefit) expense
1,743
724
(1,223)
5,324
(4,396)
Interest expense
5,140
5,136
5,286
5,347
5,321
Interest income
(1,183)
(1,802)
(1,925)
(1,703)
(730)
Depreciation
5,644
5,969
5,864
5,928
5,915
EBITDA
$ 14,070
$ 11,159
$ 9,094
$ 25,404
$ (913)
Expense related to stock option compensation
$
-
$
-
$
-
$
-
$
- Expense (income) related to stock appreciation
rights compensation
(35)
236
651
322
700
Gain on asset conversion, net
-
-
-
-
-
Retirement benefit plan expense
-
-
-
-
-
Other (income) loss on short-term investment
activity
96
(13)
(3,115)
(17,826)
(81)
Adjusted EBITDA
$ 14,131
$ 11,382
$ 6,630
$ 7,900
$ (294)
Annual Reconciliation
Quarterly Reconciliation
In Thousands, unaudited |
 EBITDA
represents
net
earnings
(loss)
before
income
tax
expense,
interest
expense
(income),
net
of
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
(loss),
cash
flows
from
operating
activities
or
other
statements
of
operations
or
statements
of
cash
flow
data
prepared
in
accordance
with
U.S.
GAAP.
Our
calculation
of
EBITDA
is
not
necessarily
comparable
to
that
of
other
similarly
titled
measures
reported
by
other
companies.
Adjusted
EBITDA
represents
EBITDA
before
share
based
compensation
expense
(income)
related
to
stock
appreciation
rights
(SARs),
and
before
gains
or
losses
on
investments
and
derivative
instruments.
We
believe
that
Adjusted
EBITDA
is
useful
to
investors
evaluating
our
operating
performance,
and
management
also
uses
Adjusted
EBITDA
for
that
purpose.
Our
SARs
(which
settle
in
cash)
are
revalued
each
quarter
based
upon
changes
in
our
stock
price.
Management
believes
that
eliminating
the
expense
(income)
associated
with
our
stock
based
compensation,
investments
and
derivates
allows
us
and
our
investors
to
understand
better
our
operating
results
independent
of
financial
changes
caused
by
the
fluctuating
price
and
value
of
our
common
stock,
investments
and
derivative
instruments.
Adjusted
EBITDA
is
not
a
financial
measure
presented
in
accordance
with
U.S.
GAAP.
Accordingly,
when
analyzing
our
operating
performance,
investors
should
not
consider
Adjusted
EBITDA
in
isolation
or
as
a
substitute
for
net
earnings
(loss),
cash
flows
from
operating
activities
or
other
statements
of
operations
or
statements
of
cash
flow
data
prepared
in
accordance
with
U.S.
GAAP.
Our
calculation
of
Adjusted
EBITDA
is
not
necessarily
comparable
to
that
of
other
similarly
titled
measures
reported
by other companies.
Exhibit
A –
EBITDA Reconciliation |
           Key Investment
Considerations Increasing
International
Presence
Quality
Leader
Flexible
Manufacturing
Established
Largest
Freight Railcar
Segments
Skilled
Railcar
Mfg.
Workforce
Agile Responsive Innovative |
 Agile Responsive Innovative |