American Railcar Reports Slight Profit Drop Despite Record Revenues

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite a slight drop in net income, American Railcar Industries Incorporated (NASDAQ:ARII) (ARI) (St. Charles, Missouri) has reported record revenues of $203 million, compared with $161.9 million in the same quarter year over year. The company said shipments of railcar totaled 7,965 for the year, 910 higher than 2007. ARI shipped 1,870 railcars in the fourth quarter, up 18% compared with 1,590 year over year. Chief Financial Officer Dale Davies said a capacity expansion at the company's Marmaduke, Arkansas, plant helped to increase railcar shipments.

Net income for the quarter totaled $7.6 million, compared with $7.9 million in the same quarter of the previous year. "Net earnings were lower for the prior year due to higher net interest expense, which resulted from lower interest income," Chief Financial Officer Dale Davies said.

In the company's manufacturing sector, revenues rose 27.2% to $190.8 million in the quarter, compared with $149.9 million a year ago. Revenues in the railcar services unit grew 2.4% to $12.3 million, compared with $12 million. The revenue increase in manufacturing is due to a larger number of shipments and higher prices because of raw material costs, Davies said. However, he said the increase was partially offset by lower selling prices of some railcars because of competition.

James Unger, who will officially become ARI's President and CEO effective April 1, said the order backlog for railcars as of the end of December 2008 totaled $373 million. About 80% of the backlog is expected to be shipped this year, he said. "We expect initial volumes to be low due to the state of the railcar market, but we expect to see increasing demand in 2010 and 2011," he said. "A weak economy and tight credit markets have resulted in fewer orders for new railcars. We expect a rebound in railcar building to begin in 2010 and that a recovery or expansion in railcar building would coincide with a recovery in the general economy."

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