Fourth Quarter and Annual 2007 Earnings Call - Final.(Financial report)

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, ladies and gentlemen, and welcome to the American Railcar Industries' fourth quarter annual 2007 earnings conference call. My name is Michelle, and I will be your coordinator for today. (OPERATOR INSTRUCTIONS.) As a reminder, this conference is being recorded for replay purposes.

And I would now like to turn the presentation over to the host for today's call, Mr. James Unger, President and Chief Executive Officer. Please proceed.

JAMES UNGER, PRESIDENT AND CEO, AMERICAN RAILCAR INDUSTRIES, INC.: Good morning. I'd like to welcome all of those on the call, as well as our audio webcast listeners today. For all of those who are interested, a replay of this broadcast will also be available on our website, www.americanrailcar.com, beginning shortly after this call ends.

I'm Jim Unger, the Chief Executive Officer of American Railcar, and with me this morning is Jim Cowan, our Chief Operating Officer, and Bill Benac, our Chief Financial Officer.

We will open the call today with a brief prepared statement related to the Company's 2007 financial results. After that, we will make a few comments on the status of our operations, update you on the progress on our capital program, and comment on other events important to ARI. Following these remarks, we will open the conference to your questions.

Bill, would you begin the conference with a review of the financial results for the quarter and year?

BILL BENAC, CFO, AMERICAN RAILCAR INDUSTRIES, INC.: Sure, Jim. Thank you.

I'm pleased to present our 2007 fourth quarter and annual financial results. Before we get started, let me remind everyone that today's call contains forward-looking statements including statements as to estimates, expectations, intentions, and predictions of future financial performance. Participants are directed to American Railcar Industries' SEC filings for a description of certain of the business issues and risks, a change in any one of which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Also, please note that the Company does not undertake any obligation to update any forward-looking statements made during the call.

The fourth quarter was a good quarter for ARI in terms of both revenue and earnings. Revenues were $162 million for the quarter, down $3 million from the same quarter of the prior year, but up $22 million from the third quarter of 2007. Deliveries of railcars in the quarter were strong, with 1,590 railcars delivered, down 6% from the same quarter of 2006, but up 25% from the 1,276 railcars we delivered in the third quarter of 2007. The decrease in railcar deliveries and revenues from the prior year was primarily attributable to a decrease in hopper car orders, resulting from softer demand and increased competition.

Partially offsetting that decrease from last year and driving the increase from last quarter, were increased tank railcar shipments due to increased capacity at our Marmaduke facility and the initial tank railcar shipments under our ACF Manufacturing Agreement. Overall, our 12% profit margin was 190 basis points higher than the comparable period in 2006 and increased 60 basis points from the third quarter of 2007.

Net earnings attributable to common shareholders for the quarter were $7.9 million or $0.37 per diluted share. For the same quarter of 2006 we reported net earnings attributable to common shareholders of $6.1 million or $0.29 per diluted share. EBITDA for the quarter was $16.9 million as compared to $12.3 million for the same period in 2006. The increase in earnings was primarily driven by increased manufacturing and labor efficiencies across the board at our railcar parts and assembly plants, partially offset by decreased production at our hopper railcar facility.

For the year revenues were a record high of $698 million, $52 million higher than 2006. Railcar shipments for the year totaled 7,055 railcars, 108 more than 2006. The major reasons for the increase in revenues and shipments included the recovery from tornado damage in 2006, added capacity at our tank railcar manufacturing facility, and additional tank railcar shipments under our ACF Manufacturing Agreement, that I mentioned earlier. These were partially offset by a decrease in hopper railcar shipments in 2007.

Net earnings attributable to common shareholders for the full year of 2007 were $37.3 million or $1.74 per diluted share compared to $34.6 million or $1.67 per diluted share for 2006. The 2006 results included a $4.3 million pretax gain or $0.13 per diluted share on the voluntary asset -- on the involuntary asset conversion, resulting from the insurance recovery of the tornado damage at our tank railcar factory. Increased earnings were driven by the factors I mentioned earlier.

EBITDA for …