American Railcar 4Q Profit Up 39% On Investment Gains

04.03.2010 (13:17)

American Railcar Industries Inc.’s (ARII) fourth-quarter profit climbed 39% on investment gains despite a steep drop in sales.

Shares rose 1.1%, to $10.04 in after-hours trading, as the freight-car manufacturer's results exceeded Wall Street's expectations. The stock has climbed 48% in the past year.

President and Chief Executive James Cowan predicted shipments and revenue would fall this year, compared with 2009, "due to continued weakness in the railcar market."

American Railcar’s results dropped sharply last year as railroad freight volumes fell, resulting in a growing number of idle cars. The company, majority-owned by activist inventor Carl Icahn, is adapting its technology to make tower structures for wind turbines to diversify its business.

For the latest quarter, American Railcar reported a profit of $10.5 million, or 50 cents a share, up from $7.6 million, or 35 cents a share, a year earlier. The latest results included 54 cents a share in investment gains.

Revenue dropped 61%, to $78.5 million, on fewer railcars shipped and a decline in surcharges.

Analysts estimated a loss of 5 cents on revenue of $77.1 million, according to a poll by Thomson Reuters.
Gross margin rose to 12% from 11.5%.

Revenue from manufacturing operations, which provides about 82% of the total, sank 66%, while revenue from railcar services grew 18%.

The company shipped 610 railcars during the quarter, down 67% from a year earlier and flat with the third quarter.
As of Dec. 31, the backlog was 550 railcars, down 53% from Sept. 30. The backlog has been hurt by the bankruptcy last fall of CIT Group Inc. (CIT), the company’s largest customer.

www.online.wsj.com