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American Railcar Industries, Inc. Message Board

  • tankersandbulkers tankersandbulkers Apr 25, 2013 5:07 PM Flag

    Why ARII missed

    Listening to the conference call, SG&A went up by an extra $5m in the quarter because they had to revalue the unvested stock based compensation given in prior quarters to management. This was caused by the stock going up so much in the quarter and cost them at least 15 cents maybe 25 cents which wasn't in the Street's estimates (there are 21.4 million shares outstanding).

    This is how they put it in the PRelease:"The increase in consolidated earnings was primarily due to an increase in the Company's manufacturing earnings from operations, partially offset by an increase in the Company's selling, general and administrative expenses driven by an increase in our share-based compensation expense, as a result of a significant increase in our stock price. The Company's share-based compensation fluctuates with our stock price. In the first quarter of 2013, our stock price increased approximately $15 per share compared to the stock price remaining flat during the same period in 2012."

    There was some concern about the backlog dropping but management said they were being more selective, i.e. holding out for higher prices and margins - what is wrong with that? Management wouldn't say it directly but I still think they prefer to build the lease business over direct sales which accounted for the drop in backlog as well.

    If hopper railcars come back in 2H 2013- they are building at only 25% of capacity - ARII will really be cooking!

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    • :"The increase in consolidated earnings was primarily due to an increase in the Company's manufacturing earnings from operations, partially offset by an increase in the Company's selling, general and administrative expenses driven by an increase in our share-based compensation expense, as a result of a significant increase in our stock price. The Company's share-based compensation fluctuates with our stock price. In the first quarter of 2013, our stock price increased approximately $15 per share compared to the stock price remaining flat during the same period in 2012."

      1Q 2012 stock price stayed at about $27.
      1Q 2013 stock price went from $32 to $45.
      1Q earnings reduced by 15¢ due to share based compensation expense.

      2Q 2012 stock price went from $27 to $29.
      2Q 2013 stock price began at $45, now at $34.
      How much should this INCREASE quarterly earnings due to REDUCED share based compensation expense?

      It sounds like they "mark to market" what they would eventually pay out in bonuses every quarter based on the increase or decrease in stock value during the corresponding quarter from a year ago.. Does this sound right?

    • I liked this a long time ago just never bought it . I think the best Icahn has got now is cvi. 6% divvy plus I would estimate another 10 - 12% in special divvies . by the way I believe it is way cheap but I m not the genious

    • I agree as far as EPS, but it was a bad time to miss on revenue and have the backlog shrink. This could be a great buying oppty. My question: if they are booking sales into the ACF enterprise, would this divert backlog away from ARII? If so, the decline may not have been as significant as appears on surface. They need to figure out a way to remove the blind spot created by ACF.

      I am buying into this drop.

      Sentiment: Strong Buy

    • Agree. Have to say that the 25% capacity quote was surprising. Not sure I understand how they make the money they do and run one of their plants at that capacity. Must have really good margin in the tank cars! And having another plant making them with 1000 car capacity has to be good. Still not sure of the relationship between the plant and ARII, and how much ARII will make from the cars produced? Didn't think cc shed enough info on this.

    • The share price based compensation charge sure won't be there next quarter!

 
ARII
65.85-0.30(-0.45%)Nov 21 4:00 PMEST

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