Of ARII's competitors, Union Tank Car Co. is a pureplay. As noted, Berkshire has basically bought it outright.
TRN is a conglomerate that makes mining equipment, wind turbines, etc. in addition to railcars. It has been converting its wind turbine production to tankcars as I understand it because of the demand. It has $3B in debt and the interest chews up its earnings though.
GBX is late to the game on tankcars. It has more capacity for hoppers that are less in demand but is trying to switch over as I understand it. Since hoppers are less in demand, GBX's margins aren't what ARII's are. It has favorable lending rates similar to ARII's but has more debt than ARII.
The industry is cyclical so ARII spreading out its revenue over the next 5-7 years is a positive in my view. Its running at close to full capacity and is expanding its manufacturing base. It is squirreling away revenues from that to be recognized over the next several years through its lease build-out. It has an agreement with another company largely owned by Icahn for ARII to license its tankcars specs for build by that other company. ARII receives 30% of the profit I believe. The cars being farmed out for build by that company aren't counted in backlog.
ARII now pays a dividend that is double the dividend yield of TRN. GBX doesn't pay a dividend as I understand it.
It makes railcars (and components for railcars through its joint ventures). 2012 saw a massive resurgence in demand for oil tank cars. ARII has capitalized on that increased demand. Traditionally, it sold most of its railcars to third parties that leased them to railroads and others. It changed its model in 2011 and 2012 given the spike in demand (and lease rates) for tankcars. Instead, since 12/31/10, it has been buying most of the tankcars it produces and putting them on the consolidated balance sheet to lease out over what are typically 5-7 year leases. The cost of making a tankcar is just over $100k. It can lease them out for between $24-$30k/year. That defers its revenue recognition into multiple years rather than all in one year. It also lets it depreciate the tankcars. There was a bonus tax depreciation for 2012 that I don't believe is present in 2013 but the demand this year for tankcars has been strong again.
It also got rid of 7.5% debt and replaced a portion of it with 2.7% debt. The spread is going to the bottom line. Given its buildout strategy, it will probably borrow more at 2.7% later in the year secured by the railcars it is putting on its balance sheet. It doesn't build them without firm lease commitments first as I understand it.
It also has a joint venture building railcars in India that just went online. I believe it uses the equity method of accounting for that but no revenues have yet been recognized. That should change later this year.
Its big competitors are TRN, GBX, and Union Tank Car Co. Union Tank Car Co. is not public and is owned by Marmon Holdings. Berkshire Hathaway has been gobbling up Marmon and now owns 90% I believe. Carl Icahn owns 55.7% of ARII. The big dogs (Buffett, Icahn) are dividing up the money made capitalizing on oil resurgence in the US. The demand for tankcars will be there until a whole lot of pipelines are built. That is deadlocked in the federal govt. right now.
Actually its down today, better than 4% as I write.
They missed analysts' #'s but exceeded yoy #'s. They got punished big last week and started a comeback but looks like some profit taking and also market is off today. Still big backlog of orders, ARII has room to run, fresh $ will come in as div yield approaches 3%.