American Railcar Industries Net Falls 73 Percent

A 73 percent drop in first quarter net income and 15 percent revenue slide still left rail equipment maker American Railcar Industries with $261 million in cash.

The company earned $2.7 million in the period, down from $10.1 million a year earlier, on $157 million in revenue. ARI specializes in bulk hopper and tank car manufacturing, operates shops to repair or refurbish used railcars and offers fleet management services.

James Cowan, who took over as president and CEO April 1, said car shipments will be slowing from the 1,491 the company sent to customers in the first three months. But he said ARI had “a solid manufacturing performance” with sales of $145 million and showed strength as well in its car services business with $12 million in revenue.

Plunging freight traffic levels have pushed customers – shippers, leasing firms and railroads – to idle hundreds of thousands of railcars, which in turn has pushed down new car orders and hurt sales for equipment manufacturers.

But Cowan said “our balance sheet continues to be a source of strength with $261.1 million in cash and $31.6 million in short-term investments.”

ARI’s car shipments fell from 1,902 in the 2008 quarter. The March 31 backlog of railcars on order was 2,752 units, down from 4,243 at the end of December. The company said profit was squeezed both by lower shipments “and market conditions that resulted in competitive pricing.”

ARI has already been cutting jobs to trim costs, and Cowan said it will keep evaluating its output to meet current demand, and align its workforce accordingly.

Contact John D. Boyd at jboyd@joc.com .