Operating Segment and Sales and Credit Concentrations

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Operating Segment and Sales and Credit Concentrations

Operating Segments and Sales and Credit Concentrations

ARI operates in three reportable segments: manufacturing, railcar leasing and railcar services. These reportable segments are organized based upon a combination of the products and services offered and performance is evaluated based on revenues and segment earnings (loss) from operations. Intersegment revenues are accounted for as if sales were to third parties.

Manufacturing

Manufacturing consists of railcar manufacturing, and railcar and industrial component manufacturing. Intersegment revenues are determined based on an estimated fair market value of the railcars manufactured for the Company’s railcar leasing segment, as if such railcars had been sold to a third party. Revenues for railcars manufactured for the Company’s railcar leasing segment are not recognized in consolidated revenues as railcar sales, but rather lease revenues are recognized over the term of the lease. Earnings from operations for manufacturing include an allocation of selling, general and administrative costs, as well as profit for railcars manufactured for the Company’s railcar leasing segment based on revenue determined as described above.

Railcar leasing

Railcar leasing consists of railcars manufactured by the Company and leased to third parties under operating leases. Earnings from operations for railcar leasing include an allocation of selling, general and administrative costs and also reflect origination fees paid to ARL associated with originating the lease to the Company’s leasing customers. The origination fees represent a percentage of the revenues from the lease over its initial term and are paid up front.

Railcar services

Railcar services consists of railcar repair services provided through the Company's various repair facilities, including mini repair shops and mobile repair units, offering a range of services from full to light repair. Earnings from operations for railcar services include an allocation of selling, general and administrative costs.

Segment financial results

The information in the following table is derived from the segments’ internal financial reports used by the Company’s management for purposes of assessing segment performance and for making decisions about allocation of resources.

	Three Months Ended June 30, 2016
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	97,548	$	9,266		$	106,814		$	15,538
Railcar leasing	33,209		—			33,209			20,237
Railcar services	19,727		609			20,336			3,059
Corporate	—		—			—			(4,441		)
Eliminations	—		(9,875		)	(9,875		)	1,581
Total Consolidated	$	150,484	$	—		$	150,484		$	35,974
	Three Months Ended June 30, 2015
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	144,481	$	123,693		$	268,174		$	69,941
Railcar leasing	28,216		—			28,216			16,976
Railcar services	19,301		94			19,395			3,880
Corporate	—		—			—			(2,463		)
Eliminations	—		(123,787		)	(123,787		)	(33,070		)
Total Consolidated	$	191,998	$	—		$	191,998		$	55,264
	Six Months Ended June 30, 2016
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	221,340	$	32,897		$	254,237		$	38,224
Railcar leasing	65,977		—			65,977			39,912
Railcar services	39,347		1,568			40,915			6,567
Corporate	—		—			—			(8,949		)
Eliminations	—		(34,465		)	(34,465		)	917
Total Consolidated	$	326,664	$	—		$	326,664		$	76,671
	Six Months Ended June 30, 2015
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	366,292	$	207,424		$	573,716		$	140,379
Railcar leasing	52,801		—			52,801			31,740
Railcar services	36,681		196			36,877			6,747
Corporate	—		—			—			(6,813		)
Eliminations	—		(207,620		)	(207,620		)	(56,774		)
Total Consolidated	$	455,774	$	—		$	455,774		$	115,279

Total Assets	June 30, 2016			December 31, 2015
	(in thousands)
Manufacturing	$	260,088		$	272,721
Railcar leasing	1,199,291			1,190,180
Railcar services	59,290			56,880
Corporate/Eliminations	(86,069		)	5,293
Total Consolidated	$	1,432,600		$	1,525,074

Sales to Related Parties

As discussed in Note 15, Related Party Transactions, ARI has numerous arrangements with related parties. As a result, from time to time, ARI offers its products and services to affiliates at terms and pricing no less favorable to ARI than the terms and pricing provided to unaffiliated third parties. Below is a summary of revenue from affiliates for each operating segment reflected as a percentage of total consolidated revenues.

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Manufacturing	0.1	%	32.2	%	0.2	%	40.1	%
Railcar leasing	—	%	—	%	—	%	—	%
Railcar services	4.8	%	3.3	%	4.7	%	2.8	%

Sales and Credit Concentration

Manufacturing revenues from customers that accounted for more than 10% of total consolidated revenues are outlined in the table below. The railcar leasing and railcar services segments had no customers that accounted for more than 10% of the total consolidated revenues for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Manufacturing revenues from significant customers	46.1	%	56.8	%	33.9	%	50.3	%

Manufacturing accounts receivable from customers that accounted for more than 10% of consolidated receivables (including accounts receivable, net and accounts receivable, due from related parties) are outlined in the table below. The railcar leasing and railcar services segments had no customers that accounted for more than 10% of the consolidated receivables balance as of June 30, 2016 and December 31, 2015.

	June 30, 2016		December 31, 2015
Manufacturing receivables from significant customers	43.7	%	20.9	%