Operating Segment and Sales and Credit Concentrations

3 Months Ended

Mar. 31, 2017

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. 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. Intersegment revenues and profits 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.

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 as well as certain operating costs related to this segment's use of a portion of the Company's tank railcar manufacturing facility to perform railcar repair work.

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 March 31, 2017
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	60,726	$	60,104		$	120,830		$	9,151
Railcar leasing	33,835		—			33,835			18,810
Railcar services	20,120		332			20,452			1,716
Corporate	—		—			—			(4,272		)
Eliminations	—		(60,436		)	(60,436		)	(3,490		)
Total Consolidated	$	114,681	$	—		$	114,681		$	21,915
	Three Months Ended March 31, 2016
	Revenues
	External		Intersegment			Total			Earnings (Loss) from Operations
	(in thousands)
Manufacturing	$	123,792	$	23,631		$	147,423		$	22,686
Railcar leasing	32,768		—			32,768			19,675
Railcar services	19,620		959			20,579			3,508
Corporate	—		—			—			(4,508		)
Eliminations	—		(24,590		)	(24,590		)	(664		)
Total Consolidated	$	176,180	$	—		$	176,180		$	40,697

Total Assets	March 31, 2017			December 31, 2016
	(in thousands)
Manufacturing	$	237,705		$	256,622
Railcar leasing	1,314,257			1,254,824
Railcar services	60,611			57,061
Corporate/Eliminations	(152,936		)	(112,257		)
Total Consolidated	$	1,459,637		$	1,456,250

Sales to Related Parties

As discussed in Note 14, Related Party Transactions, ARI has numerous arrangements with related parties. Below is a summary of revenue from affiliates for each operating segment reflected as a percentage of total consolidated revenues.

	Three Months Ended   March 31,
	2017		2016
Manufacturing	—	%	0.3	%
Railcar leasing	0.2	%	—	%
Railcar services	5.4	%	4.5	%

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 months ended March 31, 2017 and 2016.

	Three Months Ended   March 31,
	2017		2016
Manufacturing revenues from significant customers	42.7	%	50.0	%

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 March 31, 2017 and December 31, 2016.

	March 31, 2017		December 31, 2016
Manufacturing receivables from significant customers	23.0	%	53.4	%