American Commercial Lines Inc.ACLI

Morningstar Rating

Stock Research and Analysis

by Adam Fleck

Near-term dry-bulk barging struggles are challenging American Commercial Lines, but the firm's recent decision to dramatically shift its cargo mix should improve profitability over the long run.

ACL operates more than 2,500 dry- and liquid-bulk barges Read more

Bulls Say

ACL recently amended its bank debt agreement, delaying its upcoming principal repayment two years (to 2011). Although the firm faces higher interest expenses and reduced available financing, the agreement greatly reduces the probability of imminent solvency issues.

ACL's decision to concentrate more heavily on liquid-cargo barging should reduce cyclicality and improve profitability over the long run.

The firm will have to replace its aging fleet in the near future, but it faces reduced costs because of its internal barge-building subsidiary.

The Jones Act prevents foreign competition among shippers in U.S.-to-U.S. ports (including the inland ports that ACL services). Read more

Bears Say

Option contracts held by ACL's customers may force the barge manufacturer to build assets at lower margins than it typically enjoys through 2011.

Even though the firm is protected from foreign rivals, fierce domestic competition prevents any company--including an industry leader like ACL--from holding any pricing power.

ACL faces a much larger rival, Kirby, in its attempt to expand its liquid-barging business. Read more

Strategy

ACL strives to be the most-efficient barge shipper on U.S. rivers. Because the company has a high-fixed-cost business model, reducing the amount of time that cargo is stationary on a barge is critical Read more

Management

In 2008, CEO Mark Holden, CFO Chris Black, and COO Jerry Linzey left ACL after three years with the firm. Although these executives enacted a turnaround plan that brought the firm back to profitability after bankruptcy, turmoil in the underlying business Read more

Profile

Based in Jeffersonville, Ind., American Commercial Lines operates barges in North America, primarily along the Mississippi River in the U.S. The company is also the second-largest Read more

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