Thursday, April 04, 2013

Greenbrier Cos. 2Q earnings fall, but beat Street

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Lake Oswego, Ore.-based The Greenbrier Cos. Thursday reported net earnings of $13.8 million, or 45 cents per diluted share, in its second fiscal quarter ending Feb. 28, 2013. That was down 22% from earnings of $17.7 million in the comparable fiscal year 2012 quarter, but still topped Wall Street's consensus estimate of 41 cents per diluted share. Revenue was $423.2 million.

The company said its new railcar manufacturing backlog as of Feb. 28 was 11,700 units, with an estimated value of $1.3 billion (average unit sale price of $111,000), compared with 9,700 units with an estimated value of $1.11 billion (average unit sale price of $114,000) as of Nov. 30, 2012, the company's first fiscal 2013 quarter.

New railcar deliveries totaled 2,700 units in the second quarter. Since the beginning of the company's fiscal year on Sept. 1, 2012, the company has received "orders for 9,600 railcar units valued at over $1 billion, of which 1,400 units were received during the first quarter, 4,500 units during the second quarter, and 3,700 units subsequent to the February 28, 2013 quarter end," the company said.

The company also said it plans to free up $100 million of capital by the end of FY14 by selling non-core or underperforming operations, particularly in its wheel services, refurbishment, and parts unit. It plans to use the freed capital to reduce debt, make investments, or bolster dividends.

President and CEO William A. Furman said, "Our business momentum continues to improve, validating the strength of our integrated business model. Our strategy is to diversify our product offerings, shift production to our lower-cost manufacturing footprint in Mexico, and increase throughput in our lease syndication and management services businesses. Since Sept. 1, 2012, we have received diverse orders for 9,600 railcars in North America and Europe valued at over $1 billion."

In a note to clients Thursday, KeyBanc Capital Markets Inc. analyst Steve Barger said, "GBX maintained its FY13 guidance of 13,000 deliveries and guided that 2013 revenue, adjusted EBITDA, and EPS would be similar to those of FY12. Management disclosed strategic plans to increase gross margins by 200 [basis points] to 13.5% by FY14 and expects to reduce capital employed by $100 million by FY14."

KeyBanc's Barger noted as disclosure that The Greenbrier Companies, Inc. "has been a client of the firm or its affiliates for non-securities related services" of KeyBanc within the past 12 months.