Thursday, April 03, 2014

Greenbrier Cos. 2Q earnings disappoint Street

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Lake Oswego, Ore.-based The Greenbrier Cos., Inc. reported second-quarter earnings Thursday, April 3, 2014, with gains in revenue and earnings measured against the comparable quarter in 2013. But Wall Street chose to focus on the performance of both categories relative to its higher expectations.

Greenbrier Cos. reported net earnings of $15.6 million, or 50 cents per share, up from $13.8 million, or 45 cents per share, in the second fiscal quarter of 2013. Excluding restructuring charges, net earnings for the 2014 fiscal secondquarter were 51 cents per share, 9 cents below Wall Street analyst estimates. Revenue of $502.2 million was up 19% from a year ago, but also below Street estimates of $508.7 million.

The company's second quarter ended Feb. 28, 2014. New railcar backlog as of Feb. 28 was 15,200 units with an estimated value of $1.54 billion (average unit sale price of $101,000) compared with 13,500 units with an estimated value of $1.43 billion (average unit sale price of $106,000) on Nov. 30, 2013, the end of the company's first fiscal 2014 quarter.

Operating margins expanded by 80 basis points year-over-year, according to Steven Barger, analyst at KeyBanc Capital Markets Inc. "The miss vs. our [KeyBanc] estimate was likely driven by lower margins due to manufacturing line changeovers in Mexico, lower railcar production rates at the Gunderson facility and impact of severe weather.

"However, management noted that the manufacturing line changeovers were complete and Gunderson will likely operate at higher marine and railcar production rates driving higher margins in fiscal 2H14," Barger noted. "While management has achieved its capital reduction initiative and remains on track to achieve 13.5% gross margins in fiscal 4Q14, it announced plans to double its tank car production capacity and increase tank car repair and retrofit capacity in anticipation of strong demand."