Greenbrier 1Q: 2018 guidance reaffirmed

Written by William C. Vantuono, Editor-in-Chief
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In reporting results for its first fiscal quarter (Sept. 1-Nov. 30, 2017), The Greenbrier Cos. reaffirmed its Fiscal Year 2018 guidance. The company expects revenue of $2.4 -$2.6 billion and diluted EPS of $4.00, based on deliveries of 20,000-22,000 units.

Net earnings attributable to Greenbrier for the quarter were $26.3 million, or $0.83 per diluted share, on revenue of $559.5 million. Quarterly results included $3.4 million ($2.3 million after-tax or $0.07 per diluted share) of expense related to resolution of litigation in a foreign jurisdiction. Additionally, the tax rate for the quarter was 33.3%, attributable to discrete items and the geographic mix of earnings. Compared to the previous annual tax rate guidance of 29%, the impact of the higher quarterly rate is $0.07 per diluted share. Adjusted EBITDA for the quarter was $76.9 million, or 13.7% of revenue. Orders for 3,200 diversified railcars were received during this quarter, valued at more than $290 million.

Greenbrier’s new railcar backlog as of Nov. 30, 2017 was 26,500 units with an estimated value of $2.56 billion. New railcar deliveries totaled 4,400 units for the quarter. The company’s board declared a quarterly dividend of $0.23 per share, payable on Feb. 16, 2018 to shareholders as of Jan. 26, 2018.

“Based on current business trends, industry forecasts and production schedules for fiscal 2018, and excluding the expected benefits of the recent tax reform act, Greenbrier believes deliveries will be approximately 20,000-22,000 units, including Greenbrier-Maxion (Brazil), which will account for up to 10% of deliveries,” the company said. “Revenue will be $2.4-$2.6 billion; diluted EPS will be $4.00.”

“Greenbrier advanced several key initiatives during the quarter and is on track to achieve our goals for the year,” said Chairman and CEO William A. Furman. “While the new railcar market in North America is challenging, broad-based demand for Greenbrier’s products and services remains steady, and we expect will trend higher as we advance through fiscal 2018. During the recent quarter, Greenbrier received 3,200 orders for a broad range of railcar types including covered hoppers, tanks, automotive carrying units and our first orders for open top hoppers for use in aggregate service. Greenbrier’s disciplined balance sheet management has resulted in a strong cash position and very low net debt, enabling us to invest strategically and return capital to shareholders. Good backlog visibility combined with a strong balance sheet provides the flexibility we need to build railcars when and where customers need them, across four continents. Based on first-quarter results, we are confident in our guidance for the year. As fiscal 2018 progresses, we will continue integration of our new manufacturing investments and will continue to expand internationally. Greenbrier is well-positioned to achieve its ambitious business objectives for fiscal 2018 as growth in North American and international markets drives increased revenues, deliveries and EPS, compared to fiscal 2017.”

“Greenbrier’s revenue was 5% below consensus; EBITDA was largely in line with expectations, but a significantly higher gain on disposition of equipment than we modeled was a key contributor,” commented Cowen and Co. analyst Matt Elkott. “Orders were 7% above our estimate, and the ASP of orders was 16% above our estimate. The 16% gross margin was just 20 bps better than our estimate and 20 bps below consensus.”

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