Greenbrier beats Q2 estimates, extends car lease agreement with MUL

Railcar builder Greenbrier Companies reported sales and earnings that beat estimates, and announced a new railcar lease agreement worth more than $1 billion.

The Lake Oswego, Ore.-based company reported adjusted second-quarter earnings of $1.09 per share on sales of $566 million, down from $1.14 and $669.08 million in the year-ago quarter.

But current earnings topped consensus estimates of 84 cents on sales of $521 million compiled by Thomson Reuters.

Greenbrier also announced a 5% increase to 22 cents per share in its quarterly dividend.

The builder received orders for 700 new railcars valued at $50 million in the quarter, at an average price of approximately $71,000 per car. Orders for 1,000 new railcars were received after quarter end.

The new railcar backlog as of Feb. 28 was 22,600 units with an estimated value of $2.44 billion, or an average unit sale price of $108,000. New car deliveries totaled 3,900 units for the quarter.

In related news, Greenbrier and railcar lessor Mitsubishi UFJ Lease & Finance Company Ltd. (MUL) of Tokyo plan a billion-dollar expansion of their lease agreement from 5,000 to 25,000 cars over the next four years.

A new Memorandum of Understanding for the North America business includes a multi-year purchase commitment by MUL for 6,000 newly-manufactured cars through 2020. Also, MUL has committed to obtain all its new cars exclusively from Greenbrier through 2023.

The agreement also calls for MUL in the coming years to supplement its portfolio growth through a combination of lease syndications and used equipment owned and originated by Greenbrier, based in Lake Oswego, Ore.

Greenbrier and MUL in 2014 collaborated on a railcar lease syndication and asset management partnership. Under this arrangement Greenbrier has syndicated and sold to MUL nearly 5,000 new and used leased railcars, which Greenbrier currently manages.

Under the memorandum the partners will form a new 50-50 asset management service entity solely for railcars in the MUL fleet. The 5,000 cars currently managed by Greenbrier will be managed by this new entity. Greenbrier will receive fee income from MUL related to its railcar asset management services.

MUL in the release said it aims to increase its market share to put it among North America’s top eight operating lessors of railcars.