Greenbrier 2Q22: $3.6B Backlog, Lease Utilization 98%

Written by Marybeth Luczak, Executive Editor
“Robust order activity, strong liquidity and the evolution of our leasing business continues to strengthen Greenbrier, expanding our market position and earnings potential as we manage escalating costs and other operating strains,” The Greenbrier Companies President and CEO Lorie Tekorius said.

“Robust order activity, strong liquidity and the evolution of our leasing business continues to strengthen Greenbrier, expanding our market position and earnings potential as we manage escalating costs and other operating strains,” The Greenbrier Companies President and CEO Lorie Tekorius said.

Despite escalating costs and pandemic-related challenges in the second fiscal-quarter ending Feb. 28, 2022, The Greenbrier Companies achieved its “fifth consecutive quarter with a book-to-bill ratio exceeding 1.0x on orders approaching $1 billion,” President and CEO Lorie Tekorius reported on April 6. “Greenbrier ended the quarter with backlog at levels last seen six years ago.”

Following are Greenbrier’s second-quarter 2022 highlights:

• New railcar orders for 8,500 units (valued at $930 million) and deliveries of 4,800 units resulted in a 1.8x book-to-bill, according to the company.

• Diversified new railcar backlog as of Feb. 28, 2022 was 32,100 units (valued at $3.6 billion). Not included in that total is Greenbrier’s railcar refurbishment and other transportation equipment backlog of 3,200 units (valued at $180 million) for delivery during fiscal 2022 and 2023.

• Greenbrier reported that it increased lease fleet utilization to 98%, and regular lease fleet optimization and monetization generated $120 million of proceeds and $25 million of gains.

• Net earnings came in at $13 million, or $0.38 per diluted share, on revenue of $683 million, according to the company.

• GBX Leasing “completed the issuance of $323 million of asset-backed notes with a blended rate of 2.9%,” Greenbrier said. “The notes have a weighted average life of six years.”

“Financial results in the quarter reflect our unique business model and the opportunities our lease fleet provides to further enhance our performance,” Tekorius said. “This matters, particularly when we face evolving pandemic-related challenges, like intermittent labor shortages. Securing and receiving inputs for our products has the full attention of our global sourcing team. We are successfully navigating a supply chain experiencing higher raw material costs and, frequently, more expensive logistics activity. Robust order activity, strong liquidity and the evolution of our leasing business continues to strengthen Greenbrier, expanding our market position and earnings potential as we manage escalating costs and other operating strains.”

Business Update and Outlook

Based on current business trends and production schedules for fiscal 2022, Greenbrier said it expects deliveries of 17,500-19,500 units, including approximately 1,500 units in Greenbrier-Maxion (Brazil), and selling and administrative expense to be $200 million to $210 million. Additionally, it anticipates “[c]apital expenditures of $275 million in Leasing & Management Services, $55 million in Manufacturing, and $10 million in Maintenance Services. Net of proceeds of equipment sales of approximately $150 million, capital expenditures in Leasing & Management Services will be $125 million.”

Greenbrier Executive Chairman William A. Furman

“The tragedy in Ukraine and its impact on commodity prices are likely to have far-reaching consequences to the global railcar industry, including growth in rail freight in many sectors,” Greenbrier Executive Chairman William A. Furman said. “We are closely watching global commodity markets, including crude oil, grain and fertilizers, that are traditionally leading indicators for expansion in freight rail loadings. Now operating on four continents, Greenbrier is continuously assessing the effect of geopolitical developments, and actively working to support the safety and security of our employees and the cybersecurity of our information and data infrastructure. Since 2020, we have experienced some of the most daunting operating conditions in Greenbrier’s history. We have not only survived, but we have thrived in this changing environment. Our industry-leading manufacturing footprint, our growing services business and our established capabilities allow us to meet these challenges directly, bringing customers the solutions that meet their needs.”

More earnings report details can be found on the Greenbrier website.

The Cowen Insight

Cowen and Company OEM Transportation Analyst Matt Elkott summed up the Greenbrier 2Q22 earnings report this way: “All-around beat aided by gains; orders solid; guidance unchanged.”

Greenbrier’s “EPS of $0.38 beat our estimate of $0.13 and consensus of $0.19,” Cowen and Company OEM Transportation Analyst Matt Elkott reported. “Relative to our model assumptions, the net impact of equipment disposition and below-the-line-items was over $0.30 favorable, which helped offset a lower-than-expected GM of 8% (Cowen 9.9%; consensus 10.4%). Orders and deliveries exceeded our estimates. Guidance is unchanged.”

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