Greenbrier Lands Record Railcar Orders
Written by Marybeth Luczak, Executive Editor
(The Greenbrier Companies Photograph)
The Greenbrier Companies boosted its order book by 15,300 railcars in its fiscal fourth quarter ending Aug. 31, 2023. Customers operating in “various commercial sectors” are purchasing a “range of railcar types” with an aggregate value of $1.9 billion, the manufacturer reported Sept. 21. TD Cowen offered insight.
Greenbrier did not disclose the types of railcars or the customers.
According to Greenbrier, “broad demand” across all railcar types led to its highest quarterly orders in nearly a decade, and the orders demonstrate its “lease origination capabilities balanced with its direct sale expertise.”
Certain orders, the company added, are subject to “customary documentation and completion of terms.”
“The diverse range of orders across railcar types exceeded Greenbrier’s expectations for the quarter,” Greenbrier EVP Chief Commercial and Leasing Officer Brian J. Comstock said. “It also indicates Greenbrier’s strength in our North American and European markets. Order levels are distinct from the high demand seen during the crude-by-rail era of the 2010s. Today, one or two railcar types are not powering the market. Although railcar loadings are not fully back at pre-pandemic levels, we believe that growth in key commodity markets will keep railcar demand steady and above replacement levels in future periods.”
Commented Greenbrier President and CEO Lorie L. Tekorius: “Greenbrier continued its solid operational execution, and our Commercial team performed exceptionally in our fiscal fourth quarter. Our backlog and this order activity provide clear visibility through fiscal 2024, increasing our confidence in our operating expectations. Further, our leasing and aftermarket services businesses will provide additional stability and balance through economic cycles.”
The railcar manufacturer is expected to announce fiscal fourth-quarter and fiscal-year 2023 earnings Oct. 25. It reported fiscal third quarter earnings in June.
The TD Cowen Insight
“Greenbrier orders announced this morning affirm our view of a railcar manufacturing ramp up, starting in Calendar 2H23 and into CY24, as well as our view of lease rates peaking in Calendar 4Q23 for the industry,” TD Cowen Transportation OEM Analyst Matt Elkott said. “Greenbrier’s Fiscal 4Q23 manufacturing orders are up 233% sequentially and 219% year-over-year.
“Greenbrier ($41.34, Outperform) announced fiscal 4Q23 orders of 15,300, compared to our estimate of 10,500 and 4,600 in 3Q23. The quarterly orders are the highest in nearly a decade (Fiscal 3Q14, the CBR peak, saw 15,600 orders) and have an aggregate value of $1.9 billion.
“Management noted: ‘The diverse range of orders across railcar types exceeded Greenbrier’s expectations for the quarter. It also indicates strength in North American and European markets. Order levels are distinct from the high demand seen during the crude-by-rail era of the 2010s. Today, one or two railcar types are not powering the market. Although railcar loadings are not fully back at pre-pandemic levels, that growth in key commodity markets will keep railcar demand steady and above replacement levels in future periods.’
“The manufacturing orders affirm our view of a railcar manufacturing ramp up, starting in 2H23 and into CY24, as well as our view of lease rates peaking in Calendar 4Q23 for the industry. See our July 26 note on GATX ($111.07, Market Perform): Downgrade to Market Perform: We Can Finally See the Peak in the Distance.”
