Greenbrier’s Tekorius: ‘Managing Through Near-Term Economic Uncertainty’

Greenbrier President and CEO Lorie Tekorius

“Greenbrier’s business momentum continued in our fiscal first quarter, driven by a strong commercial performance that led to a book-to-bill of 1.2x,” Greenbrier President and CEO Lorie Tekorius reported on Jan. 6 for the quarter ended Nov. 30, 2022. “However, as new railcar production ramped, manufacturing margins were impacted by higher costs for outsourced parts, material shortages, supplier issues and lingering supply chain complications.”

She said the company will work through the fourth quarter to “source key components internally” to reduce input costs, and conclude manufacturing at its Portland, Ore., facility to “drive higher performance by optimizing production capacity and reducing our cost structure.”

Tekorius added that The Greenbrier Companies’ is committed to growing the leasing business, as its recent acquisition of 100% interest in GBX Leasing demonstrates. ”We are developing our railcar-leasing platform and increased the owned fleet to 14,100 units, or nearly 65% since April 2021,” she pointed out. ”Rising lease rates and high fleet utilization support our confidence in the value of leasing to our overall business.”

“Managing through near-term economic uncertainty,” Tekorius said, “we remain focused on execution and are confident in our outlook as railcar demand and our production efficiency normalizes through the fiscal year. In the meantime, Greenbrier is well-positioned with strong liquidity and a $3.4 billion manufacturing backlog.”

Following are Greenbrier’s first fiscal quarter 2023 highlights:

• Diversified new railcar orders came in at 5,600 units (valued at $700 million) and deliveries were 4,800 units, which the company said excluded “2,300 leased railcars produced onto the balance sheet to either be syndicated in future quarters or capitalized into the long-term lease fleet.”
• New railcar backlog as of Nov. 30, 2022, was 28,300 units (valued at $3.4 billion). This total excludes railcar conversion backlog of 1,800 units valued at $150 million, Greenbrier reported.
• Lease fleet utilization was 98%.
• Liquidity of $477 million, including $263 million in cash and $214 million of available borrowing capacity, was reported at quarter end.
• Greenbrier said that it was “[c]easing railcar manufacturing at Portland, Ore., facility following completion of [the] current production commitment and undertaking a strategic evaluation of [its] Marine business, resulting in a non-cash charge of $24 million related to the impairment of long-lived assets.”
• Net loss attributable to Greenbrier for the quarter was $17 million, or $0.51 per diluted share, on revenue of $767 million.
• An $18 million charge ($0.56 per share), net of tax, “related to the non-cash asset impairment,” is included in the first-quarter results, according to Greenbrier.
• Adjusted net earnings attributable to Greenbrier were $1.6 million or $0.05 per diluted share.
• Adjusted EBITDA for the quarter was $49 million, or 6.4% of revenue.

Business Update, Outlook for Fiscal Year 2023

Based on current trends and production schedules, Greenbrier said it anticipates deliveries of 22,000-24,000 units, including approximately 1,000 units in Greenbrier-Maxion (Brazil). Additionally, it expects revenue at $3.2 billion to $3.6 billion, and capital expenditures at approximately $240 million in Leasing & Management Services, $80 million in Manufacturing, and $10 million in Maintenance Services. Proceeds of equipment sales are expected to be approximately $110 million. Greenbrier said it would “[b]uild and capitalize into the lease fleet approximately 2,000 units,” and noted that these units are not included in the delivery guidance.

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