Greenbrier achieves goal of at least 20% gross margin in 3Q

The Greenbrier Companies Inc. (GBRX), Lake Oswego, Ore., released its financial results July 1, 2015, for its third fiscal quarter, which ended on May 31, 2015.

The results show net earnings attributable to GBRX for the quarter were $42.8 million, or $1.33 per diluted share on revenue $714.6 million; an adjusted EBITDA (earnings before interest taxes, depreciation and amortization) for the quarter was a record $116.3 million, or $16.3% of revenue.

GBRX reports that its new railcar backlog as of May 31, 2015 was 45,100 units with an estimated value of $4.86 billion and an average sale price of $108,000. This is compared to 46,000 units with an estimated value of $4.78 billion and an average sale price of $104,000 as of February 28, 2015. In addition, diversified orders for 5,3000 new railcars valued at $640 million were received during the quarter and new railcar deliveries totaled 5,700 units for the quarter, compared to 5,200 units for the quarter that ended February 28, 2015.

According to GBRX, the company continues to make progress on its longer-term financial goals with an aggregate gross margin that has expanded to 20.9%, compared to 19.9% in the prior quarter, reaching the goal of at least 20% gross margin by the second half of fiscal 2016.

“We remain on track to reach the goal of at least 25% ROIC (return on invested capital) by the second half of fiscal 2016. Annualized ROIC of 21.3% reflects record operating results tempered by working capital needs associated with higher production and syndication volumes, and planned capital expenditure programs,” the company said.

“Our diversified and integrated business model continues to pay off, with record revenue, adjusted EBITDA and deliveries this quarter,” said GBRX Chairman and CEO William A. Furman. “Aggregate gross margin grew to 20.9%, led by execution from our manufacturing and lease syndication business. We achieved our goal of at least 20% aggregate margin a full year ahead of plan despite an abrupt decline in scrap metal prices, which adversely affected our wheel services business. Results for the quarter include non-recurring costs of about $5.2 million after-tax, or $0.16 per diluted share, associated with a potential acquisition, for which discussions terminated in June, and advocacy of new tank car safety regulations. Our financial outlook for the year, excluding these non-recurring items, remains positive with previous guidance.”

“Since the beginning of our fiscal year on September 1, 2014, we have received orders for 29,500 new railcar units valued at $3.0 billion, with approximately 80% of these orders being non-energy related. Our railcar backlog value has grown every quarter since the first quarter of fiscal 2014. The most recent industry data reported for North America is as of March 31, 2015. Our book-to-bill ratio in North America for the 12 months ended March 31, 2015 was 2.6x, nearly 50% higher than 1.8x for the industry as a whole. Our strong commercial performance and diversified product offerings allowed us to capture 43% of all orders placed across the railcar industry in the most recently reported calendar quarter. With deliveries that stretch into 2018, we have a long runway ahead to deliver robust earnings and free cash flow, driving shareholder value. We will continue our balanced approach of reinvesting free cash flow into projects that generate high rates of return, seeking acquisitions in our core competencies and returning capital to shareholders. We remain confident in the long-term strength of our strategy and integrated business model,” Furman added.