The Greenbrier Companies, in reporting financial results for its second fiscal quarter ended Feb. 28, said earnings it characterized as “underwhelming” due to certain one-time charges were expected and should be confined to the quarter.
Greenbrier on April 5 posted net earnings of $2.8 million on revenue of $658.7 million, a higher railcar backlog of 26,000 units with an estimated value of $2.7 billion, orders for 3,800 railcars valued at nearly $450 million, and 5,100 new railcar deliveries.
Net earnings were $0.08 per diluted share, and included a charge of $4.7 million, or $0.14 per diluted share, related to loss accruals on certain railcar contracts and facility closure costs in the company’s railcar repair operations. Adjusted EBITDA for the quarter was $37.4 million, 5.7% of revenue, and include $7.6 million related to railcar contract loss accruals and facility closure costs, Greenbrier said.
The company’s board declared a quarterly dividend of $.25 per share, payable on May 15 to shareholders as of April 24.
“Order activity, railcar deliveries and revenue generation highlighted Greenbrier’s fiscal second quarter,” Greenbrier Chairman and CEO William A. Furman said. “However, our earnings performance was underwhelming, reflecting what we believe will be a single disappointing quarter. Greenbrier’s fiscal second quarter was expected to be the least profitable of fiscal 2019. Planned production line changeovers temporarily reduced manufacturing efficiency in the quarter. These expected operating disruptions were compounded by the railcar contract loss accruals in Europe and Gunderson and the facility closure costs in our railcar repair network that we communicated on March 22. Greenbrier is actively addressing these performance issues. We expect to quickly resolve them.”
The company added that with approximately 95% of fiscal production in backlog, and based on current business trends, it believes that:
- Deliveries will reach approximately 24,000-26,000 units, including Greenbrier-Maxion (Brazil), which will account for about 2,000 units.
- Revenue will exceed $3 billion.
- Diluted EPS will be between $3.60-$3.80 excluding the $0.14 per share related to railcar contract loss accruals and closure costs in the fiscal second quarter.
“Over the balance of fiscal 2019, Greenbrier’s financial performance and profitability will significantly improve compared to the first half of fiscal 2019,” Furman said. “As a result, revenue and delivery estimates for fiscal 2019 are unchanged, and we have updated EPS guidance today to reflect the impact of the unique operating challenges in the fiscal second quarter. Greenbrier’s backlog of 26,000 units valued at $2.7 billion will produce sustained railcar deliveries through fiscal 2019 and provides good visibility into fiscal 2020. Our strong balance sheet, manufacturing flexibility and product innovation position us to successfully address a dynamic market environment and continue to grow at scale. We remain confident in Greenbrier’s long-term growth strategy and integrated business model.”