The results show net earnings attributable to GBRX for the quarter were $50.4 million, or $1.57 per diluted share on revenue of $630 million; an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $102.7 million, or 16.3% of revenue.
GBRX reports that its new railcar backlog as of Feb. 28, 2015 was 46,000 units with an estimated value of $4.78 billion and an average sale price of $104,000. This is compared to 41,200 units with an estimated value of $4.20 billion and an average sale price of $102,000, as of Nov. 30, 2014. In addition, diversified orders for 10,100 new railcars valued at $1.09 billion were received during the quarter and new railcar deliveries totaled 5,200 units for the quarter, compared to 4,000 units for the quarter ending Nov. 30, 2014.
According to GBRX, the company is making progress on its longer-term financial goals with an aggregate gross margin that has expanded to 19.9%, compared to 17.8% in the prior quarter, nearly 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,” the company said. “Annualized ROIC of 19.6% reflects record operating results tempered by working capital needs associated with higher production and syndication volumes, and planned capital expenditure programs.”
“Our diverse new railcar backlog of 46,000 units represents the sixth consecutive quarter where the quantity and value of our backlog has increased,” said William A. Furman, GBRX Chairman and CEO. “It is now more than triple the size of just one year ago, with production on certain production lines stretching into 2019.”
“Nearly 80% of year-to-date orders for 24,200 railcars are non-energy related, including orders for double stack intermodal cars, grain hopper cars, automotive carrying cars, non-energy related tank cars, boxcars, and mill gondola cars for scrap steel. These orders, along with others in our backlog, include multi-year orders for various car types, a positive indication that our customers believe, as do we, that end-user demand for new railcars will remain solid for the foreseeable future. The regulatory picture for tank cars transporting hazardous materials should be clarified no later than May. We expect GBRX’s Tank Car of the Future will be the new standard, and that additional rail car and retrofit orders will occur regardless of oil prices,” Furman said.
“Our strong order book, which includes several core leasing company partners, provides us good visibility through fiscal 2016 and beyond. If the strong new railcar cycle continues to play out over the next 3-4 years, as many forecast it will, then GBRX should be well positioned to generate significant free cash flow. We will continue to take a balanced approach to reinvesting in high rate of return projects in our core business, seeking acquisitions in our core competencies, and returning capital to shareholders,” Furman concluded.
Looking ahead, GBRX anticipates that its 20% equity investment in Brazil’s Amsted-Maxion Hortolandia, the leading railcar manufacturer in South America, will close during the third quarter. And based on current business trends and industry forecasts, GBRX has raised its guidance to deliveries in fiscal year 2015 of about 21,500 units; revenue of approximately $2.6 to $2.7 billion, which excludes revenue from GBW Railcar Services LLC, a railcar repair joint venture run by GBRX and Watco Companies LLC, as it accounted for under the equity method of accounting; diluted EPS (earnings per share) in the range of $5.65 to $5.95; and adjusted EBITDA in the range of $420 to $435 million.
“Similar to previous years, financial results in the second half of the year are expected to be stronger than the first half,” GBRX said.