THE GREENBRIER COMPANIES, INC. 
By LAKE OSWEGO, Ore., Jan. 9, 2013 /PRNewswire/ -- The Greenbrier Companies (NYSE: GBX) today reported results for its first fiscal quarter ended November 30, 2012.
First Quarter Highlights
-- Net earnings for the first quarter were $10.4 million, or $.35 per
diluted share, on revenue of $415.4 million.
-- Adjusted EBITDA for the quarter was $31.8 million, or 7.6% of revenue.
-- New railcar deliveries were 2,900 units in the first quarter, a strong
start to the year.
-- Since September 1, 2012, the beginning of the Company's fiscal year,
Greenbrier has received orders for 4,200 new railcar units valued at
over $430 million, of which 1,400 units were received during the
quarter, and 2,800 units subsequent to quarter end.
-- Subsequent to quarter end, the Company received a multi-year award to
perform repair and refurbishment work, with anticipated annual revenue
of about $12 million.
-- Subsequent to quarter end, the Company received awards for two
multi-year management services contracts, with anticipated annual
revenue of $3.5 million when fully implemented in fiscal 2014.
-- New railcar manufacturing backlog as of November 30, 2012 was 9,700
units with an estimated value of $1.11 billion (average unit sale price
of $114,000), compared to 10,700 units with an estimated value of $1.20
billion (average unit sale price of $112,000) as of August 31, 2012.
-- Marine backlog totaled 2 units valued at $20 million as of November 30,
2012; subsequent to quarter end, Greenbrier received awards for 2
additional units valued at less than $10 million. Additionally we are
party to a letter of intent for 15 barges valued at $60 million, subject
to permitting and other conditions.
William A. Furman, president and chief executive officer, said, "We are pleased with our solid quarterly results. Our visibility is growing as the result of major new orders. We expect financial momentum will continue to build sequentially throughout the year, in line with earlier guidance. In North America, we continue to ramp up our higher margin tank car production to capitalize on demand from the strong energy market and are sold out of tank car capacity through calendar 2014. We expect to be at an annual run rate of about 3,800 tank cars in North America by December 2013. At the same time, we are seeing more diversified demand for our products and services in each of the business segments, as well as among railcar types, including automotive, forest products and intermodal."
Furman continued, "Since September 1, 2012, the beginning of our fiscal year, we have received orders for 4,200 new railcar units in North America and Europe, of which 1,400 were automotive related, 1,250 were tank cars, with the balance including covered hopper cars, gondolas for scrap steel and other car types. With our flexible manufacturing footprint we can readily shift our capacity to railcar types in demand. Additionally, we have recently been awarded a major multi-year maintenance contract and two multi-year management services contracts."
Furman added, "Our four key focus areas for 2013 are: enhancing operating margins, expanding product and service offerings, increasing free cash flow, and business diversification and growth. We are confident that this focus coupled with our diverse product offerings, integrated business model, and flexible manufacturing footprint position us to continue to gain share, enhance margins, and to grow through the cycle. We believe we have a long runway ahead, in each of our business segments, to drive shareholder value."
Financial Summary
Q1 FY13 Q4 FY12 Sequential Comparison - Main
Drivers
------- ------- ----------------------------
Revenue $415.4M $443.5M Down 6.3% principally due to
lower new railcar deliveries
with a higher average sales
price
------- ------- ------- -----------------------------
Gross Down 80 bps due to lower
margin manufacturing margin,
partially offset by higher
margins in both other
11.5% 12.3% segments
------- ---- ---- ---------------------------
Selling and $26.1M $27.6M Down due to lower incentive
compensation in Q1 and
certain severance costs in
Q4
administrative
--------------
Gain on $1.4M $0.07M Timing of sales fluctuates
disposition and is opportunistic
of
equipment
----------
Adjusted $31.8M $36.0 M Down principally due to lower
EBITDA deliveries and margin
-------- ------ ------- -----------------------------
Effective Normalized rate in both
tax rate periods is about 34%;
difference from normalized
rate is due to certain
26.7% 51.0% discrete tax items
--------- ---- ---- ---------------------------
Net $10.4M $7.4M Up due to lower tax rate in
earnings Q1
--------- ------ ----- ----------------------------
Diluted EPS
- GAAP $0.35 $0.26 "If converted" calculation
----------- ----- ----- --------------------------
Economic $0.37 $0.27 Excludes "if converted"
EPS impact of out-of-the-
money bonds due 2018
-------- ----- ----- ------------------------
Segment Summary
Q1 FY13 Q4 FY12 Sequential Comparison - Main
Drivers
------- ------- ----------------------------
Manufacturing
-------------
Revenue $285.4M $306.2M Down 6.8% due to lower
deliveries with a higher
average sales price
------- ------- ------- -------------------------
Gross 9.4% 11.8% Down 240 bps due to changes
margin in certain production rates
and
product mix
--- ------- -------
Deliveries 2,900 3,500 Down due change in product
mix to higher labor content
units
--- ----- -----
Wheel Services, Refurbishment & Parts
-------------------------------------
Revenue $112.1M $119.1M Down 5.9% due to lower wheel
and part volumes
------- ------- ------- ----------------------------
Gross 9.5% 8.1% Up 140 bps due to better mix
margin and improved efficiencies
------ --- --- ----------------------------
Leasing & Services
-----------------------------------------------------------------------
Revenue $17.9M $18.3M Down 2.2% due to lower
interim rents
------- ------ ------ -----------------------
Gross 57.4% 47.6% Up 980 bps due to reduction
margin in certain maintenance
accruals
--- ------- -------
Lease Up due to Q4 fleet additions
fleet placed in service in Q1
utilization 95.2% 93.5%
------------ ---- ---- ----------------------------
Business Outlook
Based on current business trends and industry forecasts, management currently anticipates the Company's new railcar deliveries in 2013 to be about 13,000 units. While deliveries are expected to be below the 15,000 deliveries for fiscal 2012, the Company anticipates the product mix will be more favorable and include railcars with higher average selling prices. Management anticipates that fiscal 2013 revenue, adjusted EBITDA and earnings per share will be similar to fiscal 2012, with the second half of the year being stronger than the first half of the year.
Certain orders and awards referenced in this release are subject to customary documentation and completion of terms.
Conference Call
Greenbrier will host a teleconference to discuss first quarter results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:
-- January 9, 2013
-- 8:00 a.m. Pacific Standard Time
-- Phone: 1-630-395-0143, Password: "Greenbrier"
-- Real-time Audio Access: ("Newsroom" at http://www.gbrx.com)Please access the site 10 minutes prior to the start time. Following the call, a webcast replay will be available for 30 days. Telephone replay will be available through January 26, 2013, at 203-369-0948.
About Greenbrier Companies
Greenbrier (www.gbrx.com), headquartered in Lake Oswego, Oregon, is a leading supplier of transportation equipment and services to the railroad industry. Greenbrier builds new railroad freight cars in its four manufacturing facilities in the U.S. and Mexico and marine barges at its U.S. facility. It also repairs and refurbishes freight cars and provides wheels and railcar parts at 39 locations across North America. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through both its operations in Poland and various subcontractor facilities throughout Europe. Greenbrier owns approximately 10,000 railcars, and performs management services for approximately 221,000 railcars.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This presentation may contain forward-looking statements, including statements regarding expected new railcar production volumes and schedules, expected customer demand for the Company's products and services, plans to increase manufacturing capacity, new railcar delivery volumes and schedules, growth in demand for the Company's railcar services and parts business, and the Company's future financial performance. Greenbrier uses words such as "anticipates," "believes," "forecast," "potential," "goal," "contemplates," "expects," "intends," "plans," "projects," "hopes," "seeks," "estimates," "could," "would," "will," "may," "can," "designed to," "foreseeable future" and similar expressions to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from in the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog is not indicative of our financial results; turmoil in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of our indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, changing technologies, production of new railcar types, or non-performance of subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; difficulties associated with governmental regulation, including environmental liabilities; integration of current or future acquisitions; succession planning; all as may be discussed in more detail under the headings "Risk Factors" and "Forward Looking Statements" in our Annual Report on Form 10-K for the fiscal year ended August 31, 2012, and our other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements.
Adjusted EBITDA is not a financial measure under generally accepted accounting principles (GAAP). We define Adjusted EBITDA as earnings attributable to Greenbrier before interest and foreign exchange, income tax expense, depreciation and amortization. Adjusted EBITDA is a performance measurement tool commonly used by rail supply companies and Greenbrier. You should not consider Adjusted EBITDA in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Adjusted EBITDA measure presented may differ from and may not be comparable to similarly titled measures used by other companies.
Economic EPS is not a financial measure under GAAP. Economic EPS is used to measure the current economic impact of our Convertible Bonds due in 2018 that have a conversion strike price of $38.05/share, which exceeds our current stock price. We define Economic EPS as net earnings attributable to Greenbrier divided by the sum of weighted average basic common shares outstanding, plus the dilutive effect of warrants. This calculation excludes the dilutive effect of the shares underlying the 2018 bonds under the "if converted" method, which is included in the calculation of Diluted EPS. You should not consider Economic EPS in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Economic EPS is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Economic EPS measure presented may differ from and may not be comparable to similarly titled measures used by other companies.
THE GREENBRIER COMPANIES, INC.
Consolidated Balance Sheets
(In thousands, unaudited)
November 30, 2012 August 31, 2012 May 31, February 29, 2012 November 30, 2011
2012
----
Assets
Cash and cash
equivalents $41,284 $53,571 $44,915 $40,666 $20,855
Restricted
cash 7,322 6,277 6,089 2,249 2,151
Accounts
receivable,
net 163,385 146,326 172,086 177,544 149,559
Inventories 363,642 316,741 346,122 365,811 354,045
Leased
railcars for
syndication 54,297 97,798 66,776 79,681 68,029
Equipment on
operating
leases, net 362,522 362,968 334,872 322,811 323,878
Property,
plant and
equipment,
net 186,715 182,429 172,729 165,700 159,671
Goodwill 137,066 137,066 137,066 137,066 137,066
Intangibles
and other
assets, net 79,500 81,368 84,693 85,155 84,187
------ ------ ------ ------ ------
$1,395,733 $1,384,544 $1,365,348 $1,376,683 $1,299,441
-------- -------- -------- -------- --------
Liabilities
and Equity
Revolving
notes $89,826 $60,755 $71,430 $101,446 $80,679
Accounts
payable and
accrued
liabilities 282,925 329,508 323,977 340,328 311,519
Deferred
income taxes 96,498 95,363 88,514 89,623 87,395
Deferred
revenue 28,283 17,194 17,872 1,230 5,724
Notes payable 427,697 428,079 428,028 428,454 431,184
Total equity
Greenbrier 447,080 431,777 418,161 399,788 368,528
Noncontrolling
interest 23,424 21,868 17,366 15,814 14,412
------ ------ ------ ------
Total equity 470,504 453,645 435,527 415,602 382,940
------- ------- ------- ------- -------
$1,395,733 $1,384,544 $1,365,348 $1,376,683 $1,299,441
-------- -------- -------- -------- --------
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Income
(In thousands, except per share amounts, unaudited)
Three Months
Ended
November 30,
------------
2012 2011
---- ----
Revenue
Manufacturing $285,368 $262,656
Wheel Services, Refurbishment
& Parts 112,100 117,749
Leasing & Services 17,906 17,794
415,374 398,199
Cost of revenue
Manufacturing 258,492 236,188
Wheel Services, Refurbishment
& Parts 101,476 105,891
Leasing & Services 7,627 9,663
367,595 351,742
Margin 47,779 46,457
Selling and administrative 26,100 23,235
Gain on disposition of
equipment (1,408) (3,658)
------ ------
Earnings from operations 23,087 26,880
Other costs
Interest and foreign exchange 5,900 5,383
----- -----
Earnings before income taxes
and loss from unconsolidated
affiliates 17,187 21,497
Income tax expense (4,586) (7,797)
------
Earnings before loss from
unconsolidated affiliates 12,601 13,700
Loss from unconsolidated
affiliates (40) (372)
----
Net earnings 12,561 13,328
Net (earnings) loss
attributable to
noncontrolling interest (2,134) 1,189
------ -----
Net earnings attributable to
Greenbrier $10,427 $14,517
Basic earnings per common
share: $0.38 $0.57
Diluted earnings per common
share: $0.35 $0.48
Weighted average common
shares:
Basic 27,144 25,463
Diluted 33,991 33,389
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Cash Flows
(In thousands, unaudited)
Three Months
Ended
November 30,
------------
2012 2011
---- ----
Cash flows from operating
activities:
Net earnings $12,561 $13,328
Adjustments to reconcile net
earnings to net cash used in
operating activities:
Deferred income taxes 940 3,665
Depreciation and amortization 10,923 9,889
Gain on sales of leased
equipment (1,408) (3,658)
Accretion of debt discount 849 787
Stock based compensation
expense 1,886 1,742
Other (1,705) 2,024
Decrease (increase) in assets:
Accounts receivable (15,515) 33,687
Inventories (41,465) (34,088)
Leased railcars for
syndication 43,501 (37,339)
Other 945 856
Increase (decrease) in
liabilities:
Accounts payable and accrued
liabilities (48,036) 260
Deferred revenue 11,039 (145)
Net cash used in operating
activities (25,485) (8,992)
------- ------
Cash flows from investing
activities:
Proceeds from sales of
equipment 10,086 5,741
Investment in and net advances
from unconsolidated
affiliates (160) 70
Increase in restricted cash (1,045) (38)
Capital expenditures (25,141) (15,007)
Other - 10
Net cash used in investing
activities (16,260) (9,224)
------- ------
Cash flows from financing
activities:
Net change in revolving notes
with maturities of 90 days or
less 27,935 (9,150)
Proceeds from revolving notes
with maturities longer than
90 days 9,195 7,557
Repayments of revolving notes
with maturities longer than
90 days (8,941) (5,606)
Proceeds from the issuance of
notes payable - 2,500
Repayments of notes payable (1,230) (1,243)
Investment by joint venture
partner 1,182 -
Excess tax benefit from
restricted stock awards 217 -
--- ---
Net cash provided by (used in)
financing activities 28,358 (5,942)
------ ------
Effect of exchange rate
changes 1,100 (5,209)
Decrease in cash and cash
equivalents (12,287) (29,367)
Cash and cash equivalents
Beginning of period 53,571 50,222
------ ------
End of period $41,284 $20,855
======= =======
THE GREENBRIER COMPANIES, INC.
Supplemental Information
Quarterly Results of Operations
(In thousands, except per share amounts, unaudited)
First Second Third Fourth Total
----- ------ ----- ------ -----
2012
Revenue
Manufacturing $262,656 $320,206 $364,930 $306,172 $1,253,964
Wheel Services,
Refurbishment
& Parts 117,749 119,894 125,145 119,077 481,865
Leasing &
Services 17,794 18,086 17,722 18,285 71,887
------ ------ ------ ------ ------
398,199 458,186 507,797 443,534 1,807,716
Cost of revenue
Manufacturing 236,188 290,851 325,424 269,921 1,122,384
Wheel Services,
Refurbishment
& Parts 105,891 106,554 111,610 109,486 433,541
Leasing &
Services 9,663 9,295 8,825 9,588 37,371
----- ----- ----- ----- ------
351,742 406,700 445,859 388,995 1,593,296
Margin 46,457 51,486 61,938 54,539 214,420
Selling and
administrative 23,235 24,979 28,784 27,598 104,596
Gain on
disposition of
equipment (3,658) (2,654) (2,585) (67) (8,964)
------ ------ ------ --- ------
Earnings from
operations 26,880 29,161 35,739 27,008 118,788
Other costs
Interest and
foreign
exchange 5,383 6,630 6,560 6,236 24,809
----- ----- ----- ----- ------
Earnings before
income tax and
earnings
(loss) from
unconsolidated
affiliates 21,497 22,531 29,179 20,772 93,979
Income tax
expense (7,797) (5,348) (8,655) (10,593) (32,393)
Earnings (loss)
from
unconsolidated (372) 72 201 (317) (416)
affiliates
Net earnings 13,328 17,255 20,725 9,862 61,170
Net (earnings)
loss
attributable
to
Noncontrolling
interest 1,189 415 (1,608) (2,458) (2,462)
----- --- ------ ------ ------
Net earnings
attributable
to Greenbrier $14,517 $17,670 $19,117 $7,404 $58,708
------- ------- ------- ------ -------
Basic earnings
per common
share:(1) $0.57 $0.66 $0.71 $0.27 $2.21
Diluted
earnings per
common
share:(2) $0.48 $0.57 $0.61 $0.26 $1.91
(1) Quarterly
amounts
do not
total to
the year
to date
amount as
each
period is
calculated
discretely.
(2) Quarterly
amounts
do not
total to
the year
to date
amount as
each
period is
calculated
discretely.
Diluted
earnings
per
common
share
includes
the
outstanding
warrants
using the
treasury
stock
method
and the
dilutive
effect of
shares
underlying
the 2018
Convertible
Notes
using the
"if
converted"
method in
which
debt
issuance
and
interest
costs,
net of
tax, were
added
back to
net
earnings.
THE GREENBRIER COMPANIES, INC.
Supplemental Information
Reconciliation of Net Earnings attributable
to Greenbrier to Adjusted EBITDA (1)
(In thousands, unaudited)
Three Three
Months Months
Ended Ended
November August
30, 31,
--------- -----
2012 2011 2012
---- ---- ----
Net
earnings
attributable
to
Greenbrier $10,427 $14,517 $7,404
Interest
and
foreign
exchange 5,900 5,383 6,236
Income
tax
expense 4,586 7,797 10,593
Depreciation
and
amortization 10,923 9,889 11,768
Adjusted
EBITDA $31,836 $37,586 $36,001
----- ----- -----
(1) AdjustedEBITDA is
not a financial
measure under
generally
accepted
accounting
principles
(GAAP). We
define Adjusted
EBITDA as
earnings
attributable to
Greenbrier
before interest
and foreign
exchange, income
tax expense,
depreciation and
amortization.
Adjusted EBITDA
is a performance
measurement tool
commonly used by
rail supply
companies and
Greenbrier. You
should not
consider
Adjusted EBITDA
in isolation or
as a substitute
for other
financial
statement data
determined in
accordance with
GAAP. In
addition,
because Adjusted
EBITDA is not a
measure of
financial
performance
under GAAP and
is susceptible
to varying
calculations,
the Adjusted
EBITDA measure
presented may
differ from and
may not be
comparable to
similarly titled
measures used by
other companies.
Three Months Ended
November 30, 2012
-------------------
Backlog Activity (units)
Beginning backlog 10,700
Orders received 1,400
Production held as Leased
railcars for syndication (200)
Production sold directly to
third parties (2,200)
------
Ending backlog 9,700
-----
Delivery Information (units)
Production sold directly to
third parties 2,200
Sales of Leased railcars for
syndication 700
---
Total deliveries 2,900
-----
THE GREENBRIER COMPANIES, INC.
Supplemental Information
Calculation of Diluted Earnings Per Share
(In thousands, except per share amounts, unaudited)
The shares used in the computation of the Company's basic and diluted
earnings per common share are reconciled as follows:
Three Months Three Months
Ended Ended
November 30, August 31,
2012 2011 2012
---- ---- ----
Weighted average basic
common shares
outstanding (1) 27,144 25,463 27,148
Dilutive effect of
warrants 802 1,881 756
Dilutive effect of
convertible notes (2) 6,045 6,045 6,045
----- ----- -----
Weighted average diluted
common shares
outstanding 33,991 33,389 33,949
------ ------ ------
(1) Restricted
stock
grants
are
treated
as
outstanding
when
issued
and are
included
in
weighted
average
basic
common
shares
outstanding
when the
Company
is in a
net
earnings
position.
(2) The
dilutive
effect
of the
2018
Convertible
notes
are
included
as they
were
considered
dilutive
under
the "if
converted"
method
as
further
discussed
below.
The
dilutive
effect
of the
2026
Convertible
notes
was
excluded
from the
share
calculations
as the
stock
price
for each
period
presented
was less
than the
initial
conversion
price of
$48.05
and
therefore
considered
anti-
dilutive.
Dilutive EPS was calculated using the more dilutive of two approaches. The first approach includes the dilutive effect of outstanding warrants and shares underlying the 2026 Convertible notes in the share count using the treasury stock method. The second approach supplements the first by including the "if converted" effect of the 2018 Convertible notes issued in March 2011. Under the "if converted method" debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes. The 2026 Convertible notes would only be included in the calculation of both approaches if the current stock price is greater than the initial conversion price of $48.05 using the treasury stock method.
Three Months Three
Ended Months
Ended
November 30, August
31,
------
2012 2011 2012
---- ---- ----
Net earnings attributable
to Greenbrier $10,427 $14,517 $7,404
Add back:
Interest and debt
issuance costs on the 1,430 1,376 1,416
2018 Convertible notes, net of
tax
------
Earnings before interest
and debt issuance costs
on convertible notes $11,857 $15,893 $8,820
------- ------- ------
Weighted average diluted
common shares
outstanding 33,991 33,389 33,949
Diluted earnings per
share (1) $0.35 $0.48 $0.26
(1) Diluted earnings per share
was calculated as follows:
Earnings before interest and debt
issuance costs on convertible
notes
---------------------------------
Weighted average diluted common
shares outstanding
THE GREENBRIER COMPANIES, INC.
Supplemental Information
Reconciliation of Basic Earnings Per Share to Economic Earnings Per
Share (1)
(In thousands, except per share amounts, unaudited)
The shares used in the computation of the Company's basic and economic
earnings per common share are reconciled as follows:
Three Months Three Months
Ended Ended
November 30, August 31,
------------ ----------
2012 2011 2012
---- ---- ----
Weighted average basic
common shares
outstanding 27,144 25,463 27,148
Dilutive effect of
warrants 802 1,881 756
Weighted average
economic diluted 27,946 27,344 27,904
common shares outstanding
Net earnings
attributable to
Greenbrier $10,427 $14,517 $7,404
Economic earnings per
share $0.37 $0.53 $0.27
(1) Economic EPS is not a financial measure under GAAP. Economic EPS is
used to measure the current economic impact of our Convertible Bonds
due in 2018 that have a conversion strike price of $38.05/share, which
exceeds our current stock price. We define Economic EPS as net earnings
attributable to Greenbrier divided by the sum of weighted average basic
common shares outstanding, plus the dilutive effect of warrants. This
calculation excludes the dilutive effect of the shares underlying the
2018 bonds under the "if converted" method, which is included in the
calculation of Diluted EPS. You should not consider Economic EPS in
isolation or as a substitute for other financial statement data
determined in accordance with GAAP. In addition, because Economic EPS
SOURCE The Greenbrier Companies, Inc. (GBX)
