The Greenbrier Cos. notches 3Q profit, trims debt

The Greenbrier Cos. Thursday reported net earnings for the third quarter of $4.6 million, or 23 cents per diluted share, a welcome contrast to the comparable quarter a year ago when the company logged a net loss of $51.1 million, or $3.04 per diluted share.

Revenue for the third quarter of $211.5 million was down from $244.4 million one yea ago. Earnings before interest, taxes, debt, and amortization (EBITDA) for the quarter was $25.9 million, or 12.2% of revenue, compared to $20.3 million, or 8.3% of revenue, in the third quarter of 2009.

The company noted it had reduced its net debt by almost $75 million, and ended the quarter with $117 million in cash and $106 million of committed additional borrowing capacity.

New railcar deliveries in the third quarter of 2010 were 700 units, compared with 800 units in the third quarter of 2009. Greenbrier’s new railcar manufacturing backlog as of May 31, 2010 was 4,400 units with an estimated value of $370 million. Greenbrier commenced management of a lease fleet of nearly 4,000railcars valued at approximately $230 million, acquired by the newly formed WLRoss-Greenbrier Rail Holdings I LLC.

Said President and CEO William A. Furman in a statement, “Each of our business segments realized improved performance, leading us to a return to profitability and our highest pre-tax earnings since the fourth quarter of 2008.  Both revenue and margin grew in the third quarter compared to the first two quarters of 2010. We are currently seeing some improvement in end-market demand for our rail products and services.

“Our third-quarter results place us on solid footing to finish our fiscal year with positive momentum, and we continue to believe that the second half of 2010 will be stronger than the first half,” Furman said.

He added, “Leveraging our strategic relationship with WL Ross, WLR-GBX, owned by affiliates of WL Ross & Co., was formed in April 2010 and purchased a used lease fleet of 4,000 railcars, which are managed by Greenbrier. The acquisition of this portfolio allows us to further scale our fleet management operations, a core competency of Greenbrier, and to participate in the economic performance and upside of this portfolio.”

In an analyst’s note Thursday, Steve Barger, director, Industrial Manufacturers, for KeyBanc Capital Markets, Inc., said that Greenbrier Cos. “reported a strong $0.23, vs. our estimate of $0.03 and consensus of a loss of $0.02. Even though revenue was down 13% year-over-year (and up 6% sequentially), GBX posted strong year-over-year and sequential increases in gross and operating margin. Railcar book/bill in the quarter was 1.0x, the best figure since 1Q08 when the Company booked the massive General Electric order.

“Overall, this was an encouraging quarter, although we think the consolidated margin is probably higher than we should expect on a run rate due to mix in Manufacturing and car sales in Leasing & Services. Regardless, we believe this supports our positive view on the name and we expect the stock (and the group) will react favorably to this news,” Barger said.