Greenbrier posts record fiscal first quarter

The Greenbrier Companies, Inc. on Jan. 7, 2016 reported record financial results for its first fiscal quarter ended Nov. 30, 2015.

Net earnings for the quarter were a record $69.4 million, or $2.15 per diluted share, on record revenue of $802.4 million. Adjusted EBITDA for the quarter was a record $161.8 million, or 20.2% of revenue. The new railcar backlog as of the quarter’s end was 36,000 units with an estimated value of $4.14 billion (average unit sale price of $115,000), compared to 41,300 units with an estimated value of $4.71 billion (average unit sale price of $114,000) as of the close of the company’s 2015 fiscal year (Aug. 31, 2015).

Greenbrier received diversified orders for 500 new railcars during the quarter, after which orders for an additional 2,100 railcars were received. The aggregate value of the cumulative orders for 2,600 new railcars is nearly $250 million, or an average sales price of approximately $96,000 per railcar. New railcar deliveries totaled 6,900 units for the quarter, compared to 6,200 units for the prior quarter.

Greenbrier’s board declared a quarterly dividend of $0.20 per share payable on Feb. 10, 2016 to shareholders of record as of Jan. 20, 2016. The company repurchased 521,626 shares of common stock at a cost of $19.1 million during the quarter. Since inception of the share repurchase program in October 2013, 2,673,165 shares have been repurchased at a cost of $123.7 million. Board authorization for approximately $101.3 million remains available for further share repurchases.

Greenbrier’s aggregate gross margin expanded to 23.0%, compared to 22.8% in the prior quarter, continuing above the company’s goal of at least 20% gross margin by the second half of FY 2016.

“Our first quarter annualized ROIC (return on invested capital) of 34.0% reflects record operating results,” said Chairman and CEO William A. Furman. “We remain on track to reach the goal of at least 25% ROIC for the second half of fiscal 2016. Our first-quarter results are the fourth consecutive quarter we have produced record-breaking performance. This accomplishment is a testament to the value of our integrated business model and our strategy to diversify our product offerings, create efficient, flexible manufacturing capacity in low-cost facilities and drive more value through our lease syndication model. Aggregate gross margin hit an all-time high of 23.0%, up 520 basis points year-over-year, with our manufacturing and lease syndication activities continuing to lead the way.”

“We anticipate and are prepared for market conditions in which order and backlog levels will likely come down from their elevated energy-driven peak,” Furman added, “We see positive continuing demand for a range of non-energy related railcars including automotive-carrying railcars, large-cube covered hoppers, non-energy tank cars and boxcars. We believe our strong backlog, geographic diversity and manufacturing flexibility will lead to another solid year of earnings and free cash flow in fiscal 2016. While the markets where we compete may transition over the course of this year and into 2017, we have built a solid foundation for Greenbrier’s future growth. Now serving customers on four continents, we are further diversifying our revenue base by growing our business outside North America. Greenbrier is a much different company today than it was just a couple of years ago. I strongly believe that Greenbrier has a great future ahead.”

Based on current business trends, industry forecasts and production schedules for FY 2016, Greenbrier reaffirmed previously provided guidance for deliveries of approximately 20,000-22,500 units, revenue exceeding $2.8 billion, and diluted EPS in the range of $5.65 to $6.15. The company said it expects financial results “to be weighted toward the first half of the year primarily due to line changeovers, product mix changes and lower production rates on certain lines in the second half of fiscal 2016.”

Greenbrier added that “there are risks to achieving this guidance. Certain orders and backlogs re subject to customary documentation and completion of terms.”

“Greenbrier delivered a decisive beat to our and consensus estimates and achieved year-over-year and sequential gross margin improvements,” noted Cowen and Company analyst Matt Elkott. “It maintained FY16 guidance, including deliveries of 20,000-22,5008 units. While this implies a tempered second half, the impressive fiscal first-quarter results affirmed full-year guidance, and new orders since a December 15 announcement should be well-received in this challenged macro environment.”