Cowen and Company

GBX Fiscal 1Q21: ‘Strong Liquidity,’ $2.35B Backlog

The Greenbrier Companies, Inc. (GBX), in its first fiscal quarter ended Nov. 30, 2020, reported a net loss of $10 million, attributable to the company, in what continues to be a “challenging market environment.” GBX noted it has been successful in maintaining cash flow and liquidity—“essential components” of its operating strategy—and its diversified $2.35 billion new railcar backlog of 23,900 units—including orders for 2,900 railcars in the quarter, valued at $260 million—“provides a baseload of activity as we gain greater visibility into customer needs as the year unfolds.”

Commentary

The Cowen Insight: OEM Earnings, Railcar Demand

At Cowen and Company, we are revising our transportation OEM and machinery earnings estimates for fourth-quarter 2020 and 2021, and introducing our 2022 estimates; updating our North American Class 8 production forecast; and fine-tuning our railcar supply demand model. What are we seeing? Gradually improving supply-side dynamics.

Commentary

Greenbrier ‘Ready for a Railcar Demand Recovery’: Cowen

At Cowen and Company, we expect North American railcar demand to recover in 2021. One of the best-positioned suppliers? The Greenbrier Companies (GBX), with more than a 40% manufacturing share following the acquisition of ARI. Railcar markets in Europe and Brazil are also improving. All of this plus the cost-cutting measures GBX has taken make it our top 2021 pick.

Commentary

Suds With Seidl: “Railroad Happy Hour”

We hosted rail industry experts in our third Suds with Seidl event. The overall mood was optimistic. The outlook for 2021 was strong, with one participant noting he was surprised to hear just how bullish his customers were this past week. Class I’s may be missing business opportunities, but there is still hope for greater communication via technology initiatives. We remain positive on the rail group.

NS 3Q20: Intermodal, PSR ‘Key Drivers Going Forward’

Norfolk Southern Corp. reported third-quarter financial results that reflected the pandemic’s impact, similar to the other five publicly traded Class I’s, but emphasized how Precision Scheduled Railroading has “significantly enhanced” operational and financial performance since its launch.

Commentary

Election ‘Blues’ Could Benefit Rail Suppliers

Rail transit rail equipment is among the transportation equipment subsectors most likely to benefit from a potential “Blue Wave” in January following a Joe Biden/Kamala Harris win and the Democrats flipping enough seats in the U.S. Senate in the November Presidential election to take control of that chamber.* As well, a power shift in Washington could drive a public transit service recovery in the U.S.

Greenbrier FY4Q20: ‘Solid Results’

Greenbrier’s fiscal fourth-quarter 2020 financial results (the company begins its fiscal year on Oct. 1 of the prior year) are based on a “strong liquidity position,” and a $2.4 billion railcar backlog of 24,600 as of Aug. 31, which includes fourth-quarter orders of 2,800 cars valued at approximately $250 million.

UP: ‘3Q Misses as 4Q Momentum Builds’

Union Pacific has reported third-quarter 2020 financial and operating results that “represent another step in our company’s transformation,” Chairman, President and CEO Lance Fritz said, emphasizing the positive aspects of what was largely a difficult quarter.

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