Commentary

Tank railcar market continues to evolve

Financial Edge, September 2018: According to the good people at Railinc (a perennial speaker at the annual Rail Equipment Finance Conference, www.railequipmentfinance.com), as of July 1, 2018, 12,581 tank railcars had been retrofit to the DOT117R standard. In the first seven months of 2018, 5,349 tank railcars were retrofit (an average of 764 per month). If retrofits continue at the same pace for the remainder of the year, the total number of retrofit cars completed in 2018 would be more than double the total number of retrofits completed by the end of 2017.

Railcar demand “net neutral”: Cowen survey

The results of Cowen and Company’s 2Q18 Rail Equipment Survey “are mixed and largely neutral on the balance,” reports Cowen analyst Matt Elkott. “Shippers’ level of certainty about ordering railcars increased, but order sizes decreased.”

Consolidation comments from Cowen’s Elkott

Cowen and Company Equity Research Analyst Matt Elkott, who covers the railway supply sector, on May 4 issued a report that looks favorably upon two potential combinations: Trinity and GATX, and Wabtec and GE Transportation.

Spin-off for Trinity infrastructure unit

Railcar builder Trinity Industries announced it would sell its infrastructure-related business to shareholders as part of a strategy for future growth, and spend $500 million to buy back shares.

Railcar inquiries remain elevated: Cowen and Co.

Reporting on Cowen and Co.’s just-concluded 10th Annual Global Transportation Conference, analyst Matt Elkott said that railcar demand recovery is “likely sustainable but not at the same level as second-quarter 2017.” Cowen is projecting third-quarter 2017 orders for 9,400 units, below the second quarter’s 12,000 but significantly higher than the first quarter’s 4,800 and similarly low prior levels.

Vertex sees tank, aggregate hopper car orders

Vertex Railcar Corp. said it has received an order for more than 130 2,480-cubic-foot open-top aggregate hoppers with automatic bottom gates and 60-degree side slopes.

Trinity quarterly results decline on weaker car deliveries

Car builder Trinity Industries on Tuesday said revenue and profits declined on “significantly lower” railcar deliveries in the first quarter of 2017 compared to the year-ago quarter.

Takeaways from REF 2017: Matt Elkott

Reporting on Rail Equipment Finance 2017, Cowen and Company analyst Matt Elkott notes, “Sentiment is better than last year, but we sensed this is only in small part based on fundamentals and in large part on hope associated with potentially more business-friendly policies and an infrastructure bill. We also noticed a rise in the number of international investors. We continue to believe a material pickup in railcar demand and lease rates is unlikely before late 2017/early 2018.”

For Miner, twice is nice from TrinityRail

For the second consecutive year, TrinityRail has awarded Miner Enterprises, Inc. a Premier Supplier Award. Trinity selected Miner as one of 13 standard component suppliers deserving special recognition based on product quality, pricing, and reliable on-time delivery.

Keybanc’s Barger: Railcar builders in a relatively good place

Steve Barger of KeyBanc Capital Markets attended the Midwest Association of Rail Shippers Conference, where, in conversations with railcar OEMs, lessors and shippers, he came to the general conclusion that, though 2016 will be a difficult year for the railcar industry, it is in a good position to withstand a period of weaker orders, chiefly due to a large backlog.

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