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Press release from PR Newswire

Greenbrier Posts Solid First Quarter EPS of $0.35 on Revenue of $415 Million

Wednesday, January 09, 2013

Greenbrier Posts Solid First Quarter EPS of $0.35 on Revenue of $415 Million06:00 EST Wednesday, January 09, 2013-- Backlog of 9,700 units valued at $1.11 Billion -- -- Over $430 Million in new orders received across multiple railcar types --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 margin 11.5% 12.3% Down 80 bps due to lower manufacturing margin, partially offset by higher margins in both other segments Selling and administrative $26.1M $27.6M Down due to lower incentive compensation in Q1 and certain severance costs in Q4 Gain on disposition of equipment $1.4M $0.07M Timing of sales fluctuates and is opportunistic Adjusted EBITDA $31.8M $36.0 M Down principally due to lower deliveries and margin Effective tax rate 26.7% 51.0% Normalized rate in both periods is about 34%; difference from normalized rate is due to certain discrete tax items Net earnings $10.4M $7.4M Up due to lower tax rate in Q1 Diluted EPS ? GAAP $0.35 $0.26 "If converted" calculation Economic EPS $0.37 $0.27 Excludes "if converted" 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 margin 9.4% 11.8% Down 240 bps due to changes 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 margin 9.5% 8.1% Up 140 bps due to better mix and improved efficiencies Leasing & Services Revenue $17.9M $18.3M Down 2.2% due to lower interim rents Gross margin 57.4% 47.6% Up 980 bps due to reduction in certain maintenance accruals Lease fleet utilization 95.2% 93.5% Up due to Q4 fleet additions placed in service in Q1 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, 2012 February 29, 2012 November 30, 2011 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 affiliates (372) 72 201 (317) (416) 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 Months Ended November 30, Three Months Ended August 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 Ended November 30, Three Months Ended 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 Ended November 30, Three Months Ended 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 2018 Convertible notes, net of tax 1,430 1,376 1,416 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 Ended November 30, Three Months Ended 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 common shares outstanding 27,946 27,344 27,904 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 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. SOURCE The Greenbrier Companies, Inc. (GBX)For further information: Mark Rittenbaum, +1-503-684-7000