Greenbrier Posts Q2 Profit, Beats Analyst Estimates

Apr. 9.12 | About: The Greenbrier (GBX)

Freight car equipment maker Greenbrier Co. (NYSE:GBX) smashed analyst forecasts, as it swung to a second-quarter profit driven by sales and margin growth across all its business divisions.

The company makes everything from double-stack railcars to boxcars used in forest products, covered hopper cars for grain and cement, as well as pressurized tank cars for petroleum and ammonia. It was founded in 1974 and is based in Lake Oswego, Oregon.

For the quarter ended February 29, net earnings were $17.7 million, or 57 cents per share, compared to a year earlier net loss of $550,000, or two cents a share. Sales went up by 60 percent reaching $458.2 million from $284.3 million, a year ago. On average, analysts polled by Bloomberg were projecting earnings of 48 cents on revenue of $438 million.

"Our strong quarterly results were driven by revenue and margin growth in all of our business segments. We expect to continue to benefit from efficiencies of operating at higher volumes," Greenbrier chief executive William A. Furman said.

For the quarter, the company delivered 3,700 new railcar units, compared to 2,200 units in the prior quarter of 2011. It also received orders for 3,600 new railcars. Following quarter's end, orders were received for 2,300 additional units valued at $270 million.

Greenbrier's new railcar manufacturing backlog totalled 12,500 units with an estimated value of $1.1 billion, at the end its fiscal second quarter.

The manufacturing segment, which consists of marine and new railcar production in Europe and North America, posted sales of $320.2 million from $156.6 million, helped by new railcar demand and higher railcar deliveries.

Gross margin for the unit was 9.2 percent compared with 5.8 percent in the prior year, as efficiencies were gained by operating at higher production rates and favourable customer pricing.

Revenue from the wheel services, refurbishment & parts division rose to $119.9 million up from $112 million, thanks to higher sales volumes and an increase in scrap metal pricing. Gross margin was 11.1 percent compared to 9.5 percent.

Meanwhile, the leasing & services segment totalled $18.1 million in contrast with a year ago sales of $15.7 million. Gross margin was 48.6 percent up from 44.4 percent.

The increase in revenue and margin stemmed from increased lease fleet utilization, and higher rents earned on leased railcars for syndication. The company, however, spent more to beef up its headcount, which raised selling and administrative costs to $25 million from $17.7 million.

Greenbrier owns about 9,100 railcars, and performs management services for approximately 216,000 railcars. Its share price closed Thursday at 19.70 each in trade on the New York Stock Exchange. Markets were closed Friday due to Easter.

Disclosure: None