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Greenbrier Reports Strong Fiscal Third Quarter Financial Results

June 28, 2012

LAKE OSWEGO, Ore., June 28, 2012 /PRNewswire/ — The Greenbrier Companies (NYSE: GBX) today reported results for its fiscal third quarter ended May 31, 2012.

Third Quarter Highlights

  • Revenue for the third quarter of 2012 was a record $507.8 million, up 11% from $458.2 million in the second quarter of this year, and up 60% from $317.3 million in the prior year’s third quarter.
  • Net earnings attributable to Greenbrier (“net earnings”) for the quarter were $19.1 million, or $0.61 per diluted share, compared to $17.7 million, or $0.57 per diluted share, in the second quarter of this year, and a net loss of $3.3 million, or a loss of $0.14 per diluted share, in the same period last year.
  • Adjusted EBITDA for the quarter was $44.6 million, or 8.8% of revenue, compared to $40.1 million, or 8.7% of revenue in the second quarter of 2012, and $25.7 million, or 8.1% of revenue in the third quarter of 2011.
  • New railcar deliveries in the third quarter of 2012 were 4,500 units, compared to 3,700 units in the second quarter of 2012, and 2,200 units in the third quarter of 2011. Current quarter deliveries include approximately 800 units under lease which were sold to third parties as part of the Company’s enhanced lease syndication activities.
  • During the third quarter, the Company received orders for 3,100 new railcars. Greenbrier’s new railcar manufacturing backlog as of May 31, 2012 was 11,500 units with an estimated value of $1.14 billion, compared to 12,500 units with a value of $1.10 billion as of February 29, 2012.

Discussion of Quarterly Results and Outlook

William A. Furman, president and chief executive officer, said, “I am pleased with our strong quarterly results. Revenue and gross margin grew in each of our business segments as compared to the second quarter of this year. We continue to benefit from efficiencies of operating at higher volumes, particularly in our manufacturing segment where we delivered a record 4,500 railcars this quarter. Approximately 800 of these deliveries were new leased railcars that were sold to third parties as part of our enhanced lease syndication activities. As compared to the second quarter of this year, manufacturing gross margin grew by over $10 million, and gross margin as a percentage of revenue grew to 10.8%, as compared to 9.2%. Our managed fleet also grew by 2,000 units.”

Furman added, “The value of our backlog increased for the third consecutive quarter. We continue to see demand across multiple railcar types, and continue to diversify the product mix in our backlog, which now includes seven different railcar types in North America. Small-cubed covered hopper cars used to carry sand for shale drilling activity comprised 18% of our backlog value as of May 31, 2012. As a result of increased demand for tank cars, we are increasing tank car production rates, and plan to open a second tank car line in fiscal 2013. We also received two barge orders valued at $25 million during the quarter, and believe that marine orders for delivery in 2013 will continue to grow.”

Furman concluded, “We continue to focus on working capital management and free cashflow. During the quarter, we generated cash provided by operating activities of over $61 million, and reduced net debt by $35 million.”

Segment Details
The Manufacturing segment consists of new railcar production in Europe and North America and marine production in North America. Manufacturing segment revenue for the third quarter was $364.9 million, compared to $173.5 million in the third fiscal quarter of 2011. The revenue increase was primarily due to higher railcar deliveries and higher per unit average sales prices. Deliveries during the quarter totaled 4,500 units, compared to 2,200 units in the same period last year. Manufacturing gross margin for the third quarter was 10.8% of revenue, compared to 9.2% of revenue in the second quarter of this year, and 8.5% in the third quarter of 2011. The increase in gross margin from the third quarter of 2011 is primarily attributable to efficiencies gained by operating at higher production rates, more favorable pricing and change in sales mix.

The Wheel Services, Refurbishment & Parts segment, which consists of a network of 40 locations, provides wheel services, repairs and refurbishes railcars, and provides railcar parts across North America. Revenue for this segment in the third quarter was $125.1 million, compared to $126.3 million in the same period last year. The slight decline is primarily the result of lower demand for wheel set replacements offset by higher refurbishment and parts demand. Wheel volumes were down due to the unseasonably warm winter in the current year; cold weather typically causes wheel sets to wear at a faster rate. In addition, an industry-wide decline in coal car loadings contributed to decreased wheel demand, as coal cars are higher mileage railcars. Gross margin for the Wheel Services, Refurbishment & Parts segment was 10.8% of revenue, compared to 12.0% of revenue in the third quarter of 2011, and 11.1% of revenue in the second quarter of this year. The decrease in gross margin from the third quarter of 2011 was primarily a result of a change in sales mix, a decrease in scrap metal pricing, and costs and inefficiencies associated with replacing certain wheel sets produced at our Mexico City wheel shop which do not conform to America Association of Railroads mounting standards.

The Leasing & Services segment includes results from both Greenbrier’s own lease fleet of approximately 9,000 railcars, as well as from fleet management services the Company provides for approximately 218,000 railcars owned by third parties. Revenue for this segment was $17.7 million for the quarter, compared to $17.5 million in the same quarter last year. Leasing & Services gross margin for the quarter was 50.2% of revenue, compared to 48.6% of revenue for the second quarter of this year, and 47.0% of revenue in the third quarter of 2011. The increase in both revenue and gross margin, compared to the third quarter of 2011, were primarily a result of higher rents earned on a greater number of leased railcars for syndication. Lease fleet utilization as of the end of the quarter was 95.5%, compared to 97.3% as of February 29, 2012, and 96.8% as of May 31, 2011,.

Gains on disposition of equipment in the current quarter were $2.6 million, compared to $1.7 million in the third quarter of 2011.

Selling and administrative costs were $28.8 million or 5.7% of revenue for the quarter, versus $22.6 million or 7.1% of revenue for the same quarter last year. The increase is primarily due to an increase in employee related costs, including incentive-based compensation. In addition, revenue-based fees paid to our joint venture partner in Mexico increased due to higher activity levels. We also incurred nonrecurring legal and audit fees associated with the structuring of a leased railcar syndication transaction.

Interest and foreign exchange expense was $6.6 million in the third quarter, compared to $9.8 million for the same period in 2011. The third quarter benefited from lower interest rates due to refinancing activities completed in the prior comparable period.

The tax rate for the quarter was 29.7%; the estimated tax rate for the balance of the year is about 33%. The lower tax rate for the quarter was due to discrete tax items.

Business Outlook
Based on current business trends, management anticipates that revenue, adjusted EBITDA and earnings per share will be higher in the fourth quarter of 2012, compared to the fourth quarter of 2011. The company expects to deliver approximately 4,000 new railcars in the fourth quarter. The lower anticipated deliveries in the fourth quarter, as compared to the third quarter, are due to line changeovers, changes in product mix, and lower syndications of leased railcars.

Conference Call
Greenbrier will host a teleconference to discuss third quarter results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:

  • June 28, 2012
  • 8:00 a.m. Pacific Daylight 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 July 14, 2012 at 1-402-998-0083.

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 three 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 40 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 9,000 railcars, and performs management services for approximately 218,000 railcars.

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This release 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,” “contemplates,” “expects,” “intends,” “plans,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” 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, 2011, 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 (loss) attributable to Greenbrier before loss on extinguishment of debt, interest and foreign exchange, income tax expense (benefit), 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.

                                                                                   THE GREENBRIER COMPANIES, INC.

    CONSOLIDATED BALANCE SHEETS
    (In thousands, unaudited)

                                             May 31,           February 29,                  August 31,
                                                          2012                2012                         2011
                                                          ----                ----                         ----
    Assets
    Cash and cash equivalents                          $44,915             $40,666                      $50,222
    Restricted cash                                      6,089               2,249                        2,113
    Accounts receivable, net                           172,086             177,544                      188,443
    Inventories                                        346,122             365,811                      323,512
    Leased railcars for syndication                     66,776              79,681                       30,690
    Equipment on operating leases, net                 334,872             322,811                      321,141
    Property, plant and equipment, net                 172,729             165,700                      161,200
    Goodwill                                           137,066             137,066                      137,066
    Intangibles and other assets, net                   84,693              85,155                       87,268
                                                        ------              ------                       ------
                                                    $1,365,348          $1,376,683                   $1,301,655
                                                    ==========          ==========                   ==========

    Liabilities and Equity
    Revolving notes                                    $71,430            $101,446                      $90,339
    Accounts payable and accrued liabilities           323,977             340,328                      316,536
    Deferred income taxes                               88,514              89,623                       83,839
    Deferred revenue                                    17,872               1,230                        5,900
    Notes payable                                      428,028             428,454                      429,140

           Total equity Greenbrier                     418,161             399,788                      361,573
    Noncontrolling interest                             17,366              15,814                       14,328
                                                        ------              ------
    Total equity                                       435,527             415,602                      375,901
                                                       -------             -------                      -------
                                                    $1,365,348          $1,376,683                   $1,301,655
                                                    ==========          ==========                   ==========

                                                                                     THE GREENBRIER COMPANIES, INC.

    CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share amounts, unaudited)

                                                        Three Months Ended           Nine Months Ended
                                                              May 31,                     May 31,
                                                             2012              2011               2012                  2011
                                                             ----              ----               ----                  ----
    Revenue
    Manufacturing                                        $364,930          $173,487           $947,792              $415,548
    Wheel Services, Refurbishment & Parts                 125,145           126,317            362,788               333,600
    Leasing & Services                                     17,722            17,476             53,601                51,406
                                                           ------            ------             ------                ------
                                                          507,797           317,280          1,364,181               800,554

    Cost of revenue
    Manufacturing                                         325,424           158,674            852,464               385,974
    Wheel Services, Refurbishment & Parts                 111,610           111,202            324,055               299,026
    Leasing & Services                                      8,825             9,254             27,783                27,099
                                                            -----             -----             ------                ------
                                                          445,859           279,130          1,204,302               712,099

    Margin                                                 61,938            38,150            159,879                88,455

    Selling and administrative                             28,784            22,580             76,998                58,212
    Gain on disposition of equipment                       (2,585)           (1,678)            (8,897)               (6,148)
    Earnings from operations                               35,739            17,248             91,778                36,391

    Other costs
    Interest and foreign exchange                           6,560             9,807             18,574                30,646
    Loss on extinguishment of debt                              -            10,007                  -                10,007
    Earnings (loss) before income taxes and
     earnings (loss) from unconsolidated
     affiliates
                                                           29,179            (2,566)            73,204                (4,262)

    Income tax benefit (expense)                           (8,655)              301            (21,798)                  812
                                                           ------               ---            -------                   ---
    Earnings (loss) before earnings (loss)
     from unconsolidated affiliates
                                                           20,524            (2,265)            51,406                (3,450)

    Earnings (loss) from unconsolidated
     affiliates                                               201              (539)               (99)               (1,700)
                                                              ---              ----                ---                ------

    Net earnings (loss)                                    20,725            (2,804)            51,307                (5,150)
    Net earnings attributable to
        noncontrolling interest                            (1,608)             (510)                (4)               (1,019)
                                                           ------              ----                ---                ------

    Net earnings (loss) attributable to
     Greenbrier
                                                          $19,117           $(3,314)           $51,303               $(6,169)
                                                          =======           =======            =======               =======

    Basic earnings (loss) per common share                  $0.71            $(0.14)             $1.94                $(0.27)

    Diluted earnings (loss) per common share                $0.61            $(0.14)             $1.65                $(0.27)

    Weighted average common shares:
    Basic                                                  26,981            24,127             26,378                22,893
    Diluted                                                33,862            24,127             33,640                22,893

                                                      THE GREENBRIER COMPANIES, INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands, unaudited)

                                                        Nine Months Ended
                                                             May 31,
                                                         2012                            2011
                                                         ----                            ----
    Cash flows from operating activities
    Net income (loss)                                 $51,307                         $(5,150)
    Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
    Deferred income taxes                               4,801                          (5,276)
    Depreciation and amortization                      30,603                          28,174
    Gain on sales of leased equipment                  (8,897)                         (2,901)
    Accretion of debt discount                          2,416                           5,446
    Stock based compensation expense                    6,724                           4,961
    Loss on extinguishment of debt (non-cash portion)       -                           2,868
    Other                                               3,586                              91
    Decrease (increase) in assets:
    Accounts receivable                                10,429                         (51,427)
    Inventories                                       (26,748)                        (83,293)
    Leased railcars for syndication                   (43,561)                        (48,465)
    Other                                              (1,419)                          5,834
    Increase (decrease) in liabilities:
    Accounts payable and accrued liabilities           12,401                          77,273
                Deferred revenue                       11,991                          (5,442)
                                                       ------                          ------
    Net cash provided by (used in) operating
     activities                                        53,633                         (77,307)
                                                       ------                         -------
    Cash flows from investing activities
    Proceeds from sales of equipment                   33,253                          14,179
    Investment in and advances to unconsolidated
     affiliates                                          (544)                           (979)
    Decrease (increase) in restricted cash             (3,976)                            308
    Capital expenditures                              (72,117)                        (59,689)
    Other                                                  35                              52
    Net cash used in investing activities             (43,349)                        (46,129)
                                                      -------                         -------
    Cash flows from financing activities
    Net change in revolving notes with maturities of
     90 days or less                                  (49,114)                          3,694
    Proceeds from revolving notes with maturities
     longer than 90 days                               56,644                          13,373
    Repayments of revolving notes with maturities
     longer than 90 days                              (23,573)                         (6,194)
    Proceeds from issuance of notes payable             2,500                         231,250
    Debt issuance costs                                     -                          (7,857)
    Repayments of notes payable                        (6,028)                       (238,569)
    Gross proceeds from equity offering                     -                          63,180
    Excess tax benefit from restricted stock awards     2,670                               -
    Investment by joint venture partner                   410                               -
    Expenses from equity offering                           -                            (420)
    Other                                                   -                              26
    Net cash provided by (used in) financing
     activities                                       (16,491)                         58,483
                                                      -------                          ------
    Effect of exchange rate changes                       900                             391
    Decrease in cash and cash equivalents              (5,307)                        (64,562)
    Cash and cash equivalents
    Beginning of period                                50,222                          98,864
                                                       ------                          ------
    End of period                                     $44,915                         $34,302
                                                      =======                         =======

                                                                                                                                              THE GREENBRIER COMPANIES, INC.

    SUPPLEMENTAL INFORMATION
    Quarterly Results of Operations (Unaudited)

    Operating results by quarter for 2012 and 2011 are as follows:

                                                                                                                                                                                            Nine Month
    (In thousands, except per share
     amount)                                               First                                     Second                                      Third                                        Total
                                                           -----                                     ------                                      -----                                        -----
    2012
    Revenue
       Manufacturing                                                $262,656                                   $320,206                                   $364,930                                        $947,792
       Wheel Services, Refurbishment & Parts                         117,749                                    119,894                                    125,145                                         362,788
       Leasing & Services                                             17,794                                     18,086                                     17,722                                          53,601
                                                                      ------                                     ------                                     ------                                          ------
                                                                     398,199                                    458,186                                    507,797                                       1,364,181
    Cost of revenue
       Manufacturing                                                 236,188                                    290,851                                    325,424                                         852,464
       Wheel Services, Refurbishment & Parts                         105,891                                    106,554                                    111,610                                         324,055
       Leasing & Services                                              9,663                                      9,295                                      8,825                                          27,783
                                                                       -----                                      -----                                      -----                                          ------
                                                                     351,742                                    406,700                                    445,859                                       1,204,302

    Margin                                                            46,457                                     51,486                                     61,938                                         159,879

    Selling and administrative                                        23,235                                     24,979                                     28,784                                          76,998
    Gain on disposition of equipment                                  (3,658)                                    (2,654)                                    (2,585)                                         (8,897)
                                                                      ------                                     ------                                     ------                                          ------
    Earnings from operations                                          26,880                                     29,161                                     35,739                                          91,778

    Other costs
       Interest and foreign exchange                                   5,383                                      6,630                                      6,560                                          18,574
                                                                       -----                                      -----                                      -----                                          ------
    Earnings before income tax and earnings
       (loss) from unconsolidated affiliates                          21,497                                     22,531                                     29,179                                          73,204

    Income tax expense                                                (7,797)                                    (5,348)                                    (8,655)                                        (21,798)

    Earnings (loss) from unconsolidated
      affiliates                                                        (372)                                        72                                        201                                             (99)
                                                                        ----                                        ---                                        ---                                             ---
    Net earnings                                                      13,328                                     17,255                                     20,725                                          51,307
    Net (earnings) loss attributable to
       Noncontrolling interest                                         1,189                                        415                                     (1,608)                                             (4)
                                                                       -----                                        ---                                     ------                                             ---
    Net earnings attributable to
     Greenbrier                                                      $14,517                                    $17,670                                    $19,117                                         $51,303
                                                                     =======                                    =======                                    =======                                         =======

    Basic earnings per common share:(1)                                $0.57                                      $0.66                                      $0.71                                           $1.94
    Diluted earnings per common share:(2)                              $0.48                                      $0.57                                      $0.61                                           $1.65

(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. Dilutive 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
    Quarterly Results of Operations (Unaudited)

    (In thousands, except per share
     amount)                                                                     First                                       Second                                      Third                                      Fourth                                      Total
                                                                                 -----                                       ------                                      -----                                      ------                                      -----
    2011
    Revenue
       Manufacturing                                                                        $85,440                                    $156,621                                    $173,487                                   $305,554                                   $721,102
       Wheel Services, Refurbishment & Parts                                                 95,268                                     112,015                                     126,317                                    119,265                                    452,865
       Leasing & Services                                                                    18,226                                      15,704                                      17,476                                     17,917                                     69,323
                                                                                             ------                                      ------                                      ------                                     ------                                     ------
                                                                                            198,934                                     284,340                                     317,280                                    442,736                                  1,243,290
    Cost of revenue
       Manufacturing                                                                         79,747                                     147,552                                     158,674                                    275,154                                    661,127
       Wheel Services, Refurbishment & Parts                                                 86,411                                     101,413                                     111,202                                    106,423                                    405,449
       Leasing & Services                                                                     9,120                                       8,725                                       9,254                                     10,084                                     37,183
                                                                                              -----                                       -----                                       -----                                     ------                                     ------
                                                                                            175,278                                     257,690                                     279,130                                    391,661                                  1,103,759

    Margin                                                                                   23,656                                      26,650                                      38,150                                     51,075                                    139,531

    Selling and administrative                                                               17,938                                      17,693                                      22,580                                     22,115                                     80,326
    Gain on disposition of equipment                                                         (2,510)                                     (1,961)                                     (1,678)                                    (2,220)                                    (8,369)
                                                                                             ------                                      ------                                      ------                                     ------                                     ------
    Earnings from operations                                                                  8,228                                      10,918                                      17,248                                     31,180                                     67,574

    Other costs
       Interest and foreign exchange                                                         10,304                                      10,536                                       9,807                                      6,345                                     36,992
       Loss on extinguishment of debt                                                             -                                           -                                      10,007                                      5,650                                     15,657
                                                                                                ---                                         ---                                      ------                                      -----                                     ------
    Earnings (loss) before income tax and loss from unconsolidated
     affiliates
                                                                                             (2,076)                                        382                                      (2,566)                                    19,185                                     14,925

    Income tax benefit (expense)                                                                611                                        (100)                                        301                                     (4,376)                                    (3,564)

    Loss from unconsolidated
      affiliates                                                                               (587)                                       (575)                                       (539)                                    (1,273)                                    (2,974)
                                                                                               ----                                        ----                                        ----                                     ------                                     ------
    Net earnings (loss)                                                                      (2,052)                                       (293)                                     (2,804)                                    13,536                                      8,387
    Net earnings attributable to Noncontrolling
       interest                                                                                (252)                                       (257)                                       (510)                                      (902)                                    (1,921)
                                                                                               ----                                        ----                                        ----                                       ----                                     ------
    Net earnings (loss) attributable to Greenbrier
                                                                                            $(2,304)                                      $(550)                                    $(3,314)                                   $12,634                                     $6,466
                                                                                            =======                                       =====                                     =======                                    =======                                     ======

    Basic earnings (loss) per common
        share: (1)                                                                           $(0.11)                                     $(0.02)                                     $(0.14)                                     $0.50                                      $0.27
    Diluted earnings (loss) per common share:(2)
                                                                                             $(0.11)                                     $(0.02)                                     $(0.14)                                     $0.42                                      $0.24

(1) Quarterly amounts do not total to the year to date amount as each period is calculated discretely. Unvested restricted stock awards are excluded from the per share calculation for the first, second and third quarters due to a net loss in each of those periods.2010 includes income of $11.

(2) Quarterly amounts do not total to the year to date amount as each period is calculated discretely. The dilutive effect of warrants is excluded from per share calculations for the first, second and third quarters due to net losses for those periods. The fourth quarter dilutive 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 (loss) attributable to Greenbrier to Adjusted EBITDA (1)
    (In thousands, unaudited)

                                                                                                                                                                                              Three Months Ended            Nine Months Ended
                                                                                                                                                                                                    May 31,                      May 31,
                                                                                                                                                                                                    -------                      -------
                                                                                                                                                                                                            2012                         2011            2012            2011
                                                                                                                                                                                                            ----                         ----            ----            ----
    Net earnings (loss) attributable to Greenbrier
                                                                                                                                                                                     $19,117                       $(3,314)                     $51,303         $(6,169)
    Loss on extinguishment of debt                                                                                                                                                         -                        10,007                            -          10,007
    Interest and foreign exchange                                                                                                                                                      6,560                         9,807                       18,574          30,646
    Income tax expense (benefit)                                                                                                                                                       8,655                          (301)                      21,798            (812)
    Depreciation and amortization                                                                                                                                                     10,281                         9,548                       30,603          28,174

    Adjusted EBITDA                                                                                                                                                                  $44,613                       $25,747                     $122,278         $61,846
                                                                                                                                                                                     =======                       =======                     ========         =======

(1) Adjusted( )EBITDA is not a financial measure under generally accepted accounting principles (GAAP). We define Adjusted EBITDA as earnings (loss) attributable to Greenbrier before loss on extinguishment of debt, interest and foreign exchange, income tax expense (benefit), 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 May 31,
                                                -------------
                                                                 2012
                                                                 ----
    Backlog Activity (units)
    February 29, 2012 backlog                                    12,500
    Orders received                                               3,100
    Production held as Leased railcars for
     syndication                                                   (400)
    Production sold directly to third parties                    (3,700)
    May 31, 2012 backlog                                       11,500
                                                               ======

    Delivery Information (units)
    Production sold directly to third parties                   3,700
    Sales of Leased railcars for syndication                      800
                                                                  ---
    Third quarter ended May 31, 2012
     deliveries                                                 4,500
                                                                =====
                                                                     THE GREENBRIER COMPANIES, INC.

    SUPPLEMENTAL INFORMATION
    Calculation of Earnings (Loss) Per Share

    The shares used in the computation of the Company's basic and diluted earnings (loss) per common share are reconciled as follows:
    (In thousands)                              Three Months Ended                 Nine Months Ended
                                                      May 31,                           May 31,
                                                    2012               2011           2012               2011
                                                    ----               ----           ----               ----
              Weighted average basic common
              shares outstanding (1)             26,981             24,127         26,378             22,893
              Dilutive effect of employee
              stock options (2)                       -                  -              -                  -
             Dilutive effect of warrants (3)        836                  -          1,217                  -
              Dilutive effect of convertible
              notes (4)                           6,045                  -          6,045                  -
             --------
              Weighted average diluted common
              shares outstanding                 33,862             24,127         33,640             22,893
                                                 ======

(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. Shares outstanding exclude 0.8 million shares of unvested restricted stock for the three and nine months ended May 31, 2011 due to a net loss.

(2) There were no options outstanding for the three and nine months ended May 31, 2012. The dilutive effect of options was excluded from the share calculation for the three and nine months ended May 31, 2011 due to a net loss.

(3) The dilutive effect of warrants to purchase 3.4 million shares was excluded from the share calculation for the three and nine months ended May 31, 2011 due to a net loss.

(4) 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 for the three and nine months ended May 31, 2012 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 (see footnote 2 above). 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 6,045 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  Nine Months Ended
                                       May 31, 2012       May 31, 2012
                                       ------------       ------------
    Net earnings attributable to
     Greenbrier                                 $19,117            $51,303
    Add back:
    Interest and debt issuance
     costs on 2018 Convertible
     notes, net of tax
                                                  1,416              4,262
                                                  -----              -----
    Earnings before interest and
     debt issuance costs on 2018
     convertible notes
                                                $20,533            $55,565
                                                -------            -------

    Weighted average diluted common
     shares outstanding                          33,862             33,640

    Diluted earnings per share                $0.61 (1)           $1.65(1)

(1) Diluted earnings per share was calculated as follows:

Earnings before interest and debt issuance costs on 2018 convertible notes
Weighted average diluted common shares outstanding

SOURCE The Greenbrier Companies, Inc. (GBX)


Source: PR Newswire