Greenbrier Reports Fiscal First Quarter 2009 Results
Companies (NYSE: GBX) today reported results for its fiscal first quarter
ended
Financial Summary
Fiscal First Quarter Results:
* Revenues for the first quarter were $256 million, down $30 million
versus the prior year's first quarter.
* Net loss for the quarter was $3.3 million, or $.20 per diluted
share, compared to net earnings of $2.6 million, or $.16 per diluted
share, in the prior year's first quarter.
* Results for the first quarter of 2009 included a non-cash charge to
"interest and foreign exchange expense" of $1.2 million pre-tax,
$.6 million after-tax, or $.04 per diluted share.
* EBITDA for the quarter was $12.5 million, or 4.9% of revenues,
compared to $24.5 million, or 8.6% of revenues in the first quarter
of 2008.
* Selling and administrative costs were $16.0 million for the quarter,
or 6.2% of revenues, versus $20.2 million or 7.0% or revenues for
the same quarter last year.
Liquidity:
* The Company had approximately $98 million of committed additional
borrowing capacity and $19 million of cash as of November 30, 2008.
* Borrowings outstanding as of January 8, 2009 on the Company's
revolving credit facilities are approximately $106 million, a
reduction of $40 million from November 30, 2008; cash balances
remain substantially unchanged. This reduction in borrowings
increases current committed additional borrowing capacity to
approximately $138 million.
* The quarterly dividend has been reduced to $.04 per share.
Deliveries and Backlog:
* New railcar deliveries in the first quarter of 2009 were
approximately 800 units, compared to 1,900 units in the first
quarter of 2008.
* Greenbrier's new railcar manufacturing backlog as of November 30,
2008 was 15,900 units valued at $1.39 billion, compared to 16,200
units valued at $1.44 billion as of August 31, 2008. Based on
current production plans, approximately 2,900 railcar units included
in backlog are scheduled for delivery in fiscal 2009.
* Marine backlog as of November 30, 2008 was $190 million, compared to
$200 million as of August 31, 2008.
Subsequent events:
* Following the close of the quarter, the Company delivered its first
tank cars to GE Railcar Services for the North American market.
First Quarter Results:
Total revenues for the first quarter of fiscal 2009 were
down from
quarter was 7.0% of revenues compared to 12.5% of revenues in the prior
comparable period. EBITDA was
quarter, compared to
first quarter.
Net loss for the first quarter of fiscal 2009 was
per diluted share, compared to net earnings of
diluted share, in the prior year’s first quarter. The Company enters into
currency hedge contracts to manage fluctuations in foreign currencies and
protect margins on foreign currency sales in
are economically effective, during the quarter certain hedge contracts did not
meet the requirements to be designated for hedge accounting treatment under
Generally Accepted Accounting Principles. As such, the mark to market of
these hedge contracts resulted in a non-cash charge to “interest and foreign
exchange” of
Effective in January, the Company intends to utilize hedge accounting for all
of its hedge contracts.
Revenues from the Company’s Refurbishment & Parts, Leasing & Services, and
Marine manufacturing businesses accounted for 68% of total revenues for the
quarter ended
ended
railcar manufacturing in
revenue mix is principally due to the Company’s strategic diversification
efforts completed over the past several years.
results for the quarter reflect the difficult economic environment in which we
currently operate. The less cyclical parts of our business, including
Refurbishment & Parts, Leasing & Services, and Marine manufacturing, along
with our European operations, have helped to dampen the effect of the
downturn. However, the adverse impacts of weak railcar loadings, surplus
railcars, and deferments in capital spending by our customers, along with
resultant downward pricing pressures, affected all our business during the
quarter. Dramatic recent reductions in commodity prices, which are expected to
have a positive impact in the long run, adversely affected our Refurbishment &
Parts segment during the quarter.”
Revenue for the Refurbishment & Parts segment during the first quarter was
segment consists of railcar repair and refurbishment, wheels services, and
railcar parts from 39 locations in
of total Company revenues during the period, as revenue increased
million
from American Allied Railway Equipment Company (two wheel shops and one parts
location) and Roller Bearings, Inc, (one parts location), both of which were
acquired by Greenbrier in the second half of 2008. This increase was offset
somewhat by lower scrap proceeds, which also contributed to lower segment
margin this quarter.
Gross margin for the Refurbishment & Parts segment was 9.8% of revenues,
as compared to 15.3% of revenues in the prior comparable period. The gross
margin decline was primarily due to a less favorable mix of repair and
refurbishment work, and lower scrap proceeds. Recently, scrap prices have
begun to strengthen from levels realized in the first quarter.
For the Manufacturing segment, revenue for the first quarter was
million
deliveries during the first quarter were 800 units, down from 1,900 units in
the same period last year, while the current period includes a product mix
with higher per unit sale prices.
Manufacturing gross margin for the first quarter was negative 4.1%,
compared to positive 5.4% of revenues in the first quarter of 2008.
Manufacturing gross margin continued to be adversely affected by lower
production rates due to ongoing weak market demand, as well as a less
favorable product mix, and higher cost materials purchased earlier in the
year. In fiscal 2008, the Company accrued loss reserves for certain railcars
in backlog, where the anticipated cost to produce the railcars exceeded the
sales price. These 2008 reserves were adjusted by
quarter, based on current expectations.
The Leasing & Services segment includes results from the Company’s owned
lease fleet of approximately 9,000 railcars and from fleet management services
provided for approximately 137,000 railcars. Revenue for this segment was
Leasing & Services gross margin for the quarter was 43.6% of revenue, compared
to 48.8% of revenue in the same quarter last year. The revenue and gross
margin decrease was principally due to lower lease fleet utilization and lower
gains on sale of railcars from the lease fleet.
Selling and administrative costs were
6.2% of revenues, versus
quarter last year. The decline is principally due to cost reduction
initiatives, as well as a reversal of
Plan to Improve Liquidity, Optimize Cost Structure and Reduce Capex
Furman continued, “Even though visibility remains limited in our markets,
particularly in new railcar manufacturing, we anticipate achieving economic
benefits from both external factors and internal measures during the rest of
the year. Lower input costs and a more favorable product mix should help
improve overall gross margins in the months ahead. Internal measures include
our decision to further optimize our cost structure, improve our working
capital utilization and rationalize plant utilization. Given current market
conditions, we believe it is prudent to reduce the quarterly dividend to
per share, from the current
help stabilize our EBITDA margin and cash flow, reduce debt levels and
increase liquidity. We will continue to manage the Company for cash flow, and
limit discretionary capital expenditures and other costs which can be
avoided.”
Business Outlook
Furman added, “We believe fiscal 2009 will be a challenging year for the
entire rail industry. New railcar demand industrywide is soft and forecasted
to remain so for the balance of calendar 2009 and into 2010. Normal for this
phase of the business cycle, some customers are seeking price concessions,
and/or are reevaluating their need for railcars that have already been
ordered. Nevertheless, we believe our railcar sales contracts are sound and
provide adequate protection in the event of attempted cancellation or
renegotiation. Similarly, we are seeking concessions from our suppliers.”
Furman continued, “The initiatives we have taken over the last three years
to improve our competitive positioning, enhance our integrated business model,
and diversify our revenue and earnings base into higher margin businesses, are
proving to be the correct actions. The steps we have taken are expected to
continue to stabilize our overall business through the current economic
downturn, while providing a strong platform for growth when the economy
recovers.”
Furman concluded, “We continue to be optimistic about the long term
fundamentals of the railroad industry and especially our enhanced competitive
position within the industry. In the near term, however, we will continue to
scale our operations to reflect the current economic environment. To this
end, we will control those things we can, which include adjusting and
rationalizing production, reducing overhead and general administrative costs
and capital expenditures, improving our balance sheet, and managing the
Company for cash. The railroad supply industry has always been cyclical, and
we are well prepared to survive this down cycle. As the economy and our
segment recover we expect Greenbrier will outperform, due in part to our
integrated business model.”
said, “In addition to managing our operations, we are also focused on
improving our liquidity, managing the Company for cash, paying down debt, and
prudently employing invested capital. Current borrowings outstanding on our
revolving credit facilities are approximately
million
million
additional borrowing capacity to approximately
Rittenbaum continued, “We are implementing more aggressive working capital
management programs, with the goal of improving working capital utilization by
and general and administrative costs in 2009 by at least
annualized basis. This is in addition to
reductions realized in 2008. Finally, we plan to limit our net capital
expenditures for 2009 to no more than
in 2008.”
Rittenbaum concluded, “We believe we have sufficient liquidity to meet our
business needs and little exposure to near term debt rollovers, with only our
European lines of credit aggregating
million
amounts of our notes payable is
About Greenbrier Companies
Greenbrier (http://www.gbrx.com), headquartered in
a leading supplier of transportation equipment and services to the railroad
industry. The Company builds new railroad freight cars in its three
manufacturing facilities in the U.S. and
facility. It also repairs and refurbishes freight cars and provides wheels and
railcar parts at 39 locations across
railroad freight cars and refurbishes freight cars for the European market
through both its operations in
throughout
management services for approximately 137,000 railcars.
“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: This release may contain forward-looking statements. Greenbrier uses
words such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend”
and similar expressions to identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference
include, but are not limited to, 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 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 price fluctuations 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 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” on page 11 of Part I , Item 1a and “Forward
Looking Statements” on page 3 of our Annual Report on Form 10-K for the fiscal
year ended
reliance on these forward-looking statements, which reflect management’s
opinions only as of the date hereof. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking
statements.
EBITDA is not a financial measure under GAAP. We define EBITDA as
earnings from continuing operations before special charges, interest and
foreign exchange, taxes, depreciation and amortization. We consider net cash
provided by operating activities to be the most directly comparable GAAP
financial measure. EBITDA is a liquidity measurement tool commonly used by
rail supply companies and we use EBITDA in that fashion. You should not
consider EBITDA in isolation or as a substitute for cash flow from operations
or other cash flow statement data determined in accordance with GAAP. In
addition, because EBITDA is not a measure of financial performance under GAAP
and is susceptible to varying calculations, the EBITDA measure presented may
differ from and may not be comparable to similarly titled measures used by
other companies.
The Greenbrier Companies will host a teleconference to discuss first
quarter of fiscal year 2009 results. Teleconference details are as follows:
Friday, January 9, 2009
7:30 am Pacific Standard Time
Phone #: 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 replay will be available on the same website for 30 days. Telephone
replay will be available through
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
November 30, August 31,
Assets 2008 2008
Cash and cash equivalents $18,765 $5,957
Restricted cash 524 1,231
Accounts receivable 152,733 181,857
Inventories 256,123 252,048
Assets held for sale 63,182 52,363
Equipment on operating leases 318,864 319,321
Investment in direct finance leases 8,328 8,468
Property, plant and equipment 134,060 136,506
Goodwill 192,733 200,148
Intangibles and other assets 95,747 99,061
$1,241,059 $1,256,960
Liabilities and Stockholders' Equity
Revolving notes $146,323 $105,808
Accounts payable and accrued liabilities 234,541 274,322
Losses in excess of investment in
de-consolidated subsidiary 15,313 15,313
Deferred income taxes 76,851 74,329
Deferred revenue 22,053 22,035
Notes payable 491,279 496,008
Minority interest 9,509 8,618
Stockholders' equity: 245,190 260,527
$1,241,059 $1,256,960
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
Three Months Ended
November 30,
2008 2007
Revenue
Manufacturing $102,717 $159,194
Refurbishment & Parts 132,279 103,889
Leasing & Services 21,133 23,295
256,129 286,378
Cost of revenue
Manufacturing 106,923 150,565
Refurbishment & Parts 119,326 87,951
Leasing & Services 11,929 11,925
238,178 250,441
Margin 17,951 35,937
Other costs
Selling and administrative 15,980 20,184
Interest and foreign exchange 10,846 10,419
Special charges - 189
26,826 30,792
Earnings (loss) before income tax, minority
interest and equity in unconsolidated
subsidiaries (8,875) 5,145
Income tax benefit (expense) 4,544 (2,956)
Earnings (loss) before minority interest and
equity in unconsolidated subsidiaries (4,331) 2,189
Minority interest 568 375
Equity in earnings (loss) of unconsolidated
subsidiaries 434 78
Net earnings (loss) $(3,329) $2,642
Basic earnings (loss) per common share: $(0.20) $0.16
Diluted earnings (loss) per common share: $(0.20) $0.16
Weighted average common shares:
Basic 16,629 16,172
Diluted 16,629 16,198
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
Three Months Ended
November 30,
2008 2007
Cash flows from operating activities:
Net earnings (loss) $(3,329) $2,642
Adjustments to reconcile net earnings (loss) to
net cash used in operating activities:
Deferred income taxes 2,522 2,692
Depreciation and amortization 9,556 8,256
Gain on sales of equipment (289) (780)
Special charges - 189
Minority interest (509) (103)
Other 139 (139)
Decrease (increase) in assets:
Accounts receivable 18,845 23,564
Inventories (15,260) (232)
Assets held for sale (10,883) (8,501)
Other 469 503
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (25,347) (30,743)
Deferred revenue 1,712 (6,118)
Net cash used in operating activities (22,374) (8,770)
Cash flows from investing activities:
Principal payments received under direct
finance leases 105 88
Proceeds from sales of equipment 306 1,422
Investment in and net advances to unconsolidated
subsidiaries - 176
Decrease in restricted cash 433 140
Capital expenditures (8,473) (14,475)
Net cash used in investing activities (7,629) (12,649)
Cash flows from financing activities:
Changes in revolving notes 51,062 6,677
Repayments of notes payable (4,189) (1,331)
Investment by joint venture partner 1,400 600
Stock options and restricted stock awards
exercised 1,152 783
Excess tax benefit of stock options exercised - 51
Net cash provided by financing activities 49,425 6,780
Effect of exchange rate changes (6,614) 516
Increase (decrease) in cash and cash equivalents 12,808 (14,123)
Cash and cash equivalents
Beginning of period 5,957 20,808
End of period $18,765 $6,685
THE GREENBRIER COMPANIES, INC.
Supplemental Disclosure
Reconciliation of Net Cash Provided by Operating Activities to EBITDA(1)
(In thousands, unaudited)
Three Months Ended
November 30,
2008 2007
Net cash used in operating activities $(22,374) $(8,770)
Changes in working capital 30,464 21,716
Special charges - (189)
Deferred income taxes (2,522) (2,692)
Gain on sales of equipment 289 780
Other (139) 139
Minority interest 509 103
Income tax expense (benefit) (4,544) 2,956
Interest and foreign exchange 10,846 10,419
Adjusted EBITDA from operations before special
charges $12,529 $24,462
(1) "EBITDA" (earnings from continuing operations before special charges,
interest and foreign exchange, taxes, depreciation and amortization)
is a useful liquidity measurement tool commonly used by rail supply
companies and Greenbrier. It should not be considered in isolation or
as a substitute for cash flows from operating activities or cash flow
statement data prepared in accordance with generally accepted
accounting principles.
SOURCE The Greenbrier Companies