Greenbrier earnings slip in Q3 FY2015

The railroad transportation equipment manufacturer reported a 15 percent drop in net earnings in its fiscal third quarter compared to its fiscal second quarter, despite record quarterly revenues.    Railroad transportation equipment manufacturer Greenbrier Companies, Inc. reported net earnings dropped 15.1 percent to $42.8 million in the third quarter of its fiscal year 2015, ended May 31, compared to second quarter FY2015.
   The decline in earnings came despite record quarterly revenues of $714.6 million, an increase of 13.4 percent from the previous quarter. Greenbrier attributed the jump in revenues primarily to increased deliveries and the sixth consecutive quarter of backlog growth.
   Adjusted earnings before interest, tax, debt and amortization (EBITDA) for the quarter also reached record levels at $116.3 million, or 16.3% of revenue. Earnings per diluted share fell from $1.33 per share to $1.57 per share for the quarter.
   Greenbrier said in its most recent financial statements the company incurred non-recurring costs of approximately $5.2 million after taxes, or $0.16 per diluted share, during Q3 FY2015. These costs included costs associated with an unnamed and unfulfilled potential acquisition and the implementation of new tank car safety regulations, as well as a significant decline in scrap metal prices, which had a negative impact $1.1 million on the company’s wheel services business.
   Greenbrier received diversified orders for 5,300 new railcars – worth $640 million – during its fiscal 2015 third quarter and delivered a total of 5,700 new railcars, up 9.6 percent from the second quarter.
   Greenbrier said its annualized 21.3 percent return on invested capital (ROIC) in Q3 FY2015 “reflects record operating results tempered by working capital needs associated with higher production and syndication volumes, and planned capital expenditure programs,” and that the company remains on track to reach its goal of at least 25 percent ROIC by the second half of fiscal 2016.
   Looking forward, the company reaffirmed previous FY2015 financial projections of $420 million to $435 million in adjusted EBITDA on revenues of $2.6 billion to $2.7 billion and approximately 21,500 deliveries.
   “Our diversified and integrated business model continues to pay off, with record revenue, adjusted EBITDA and deliveries this quarter,” Greenbrier Chairman and CEO William A. Furman said of the results. “Aggregate gross margin grew to 20.9%, led by execution from our manufacturing and lease syndication businesses.  We achieved our goal of at least 20% aggregate margin a full year ahead of plan despite an abrupt decline in scrap metal prices which adversely affected our wheel services business.
   “Since the beginning of our fiscal year on September 1, 2014, we have received orders for 29,500 new railcar units valued at $3.0 billion, with approximately 80% of these orders being non-energy related,” added Furman. “Our railcar backlog value has grown every quarter since the first quarter of fiscal 2014. The most recent industry data reported for North America is as of March 31, 2015.
   “Our book-to-bill ratio in North America for the 12 months ended March 31, 2015 was 2.6x, nearly 50% higher than 1.8x for the industry as a whole.  Our strong commercial performance and diversified product offerings allowed us to capture 43% of all orders placed across the railcar industry in the most recently reported calendar quarter.  With deliveries that stretch into 2018, we have a long runway ahead to deliver robust earnings and free cash flow, driving shareholder value.”