The Greenbrier Companies, Inc. has reported financial results for its first fiscal quarter, which ended November 30, 2019, with net earnings of $7.7 million, or $0.23 per diluted share, on revenue of $769.4 million. Adjusted EBITDA for the quarter was $74.2 million, or 9.6 percent of revenue.
First quarter results included $2.2 million, net of tax, of integration and acquisition-related expenses from acquiring American Railcar Industries.
"Greenbrier's strategy of strengthening its core North American market, international diversification, talent development and growing the business at scale is working,” said William A. Furman, Greenbrier chairman and CEO. “Employees performed well as we continued the integration of our largest-ever acquisition in North America. The synergies Greenbrier sought in acquiring the ARI manufacturing assets yielded $2.8 million in the first quarter, a good start toward achieving the fiscal 2020 synergy target of $15 million.”
During the first quarter, Greenbrier received diversified orders for 4,500 railcars, which are valued at $450 million. Deliveries of new railcars totaled 6,200 units for the quarter. As of November 30, Greenbrier’s railcar backlog was 28,500 units, with an estimated value of $3.1 billion. Greenbrier agreed in principle to remove 575 units in backlog in exchange for financial consideration subsequent to the first quarter.
“Despite a weak North American freight railcar market, Greenbrier secured worldwide orders in the first quarter of 4,500 units valued at $450 million,” added Furman. “Subsequent to quarter-end, Greenbrier received orders for nearly 4,400 railcars including a large multi-year order for our Greenbrier-Maxion JV in Brazil. Europe also recorded strong post-quarter orders. Included in post-quarter orders was a large award in North America from a customer in Saudi Arabia.”
“These orders underline the traction Greenbrier is gaining internationally and the power of a developing globally integrated model,” continued Furman. “The December orders, along with Greenbrier's backlog of 28,500 units at November 30, worth more than $3 billion, provide good global visibility. Given overall progress through the first three months, we are on track to achieve our guidance for the year, although quarterly performance will not be linear."
"Greenbrier's uneven performance in the first quarter of fiscal 2020 fell short of our expectations,” said Furman. “Operating inefficiencies and component supply issues triggered lost production days and reduced production at one of our newly-acquired ARI facilities. Therefore, a higher proportion of quarterly railcar deliveries originated from our 50/50 joint venture at GIMSA in Mexico, which impacted net earnings. The operating inefficiencies and supplier issues are being addressed."
Based on current business trends, Greenbrier believes that for fiscal year 2020, revenue will be approximately $3.5 billion, and deliveries will be 26,000 to 28,000 units, including Greenbrier-Maxion, which will account for approximately 2,000 units. Adjusted diluted EPS is expected to be $2.60 to $3.00 excluding approximately $20 to $25 million of pre-tax integration and acquisition-related expenses from the ARI acquisition.
"Looking ahead, fiscal 2020 remains a year of execution and responsiveness to a rapidly changing demand environment. The ARI integration is complex, but progressing favorably. Likewise, we are continuing remedial actions at Greenbrier Rail Services including Repair, and expect these operations to improve through the year,” Furman concluded. “Our focus remains on managing recent acquisitions, generating positive cash flow, and creating long-term shareholder value through efficient capital allocation."