The Greenbrier Companies, Inc. (NYSE:GBX) today reported financial results for its third fiscal quarter ended May 31, 2022.
Third Quarter Highlights
- New railcar orders for 5,000 units valued at $670 million and deliveries of 5,200 units resulted in a book-to-bill of nearly 1.0x. Orders primarily originated in North America as Europe navigates the continued impact of the war in Ukraine.
- Diversified new railcar backlog as of May 31, 2022 was 30,900 units with a value of $3.6 billion and provides strong earnings visibility.
- Railcar refurbishment backlog of 3,100 units valued over $220 million is not included in new railcar backlog.
- Maintained lease fleet utilization of 98%.
- Gross margin and gross margin % increased sequentially as improvement in North American Manufacturing and Maintenance Services offset headwinds from Europe and pass-through of input cost escalations.
- Net earnings attributable to Greenbrier for the quarter were $3.1 million, or $0.09 per diluted share, on revenue of $794 million.
- Quarter end liquidity of $535 million, including $450 million in cash and $85 million of available borrowing capacity.
- Board declared a quarterly dividend of $0.27 per share, payable on August 18, 2022 to shareholders of record as of July 28, 2022, representing Greenbrier's 33rd consecutive quarterly dividend.
"Greenbrier delivered strong operating results in our third quarter. Lease fleet utilization and manufacturing production and delivery levels remain robust in North America. This performance was partially offset by inflation and the impact of the war in Ukraine. Pass-through of input cost escalations protect Greenbrier when raw material prices spike, but dilute margin percentages," said Lorie Tekorius, Chief Executive Officer & President.
Tekorius concluded, "In Europe, the war triggered a pause in order activity after securing orders for 2,300 railcars in the first two quarters of our fiscal year. In recent weeks, European buyers are returning to the market and our sales pipeline is active. Lease syndications and Maintenance Services helped to balance our quarterly results, underscoring the value of Greenbrier's diverse business activities. Uncertainty in the U.S. economy remains an ongoing challenge, but our operations continue to build momentum. When confronted with difficult externalities, Greenbrier has a proven ability to produce value through our integrated platform."
Business Update & Outlook
Based on current business trends and production schedules for fiscal 2022, Greenbrier expects:
- Deliveries of 18,500 – 19,500 units including approximately 1,500 units in Greenbrier-Maxion (Brazil).
- Selling & administrative expense to be $210 - $215 million.
- Capital expenditures will be approximately $310 million in Leasing & Management Services, $50 million in Manufacturing and $10 million in Maintenance Services. Net of proceeds of equipment sales of approximately $155 million, capital expenditures in Leasing & Management Services will be $155 million.
Financial Summary
Q3 FY22 | Q2 FY22 | Sequential Comparison – Main Drivers | |
Revenue | $793.5M | $682.8M | 16% increase reflects higher deliveries and pass-through of input cost escalations in Manufacturing and increased volumes in Maintenance Services |
Gross margin | $76.3M | $54.8M | 39% increase reflects higher deliveries and improved operating efficiencies in Manufacturing and Maintenance Services |
Gross margin % | 9.6 % | 8.0 % | Improving operating efficiencies in Manufacturing and Maintenance Services |
Selling and administrative | $57.4M | $54.7M | Increased employee costs, consulting, and travel expense from higher business activity levels |
Net gain on disposition of equipment | $0.7M | $25.1M | Timing of fleet rebalancing and optimization |
EBITDA | $48.6M | $51.7M | Higher gross margin offset by minimal fleet sales in the quarter; See reconciliation on page 9 |
Net (earnings) loss attributable to noncontrolling interest | ($4.5M) | $1.6M | Partners' share of consolidated JV's operating results |
Net earnings attributable to Greenbrier | $3.1M | $12.8M | Primarily lower operating earnings reflecting timing of fleet sales |
Diluted EPS | $0.09 | $0.38 |
Segment Summary
Q3 FY22 | Q2 FY22 | Sequential Comparison – Main Drivers | |
Manufacturing | |||
Revenue | $650.9M | $555.7M | Increased deliveries and pass-through of input cost escalations |
Gross margin | 6.1 % | 3.7 % | Improving operating efficiency partially offset by European headwinds and pass-through of input cost escalations (which increase revenue but are dilutive to GM %) |
Operating margin (1) | 3.1 % | 0.3 % | |
Deliveries (2) | 4,900 | 4,400 | |
Maintenance Services | |||
Revenue | $101.5M | $86.6M | Increased wheel and repair volumes and scrapping activity |
Gross margin | 10.2 % | 5.7 % | Improved throughput and scrapping activity |
Operating margin (1) | 8.5 % | 3.3 % | |
Leasing & Management Services (including GBX Leasing) | |||
Revenue | $41.1M | $40.5M | Continued strong syndication activity and interim rent |
Gross margin | 64.0 % | 72.1 % | More normalized gross margin activity |
Operating margin (1) (3) | 46.7 % | 117.5 % | Timing of fleet rebalancing and optimization |
Fleet utilization | 97.5 % | 97.9 % | |
(1) See supplemental segment information on page 8 for additional information. |
(2) Excludes Brazil deliveries which are not consolidated into Manufacturing revenue and margins. |
(3) Includes Net loss (gain) on disposition of equipment, which is excluded from gross margin. |
Conference Call
Greenbrier will host a teleconference to discuss its third quarter of 2022 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:
- July 11, 2022
- 8:00 a.m. Pacific Daylight Time
- Phone: 1-888-317-6003 (Toll Free) 1-412-317-6061 (International), Entry Number "8138307"
- Real-time Audio Access: ("Newsroom" at https://www.gbrx.com)
Please access the site 10-15 minutes prior to the start time.