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8-K - FORM 8-K - GREENBRIER COMPANIES INC | v58858e8vk.htm |
Exhibit 99.1
News Release One Centerpointe Drive Suite 200 Lake Oswego, Oregon 97035 503-684-7000 |
For release: April 7, 2011, 6:00 am EDT
|
Contact: | Mark Rittenbaum | ||
503-684-7000 |
Greenbrier Reports Fiscal Second Quarter 2011 Results
Lake Oswego, Oregon, April 7, 2011 The Greenbrier Companies [NYSE:GBX] today
reported results for its fiscal second quarter ended February 28, 2011.
Second Quarter Highlights
Financial Highlights:
| Revenues for the second quarter of 2011 were $286.3 million, up from $200.0 million in the prior years second quarter. | ||
| Adjusted EBITDA for the quarter was $19.4 million, or 6.8% of revenues, compared to $15.9 million, or 8.0% of revenues in the second quarter of 2010. | ||
| The Companys net loss for the quarter was $550 thousand or $.02 per diluted share, compared to a net loss of $4.8 million, or $.28 per diluted share, in the prior years second quarter. 1 |
Liquidity Summary:
| The Company ended the quarter with $99.1 million of cash and $108.6 million of committed additional borrowing capacity. | ||
| The Company enhanced its balance sheet, cash flow and liquidity through (i) the sale of 3,000,000 shares of common stock during the second quarter, which generated approximately $63 million in net proceeds, and (ii) the sale, subsequent to the quarter end, of $230 million of 3.5% senior convertible notes due 2018, which are convertible into shares of Greenbrier common stock at an initial conversion price of $38.05 per share. | ||
| The Company will reduce annual cash interest expense by over $10 million and extend its debt maturities by using the net proceeds from the sale of the senior convertible notes and cash on hand to retire all of Greenbriers outstanding $235 million aggregate principal amount of 8 3/8% senior notes due 2015. |
Segment Summary:
| New railcar deliveries in the second quarter of 2011 were 2,200 units, compared to 800 units in the second quarter of 2010. | ||
| Greenbriers new railcar manufacturing backlog as of February 28, 2011 was 9,500 units with an estimated value of $720 million. Subsequent to quarter end, the Company received orders for an additional 2,400 units. |
1 | Net earnings (loss) is now referred to in the Consolidated Statements of Operations, in accordance with GAAP, as Net earnings (loss) attributable to controlling interest. |
Discussion of Quarterly Results and Outlook
William A. Furman, president and chief executive officer, said, We are pleased to report near
breakeven results, consistent with our previously disclosed outlook. This goal was achieved during
a quarter when we were ramping up railcar production, and were impacted by both severe weather at
certain facilities and expiration of a management services contract. Our business visibility
continues to improve. New railcar orders are continued evidence of the recovery in new railcar
manufacturing. Since the beginning of our fiscal year, we have received orders for 10,200 new
railcars. We believe the expanding product diversity of new orders signals the next stage of the
recovery in the new railcar market. As we strive to meet ongoing demand, we continue to ramp up
production and are on track with plans to open an additional production line in July 2011. We
continue to expect to deliver between 9,000 and 10,000 new railcars in fiscal 2011.
Furman added, Revenue in our Wheel Services, Refurbishment and Parts segment has grown for
the second consecutive quarter, driven by improvement in our wheel services business. We believe
the number of railcars in storage is returning to more normal levels. This factor, along with the
continued increase in railcar loadings and decline in velocity, should lead to stronger performance
for this segment in the second half of the year.
Furman concluded, We remain on track to achieve our fiscal 2011 goals. In the second half of
the fiscal year, we will continue to focus on expanding gross margins, improving working capital
and operational efficiencies, enhancing our leasing & services platform, leveraging our integrated
business model and returning to sustained profitability. Our recent debt refinancing is expected
to save the Company over $10 million in pre-tax annual interest expense, and strengthens our
balance sheet, extends our average debt maturities and positions us financially to more fully
participate in the market recovery.
Segment Details
The Manufacturing segment consists of marine and new railcar production in Europe and North
America. Manufacturing segment revenue for the second quarter was $156.6 million, compared to $88.1
million in the second quarter of 2010. The revenue increase was primarily due to higher railcar
deliveries, somewhat offset by a decline in marine barge production and a change in product mix.
Current quarter new railcar deliveries of 2,200 units were up from 800 units in the same quarter
last year. Manufacturing gross margin for the second quarter was 5.8% of revenues, compared to 7.3%
in the second quarter of 2010. The decrease was due principally to a reduction in marine production
and certain inefficiencies associated with the ramping up of railcar production.
The Wheel Services, Refurbishment & Parts segment, consisting of a network of 37 locations,
repairs and refurbishes railcars, and provides wheel services and railcar parts across
North America. Revenue for this segment in the second quarter was $112.0 million, compared to
$94.3 million in the second quarter of 2010. The revenue increase was primarily due to higher sales
volumes, a product mix with a higher average sales price and metal scrapping programs not in effect
in the prior period. Gross margin for the Wheel Services, Refurbishment & Parts segment was 9.5% of
revenues, compared to 11.6% of revenues in the same quarter last year. The decrease was primarily
the result of a change in product mix and the impact of severe weather at some of our locations.
This decrease was partially offset by higher scrap metal prices and improved efficiencies at our
repair facilities.
The Leasing & Services segment includes results from the Company-owned lease fleet of
approximately 9,000 railcars and from fleet management services provided for approximately 216,000
railcars. Revenue for this segment was $17.7 million, compared to $17.6 million in the same quarter
last year. The increase was primarily due to higher gains on sales of assets from the fleet and
increased rents earned on assets held for sale, partially offset by expiration of one management
services contract. Gains on lease fleet sales in the current quarter were $2.0 million, compared
to $0.1 million in the second quarter of 2010. Leasing & Services gross margin for the quarter was
50.6% of revenue, compared to 38.5% of revenue in the same quarter last year. The increase is due
to higher gains on asset sales and increased rents earned on assets held for sale, both of which
have no associated cost of revenue. Lease fleet utilization was 95.9%, compared to 92.4% in the
same period last year.
Selling and administrative costs were $17.7 million for the quarter, or 6.2% of revenues,
versus $17.0 million, or 8.5% of revenues, for the same quarter last year. The increase was
primarily due to employee-related costs associated with the partial restoration of previous salary
reductions taken during the downturn and revenue-based fees paid to our manufacturing joint venture
partner in Mexico.
Interest and foreign exchange expense was $10.5 million for the quarter, compared to $12.4
million for the same period in 2010. This decrease was due to lower debt levels. In addition, the
current period includes a foreign exchange loss of $0.1 million, compared to $0.6 million in the
prior comparable period.
Business Outlook
Based on current business trends, management continues to anticipate that both revenues and
Adjusted EBITDA will be higher in fiscal 2011 compared to fiscal 2010, with the second half of the
year being stronger than the first half of the year. Management anticipates the Company will be
profitable in the second half of the year and for the year as a whole, excluding
any one-time charges associated with the repurchase or redemption of the $235 million of
outstanding 8 3/8% senior notes due 2015. Profitability is expected to be driven by higher new
railcar deliveries, production efficiencies and anticipated higher wheel services and repair
volumes.
Conference Call
The Greenbrier Companies will host a teleconference to discuss second quarter results.
Teleconference details are as follows:
| Thursday, April 7, 2011 | ||
| 8:00 am 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 replay will
be available on the same website for 30 days. Telephone replay will be available through April 23
at 203-369-3460.
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 37 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 216,000 railcars.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This
release may contain forward-looking statements, including statements regarding the Companys
anticipated use of proceeds from its convertible notes offering, expected new railcar production
volumes and schedules, expected customer demand for the Companys products and services, plans to
increase manufacturing capacity, new railcar delivery volumes and schedules, growth in demand for
the Companys railcar services and parts business, and the Companys 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 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, 2010 and in our Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2010,
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 managements
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 special
charges, 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.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
(In thousands, unaudited)
February 28, | August 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 99,089 | $ | 98,864 | ||||
Restricted cash |
1,927 | 2,525 | ||||||
Accounts receivable, net |
115,465 | 89,252 | ||||||
Inventories |
250,379 | 204,626 | ||||||
Assets held for sale |
62,566 | 12,804 | ||||||
Equipment on operating leases, net |
295,414 | 302,663 | ||||||
Investment in direct finance leases |
131 | 1,795 | ||||||
Property, plant and equipment, net |
144,163 | 132,614 | ||||||
Goodwill |
137,066 | 137,066 | ||||||
Intangibles and other assets |
84,837 | 90,679 | ||||||
$ | 1,191,037 | $ | 1,072,888 | |||||
Liabilities and Equity |
||||||||
Revolving notes |
$ | 10,000 | $ | 2,630 | ||||
Accounts payable and accrued liabilities |
226,285 | 181,638 | ||||||
Deferred income taxes |
85,805 | 81,136 | ||||||
Deferred revenue |
5,791 | 11,377 | ||||||
Notes payable |
499,997 | 498,700 | ||||||
Total equity Greenbrier |
351,181 | 285,938 | ||||||
Noncontrolling interest |
11,978 | 11,469 | ||||||
Total equity |
363,159 | 297,407 | ||||||
$ | 1,191,037 | $ | 1,072,888 | |||||
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
(In thousands, except per share amounts, unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
||||||||||||||||
Manufacturing |
$ | 156,621 | $ | 88,065 | $ | 242,062 | $ | 148,143 | ||||||||
Wheel Services, Refurbishment & Parts |
112,015 | 94,329 | 209,160 | 187,310 | ||||||||||||
Leasing & Services |
17,665 | 17,556 | 36,523 | 36,189 | ||||||||||||
286,301 | 199,950 | 487,745 | 371,642 | |||||||||||||
Cost of revenue |
||||||||||||||||
Manufacturing |
147,552 | 81,608 | 227,300 | 137,455 | ||||||||||||
Wheel Services, Refurbishment & Parts |
101,413 | 83,387 | 187,824 | 166,673 | ||||||||||||
Leasing & Services |
8,725 | 10,789 | 17,845 | 21,707 | ||||||||||||
257,690 | 175,784 | 432,969 | 325,835 | |||||||||||||
Margin |
28,611 | 24,166 | 54,776 | 45,807 | ||||||||||||
Other costs |
||||||||||||||||
Selling and administrative |
17,693 | 16,958 | 35,632 | 33,166 | ||||||||||||
Interest and foreign exchange |
10,536 | 12,406 | 20,839 | 23,517 | ||||||||||||
28,229 | 29,364 | 56,471 | 56,683 | |||||||||||||
Earnings (loss) before income taxes and
loss from unconsolidated affiliates |
382 | (5,198 | ) | (1,695 | ) | (10,876 | ) | |||||||||
Income tax benefit (expense) |
(100 | ) | 944 | 512 | 3,444 | |||||||||||
Earnings (loss) before loss from
unconsolidated affiliates |
282 | (4,254 | ) | (1,183 | ) | (7,432 | ) | |||||||||
Loss from unconsolidated affiliates |
(575 | ) | (131 | ) | (1,162 | ) | (314 | ) | ||||||||
Net loss |
(293 | ) | (4,385 | ) | (2,345 | ) | (7,746 | ) | ||||||||
Net earnings attributable to
noncontrolling interest |
(257 | ) | (367 | ) | (509 | ) | (250 | ) | ||||||||
Net loss attributable to Greenbrier |
$ | (550 | ) | $ | (4,752 | ) | $ | (2,854 | ) | $ | (7,996 | ) | ||||
Basic loss per common share |
$ | (0.02 | ) | $ | (0.28 | ) | $ | (0.13 | ) | $ | (0.47 | ) | ||||
Diluted loss per common share |
$ | (0.02 | ) | $ | (0.28 | ) | $ | (0.13 | ) | $ | (0.47 | ) | ||||
Weighted average common shares: |
||||||||||||||||
Basic |
23,310 | 17,113 | 22,030 | 17,100 | ||||||||||||
Diluted |
23,310 | 17,113 | 22,030 | 17,100 |
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
(In thousands, unaudited)
Six Months Ended | ||||||||
February 28, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | (2,345 | ) | $ | (7,746 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities: |
||||||||
Deferred income taxes |
4,669 | 7,727 | ||||||
Depreciation and amortization |
18,626 | 18,616 | ||||||
Gain on sales of equipment |
(2,594 | ) | (951 | ) | ||||
Accretion of debt discount |
3,620 | 4,263 | ||||||
Stock based compensation expense |
2,554 | 2,737 | ||||||
Other |
55 | (1,252 | ) | |||||
Decrease (increase) in assets: |
||||||||
Accounts receivable |
(24,360 | ) | (2,913 | ) | ||||
Inventories |
(44,563 | ) | (13,349 | ) | ||||
Assets held for sale |
(49,329 | ) | 10,610 | |||||
Other |
4,393 | 2,268 | ||||||
Increase (decrease) in liabilities: |
||||||||
Accounts payable and accrued liabilities |
43,006 | (6,810 | ) | |||||
Deferred revenue |
(5,477 | ) | (5,410 | ) | ||||
Net cash provided by (used in) operating activities |
(51,745 | ) | 7,790 | |||||
Cash flows from investing activities |
||||||||
Principal payments received under direct finance leases |
43 | 235 | ||||||
Proceeds from sales of equipment |
13,752 | 3,069 | ||||||
Investment in and advances to unconsolidated affiliates |
(279 | ) | (450 | ) | ||||
Decrease (increase) in restricted cash |
598 | (66 | ) | |||||
Capital expenditures |
(30,132 | ) | (19,616 | ) | ||||
Net cash used in investing activities |
(16,018 | ) | (16,828 | ) | ||||
Cash flows from financing activities |
||||||||
Net change in revolving notes with maturities of 90 days or less |
(2,888 | ) | 1,541 | |||||
Proceeds from revolving notes with maturities longer than 90 days |
10,000 | | ||||||
Net proceeds from issuance of notes payable |
| 1,712 | ||||||
Repayments of notes payable |
(2,323 | ) | (4,041 | ) | ||||
Gross proceeds from equity offering |
63,180 | | ||||||
Expenses from equity offering |
(405 | ) | | |||||
Other |
26 | | ||||||
Net cash provided by (used in) financing activities |
67,590 | (788 | ) | |||||
Effect of exchange rate changes |
398 | 1,546 | ||||||
Increase (decrease) in cash and cash equivalents |
225 | (8,280 | ) | |||||
Cash and cash equivalents |
||||||||
Beginning of period |
98,864 | 76,187 | ||||||
End of period |
$ | 99,089 | $ | 67,907 | ||||
THE GREENBRIER COMPANIES, INC.
Supplemental Disclosure
Reconciliation of Net loss attributable to Greenbrier to Adjusted EBITDA (1)
(In thousands, unaudited)
Reconciliation of Net loss attributable to Greenbrier to Adjusted EBITDA (1)
(In thousands, unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net loss
attributable to Greenbrier |
$ | (550 | ) | $ | (4,752 | ) | $ | (2,854 | ) | $ | (7,996 | ) | ||||
Interest and foreign exchange |
10,536 | 12,406 | 20,839 | 23,517 | ||||||||||||
Income tax expense (benefit) |
100 | (944 | ) | (512 | ) | (3,444 | ) | |||||||||
Depreciation and amortization |
9,307 | 9,224 | 18,626 | 18,616 | ||||||||||||
Adjusted EBITDA |
$ | 19,393 | $ | 15,934 | $ | 36,099 | $ | 30,693 | ||||||||
(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 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. |
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