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July 2, 2019 4:30 PM, EDT

Greenbrier Reports Lower 3Q Net Income, but Higher Revenue

Greenbrier rail car A rail car sits on the production line at the Greenbrier Cos.' plant. (Natalie Behring/Bloomberg News)

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The Greenbrier Cos. reported record quarterly revenue for its third fiscal quarter of 2019, citing higher delivery volumes in the three months ending May 31, compared to the previous quarter.

But net income was substantially down from a year earlier.

Greenbrier is an international supplier of equipment and services to the freight rail transportation markets.

William Furman

Furman

Greenbrier said net earnings for the quarter were $15.2 million, or $0.46 per share. Revenues were a company high of $856.2 million. That compares with net earnings of $36.2 million, or 1.01 cents, on revenue of $681.6 million a year earlier.

Officials of the Lake Oswego, Ore.-based company said quarterly results include a $10 million noncash goodwill impairment charge in the rail car repair operation and acquisition costs of $4.3 million to obtain American Railcar Industries. In April, Greenbrier announced it would acquire the manufacturing business of American Railcar Industries from ITE Management for $430 million.

“Greenbrier gained the momentum we expected during the quarter, led by improved operating efficiencies in our core North American manufacturing business,” said William Furman, Greenbrier chairman and CEO. “Gains were muted in our overall financial results due to continued weakness in Greenbrier’s rail car repair business and certain international operations, along with costs associated with the ARI acquisition.”

Furman said despite acquisition costs and some industry headwinds, he expects momentum in the final quarter of 2019.

Greenbrier Cos. logo

“Realignment of our rail car repair network is expected to be completed by the end of the year, which will help earnings performance in the wheels, repair and parts segment,” said Furman. “Meanwhile, pricing and manufacturing performance in Europe responded more slowly than expected, but is now kicking in. Headwinds from Europe and Brazil are expected to turn to tailwinds in (the final quarter) and beyond, along with other international performance contributions.”

Greenbrier officials said orders for 6,500 diversified rail cars were received during the quarter, valued at $730 million.

The backlog of new rail cars was 26,100 units, with an estimated value of $2.74 billion, as of May 31, 2019.

Furman said Greenbrier is doing well overall, despite “choppiness” in the global rail freight market.

“Greenbrier received orders for approximately 6,500 new rail cars,” said Furman. “These orders span a range of rail car types from a diverse set of customers. Greenbrier’s four-part strategy remains unchanged: reinforcing our core North American markets, executing on our international strategy, developing a robust talent pipeline, and growing the business on a larger scale. The strategy and Greenbrier’s integrated business model work in parallel to support our success over time, especially with the acquisition of ARI, which will allow a larger, more diversified product and geographic mix in North America.”