Media & Resources Press Releases Greenbrier Reports Fiscal Third Quarter Results, Facilities Reductions and Leadership Changes

Greenbrier Reports Fiscal Third Quarter Results, Facilities Reductions and Leadership Changes

LAKE OSWEGO, Ore., July 1, 2013 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) today reported results for its third quarter ended May 31, 2013.

Third Quarter Financial Highlights                                                                                         

  • Net earnings, excluding a non-cash goodwill impairment charge, were $15.7 million, or $.50 per diluted share, on revenue of $433.7 million, for the third quarter.
  • A non-cash goodwill impairment charge of $71.8 million net of tax, or $2.60 per share, related to the Wheels, Repair & Parts segment, led to a net loss for the quarter of $56.0 million, or $2.10 per share.
  • Adjusted EBITDA for the quarter was $39.6 million, or 9.1% of revenue.
  • New railcar deliveries were 2,500 units in the third quarter.
  • Since September 1, 2012, Greenbrier has received broadly-based orders for 13,500 railcar units valued at almost $1.3 billion, of which 1,400 units were received during the first quarter, 4,500 units during the second quarter, 5,500 units during the third quarter and 2,100 units subsequent to the May 31, 2013 quarter end.
  • New railcar backlog as of May 31, 2013 was 14,200 units with an estimated value of $1.57 billion (average unit sale price of $111,000), compared to 11,700 units with an estimated value of $1.30 billion (average unit sales price of $111,000) as of February 28, 2013. 
  • Proprietary Multi-Max™ automotive railcar was successfully launched in May.
  • Marine backlog totaled $1.6 million as of May 31, 2013.  Subsequent to quarter end, orders for two additional smaller size marine vessels were received.  Strong demand is building for transportation of crude oil by barge.  Additionally, we are party to a letter of intent for 15 coal barges valued at $60 million, subject to significant permitting and other conditions.

Progress on Strategic Initiatives.

  • Company addresses margins and ROIC in its underperforming Wheels, Repair & Parts segment:
    • Leadership changes implemented:  Rick Turner to lead Wheels & Strategic Execution; William Glenn to lead Repair & Parts.
    • Eight of 38 shop locations to be closed or sold; initiatives launched to significantly improve performance at six locations.
    • Actions expected to liberate $25 million of capital for this segment by December 31, 2013.
    • An additional $75 million of capital is expected to be liberated through working capital improvements of $25 million and refinements to the Company's leasing model of $50 million; Company accelerates goal to achieve these capital efficiencies no later than February 28, 2014.

William A. Furman, president and chief executive officer, said, "We are encouraged by the growth of our diverse backlog and robust order activity, with orders in the third quarter for 5,500 railcar units.  Since quarter end, we have received orders for an additional 2,100 railcar units, including a sizable double stack intermodal order for 1,500 units, about a third of which will be delivered in fiscal 2013, and the balance in fiscal 2014.  Approximately 37% of the total 7,600 units ordered since March 1, 2013 are for tank cars in North America, with the remainder of the orders in this time period consisting of a broad range of railcar types including various sizes of covered hoppers, automotive products, gondola cars and double stack intermodal cars."

Furman continued, "The automotive railcar market remains active and we are pleased by the enthusiastic customer response to Greenbrier's proprietary Multi-Max™ automotive railcar introduced in May.  We anticipate brighter prospects for intermodal railcar activity and downstream energy-related railcar products such as plastics, in fiscal 2014.  Our marine outlook is also improving, driven by strong customer inquiries related to transportation of crude oil by barge. "

"Company-wide, we are confident about our goals announced in April of improving gross margins by at least 200 basis points and liberating a minimum of $100 million of capital no later than August 31, 2014.  We are gaining traction on this $100 million goal and are now accelerating the timing of it to February 28, 2014.  In our Wheels, Repair & Parts segment, where we incurred a related $71.8 million (net of tax) goodwill impairment charge this quarter, we are taking decisive action with a focused effort to improve our performance both in the near term and over time.  This action is expected to liberate $25 million of capital by December 31, 2013 and improve gross margin and ROIC.  The planned sale or closing of the eight underperforming facilities in this segment by the end of the calendar year will eliminate a drag of approximately 100 basis points on segment gross margin and 30 basis points on Company-wide gross margin.  While we are currently focused on operational execution, we also believe there are significant opportunities to streamline general and administrative costs.  We will be taking initial steps to reduce these costs in the months ahead, and will announce specific reduction targets as part of our fourth quarter earnings release and 2014 outlook," Furman added.

Furman concluded.  "I remain confident in the long term strength of our integrated business model.  A combination of factors however, including a slower than anticipated ramp up of tank car production at our GIMSA facility and near term softness in the intermodal market affected deliveries, revenue and gross margin for the third quarter.  A $1.9 million pre-tax charge, ($1.6 million net of tax, or $.05 per share) related to certain balance sheet adjustments at a wheels and repair location also adversely impacted results for the quarter.  We are addressing these issues head-on and expect our new management team to quickly impact results." 

Financial Summary

 

Q3 FY13

Q2 FY13

Sequential Comparison – Main Drivers

Revenue

$433.7M

$423.2M

Up 2.5% due to favorable change in demand and product mix in Wheels, Repair & Parts

Gross margin

11.5%

11.4%

Up 10 bps attributable to favorable Manufacturing  product mix

SG&A

$25.3M

$24.9M

Up due to certain employee-related costs and higher revenue-based fees to our joint venture partner in Mexico

Gain on disposition

of equipment

$5.1M

$3.1M

Timing of sales fluctuates and is opportunistic; typically ranges from $1.0M - $5.0M per quarter

Goodwill impairment

$76.9M

---

Result of annual goodwill impairment test; associated with Wheels, Repair & Parts

Adjusted EBITDA

$39.6M

$36.2M

Up 9.4% principally due to higher gains on disposition of equipment and improved gross margin

Effective tax rate

(excluding impairment)

32.9%

27.8%

34% annualized effective rate; difference due to certain discrete tax items

Net earnings excluding

goodwill effect

$15.7M

$13.8M

Up due to higher EBITDA

Diluted EPS

excluding goodwill effect

$0.50

$0.45

 

Economic EPS

excluding goodwill effect

$0.56

$0.49

Excludes "if converted" impact of out-of-the-money bonds due 2018

 

Segment Summary

 

Q3 FY13

Q2 FY13

Sequential Comparison – Main Drivers

Manufacturing

  Revenue

$284.6M

$294.0M

Down 3.2% due to lower deliveries

  Gross margin

11.0%

10.7%

Up 30 bps attributable to favorable product mix

  Deliveries

2,500

2,700

Down due to softness in intermodal demand

and slower than anticipated tank car ramp up

Wheels, Repair & Parts

  Revenue

$131.2M

$112.0M

Up 17.1% due to change in product mix, improved wheel volumes and sale of excess inventory

  Gross margin

8.2%

7.9%

Up 30 bps due to favorable product mix

Leasing & Services

  Revenue

$17.9M

$17.2M

Up 4.1% due to increased management services activity

  Gross margin

45.2%

47.0%

Down due to lower average volume of rent-producing leased railcars for syndication

  Lease fleet utilization

97.9%

97.5%

 

Strategic Initiatives
On April 4, 2013, Greenbrier presented its plan to increase gross margins by at least 200 basis points and reduce capital employed in its operations by at least $100 million before the end of its fiscal year 2014.  The timing of the capital reduction goal has been accelerated to February 28, 2014.  Definitive structural and leadership changes to its underperforming Wheels, Repair & Parts segment were announced today in a separate press release.  These actions include the sale or closure of eight facilities and a commitment to significant improvements to six other underperforming sites, as well as the appointment of two new leaders of the segment.  This reorganization is expected to improve gross margin and yield at least $25 million of capital by December 2013.  The remaining $75 million of our capital liberation goals consists of working capital improvements of $25 million, primarily in Manufacturing, and refinements to our leasing model which will remove leasing assets from our balance sheet and generate at least $50 million of capital.
 

Business Outlook
Based on current business trends, including lower than anticipated demand for new intermodal railcars in 2013 and slower than anticipated ramp up of tank car production, management is revising its outlook for fiscal 2013.  Management currently anticipates in 2013 that the Company's new railcar deliveries will be between 11,750 and 12,250 units, revenue to be in the range of $1.75 to $1.80 billion, adjusted EBITDA to be in the range of $150 to $155 million (excluding any restructuring costs), and net capital expenditures (gross capital expenditures less proceeds from lease fleet sales) to be reduced to approximately $25 million, down significantly from previous expectations of approximately $95 million.  The Company also anticipates that cash restructuring costs associated with its facilities reductions and leadership changes announced today will be in the range of $3.0$5.0 million over the next 2 – 3 quarters.  This range does not include future non-cash gains or losses from facilities reductions, as these amounts are not presently determinable.

Conference Call
Greenbrier will host a teleconference to discuss its third quarter results and the restructuring and reorganization of its Wheels, Repair & Parts segment.  In conjunction with this news release and the news release detailing the Company's reported results for its third quarter ended May 31, 2013, Greenbrier has posted a supplemental earnings presentation to our website.  Teleconference details are as follows:

  • July 2, 2013
  • 8:00 a.m. 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 webcast replay will be available for 30 days.  Telephone replay will be available through July 20, 2013, at 203-369-0134.

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 four 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 36 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 9,400 railcars, and performs management services for approximately 228,000 railcars.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:  This press release may contain forward-looking statements, including statements regarding expected new railcar production volumes and schedules, expected customer demand for the Company's products and services, plans to increase manufacturing capacity, new railcar delivery volumes and schedules, growth in demand for the Company's railcar services and parts business, and the Company's future financial performance. Greenbrier uses words such as "anticipates," "believes,"  "forecast," "potential," "goal," "contemplates," "expects," "intends," "plans," "projects," "hopes," "seeks," "estimates," "could," "would," "will," "may," "can," "designed to," "foreseeable future" 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, production of new railcar types, 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, 2012, 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 management's 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.

Net earnings excluding goodwill effect, Adjusted EBITDA, Adjusted weighted average diluted common shares outstanding, Adjusted diluted earnings per common share and Economic earnings per share excluding goodwill are not financial measures under generally accepted accounting principles (GAAP). We define Net earnings excluding goodwill effect as Net earnings (loss) attributable to Greenbrier before goodwill impairment (after-tax). 

We define Adjusted EBITDA as earnings attributable to Greenbrier before interest and foreign exchange, income tax expense, goodwill impairment (pre-tax), depreciation and amortization. 

We define Adjusted weighted average diluted common shares outstanding as Weighted average diluted common shares outstanding plus the dilutive effect of common stock equivalents related to warrants, restricted stock, restricted stock units and convertible notes to the extent that they are considered dilutive in the Adjusted diluted earnings per dilutive share calculation.

We define Economic earnings per common share excluding goodwill effect as Net earnings excluding goodwill effect divided by the sum of weighted average basic common shares outstanding, including the dilutive effect of restricted stock, restricted stock units and warrants. This calculation excludes the dilutive effect of the shares underlying the 2018 bonds under the "if converted" method, which is included in the calculation of Diluted EPS.

We define Diluted earnings per common share excluding goodwill effect as Net earnings excluding goodwill effect before interest and debt issuance costs (net of tax) on convertible notes divided by Adjusted weighted average diluted common shares outstanding. Net earnings excluding goodwill effect, Adjusted EBITDA, Adjusted weighted average diluted common shares outstanding, Diluted earnings per common share excluding goodwill effect and Economic earnings per common share excluding goodwill effect are performance measurement tools used by Greenbrier. You should not consider Net earnings excluding goodwill effect, Adjusted EBITDA, Adjusted weighted average diluted common shares outstanding, Diluted earnings per common share excluding goodwill effect and Economic earnings per common share excluding goodwill effect in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Adjusted EBITDA, Diluted earnings per common share excluding goodwill effect  and Economic earnings per common share excluding goodwill effect are not measures of financial performance under GAAP and are susceptible to varying calculations, the Adjusted EBITDA, Diluted earnings per common share excluding goodwill effect and Economic earnings per common share excluding goodwill effect measures presented may differ from and may not be comparable to similarly titled measures used by other companies.

 

THE GREENBRIER COMPANIES, INC.

Consolidated Balance Sheets

(In thousands, unaudited)

 
 

May 31,  2013

February 28, 2013

November 30, 2012

August 31, 2012

May 31, 2012

Assets

         

   Cash and cash equivalents

$       31,606

$       55,637

$       41,284

$       53,571

$       44,915

   Restricted cash

8,906

8,899

7,322

6,277

6,089

   Accounts receivable, net 

162,352

144,933

163,385

146,326

172,086

   Inventories

344,168

359,281

363,642

316,741

346,122

   Leased railcars for syndication

71,091

36,198

54,297

97,798

66,776

   Equipment on operating leases, net

332,924

344,576

362,522

362,968

334,872

   Property, plant and equipment, net

197,779

194,887

186,715

182,429

172,729

   Goodwill

57,416

134,316

137,066

137,066

137,066

   Intangibles and other assets, net

79,364

86,194

79,500

81,368

84,693

 

$  1,285,606

$  1,364,921

$  1,395,733

$  1,384,544

$  1,365,348

           

Liabilities and Equity

         

   Revolving notes

$       92,968

$       50,058

$       89,826

$       60,755

$       71,430

   Accounts payable and accrued liabilities

286,964

278,221

282,925

329,508

323,977

   Deferred income taxes

86,229

99,965

96,498

95,363

88,514

   Deferred revenue

16,203

23,178

28,283

17,194

17,872

   Notes payable

372,942

427,553

427,697

428,079

428,028

           

   Total equity - Greenbrier

404,707

461,136

447,080

431,777

418,161

   Noncontrolling interest

25,593

24,810

23,424

21,868

17,366

   Total equity

430,300

485,946

470,504

453,645

435,527

 

$  1,285,606

$  1,364,921

$  1,395,733

$  1,384,544

$  1,365,348

 

 

THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

           
   

Three Months Ended

May 31,

 

Nine Months Ended

May 31,

 
   

2013

 

2012

 

2013

 

2012

 

Revenue

                 

Manufacturing

 

$      284,591

 

$     364,930

 

$      864,006

 

$      947,792

 

Wheels, Repair & Parts

 

131,167

 

125,145

 

355,219

 

362,788

 

Leasing & Services

 

17,905

 

17,722

 

52,978

 

53,601

 
   

433,663

 

507,797

 

1,272,203

 

1,364,181

 
                   

Cost of revenue

                 

Manufacturing

 

253,360

 

325,424

 

774,502

 

852,464

 

Wheels, Repair & Parts

 

120,476

 

111,610

 

325,086

 

324,055

 

Leasing & Services

 

9,808

 

8,825

 

26,542

 

27,783

 
   

383,644

 

445,859

 

1,126,130

 

1,204,302

 
                   

Margin

 

50,019

 

61,938

 

146,073

 

159,879

 
                   

Selling and administrative expense

 

25,322

 

28,784

 

76,364

 

76,998

 

Net gain on disposition of equipment

 

(5,131)

 

(2,585)

 

(9,615)

 

(8,897)

 

Goodwill impairment

 

76,900

 

-

 

76,900

 

-

 

Earnings (loss) from operations

 

(47,072)

 

35,739

 

2,424

 

91,778

 
                   

 Other costs

                 

Interest and foreign exchange

 

5,905

 

6,560

 

18,127

 

18,574

 

Earnings (loss) before income taxes and earnings    (loss) from unconsolidated affiliates

 

 

(52,977)

 

 

29,179

 

 

(15,703)

 

 

73,204

 
                   

Income tax expense

 

(2,729)

 

(8,655)

 

(12,905)

 

(21,798)

 

Earnings (loss) before earnings (loss) from unconsolidated affiliates

 

 

(55,706)

 

 

20,524

 

 

(28,608)

 

 

51,406

 
                   

Earnings (loss) from unconsolidated affiliates

 

82

 

201

 

(63)

 

(99)

 
                   

Net earnings (loss)

 

(55,624)

 

20,725

 

(28,671)

 

51,307

 

Net earnings attributable to

    noncontrolling interest

 

 

(406)

 

 

(1,608)

 

 

(3,093)

 

 

(4)

 

 

Net earnings (loss) attributable to Greenbrier

 

 

$      (56,030)

 

 

$        19,117

 

 

$      (31,764)

 

 

$        51,303

 
                   

Basic earnings (loss) per common share

 

$          (2.10)

 

$            0.71

 

$          (1.20)

 

$            1.94

 
                   

Diluted earnings (loss) per common share

 

$          (2.10)

 

$            0.61

 

$          (1.20)

 

$            1.65

 
                   

Weighted average common shares:

                 

Basic

 

26,619

 

26,981

 

26,510

 

26,378

 

Diluted

 

26,619

 

33,862

 

26,510

 

33,640

 

 

THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Cash Flows

(In thousands, unaudited)

 
   

Nine Months Ended

May 31,

 
   

2013

 

2012

 

Cash flows from operating activities

         

Net earnings (loss)

 

$             (28,671)

 

$              51,307

 

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

         

Deferred income taxes

 

(9,391)

 

4,801

 

Depreciation and amortization

 

31,523

 

30,603

 

Net gain on disposition of equipment

 

(9,615)

 

(8,897)

 

Accretion of debt discount

 

2,455

 

2,416

 

Stock based compensation expense

 

4,843

 

6,724

 

Goodwill impairment

 

76,900

 

-

 

Other

 

(1,895)

 

3,586

 

Decrease (increase) in assets:

         

Accounts receivable

 

(15,499)

 

10,429

 

Inventories

 

(9,114)

 

(26,748)

 

Leased railcars for syndication

 

22,067

 

(43,561)

 

Other

 

338

 

(1,419)

 

Increase (decrease) in liabilities:

         

Accounts payable and accrued liabilities

 

(43,605)

 

12,401

 

            Deferred revenue

 

(1,099)

 

11,991

 

Net cash provided by operating activities

 

19,237

 

53,633

 

Cash flows from investing activities

         

Proceeds from sales of assets

 

39,611

 

33,253

 

Capital expenditures

 

(49,677)

 

(72,117)

 

Increase in restricted cash

 

(2,629)

 

(3,976)

 

Investment in and net advances to unconsolidated affiliates

 

(1,016)

 

(544)

 

Other

 

(3,582)

 

35

 

Net cash used in investing activities

 

(17,293)

 

(43,349)

 

Cash flows from financing activities

         

Net change in revolving notes with maturities of 90 days or less

 

26,973

 

(49,114)

 

Proceeds from revolving notes with maturities longer than 90 days

 

31,847

 

56,644

 

Repayments of revolving notes with maturities longer than 90 days

 

(26,877)

 

(23,573)

 

Proceeds from issuance of notes payable

 

-

 

2,500

 

Repayments of notes payable

 

(57,592)

 

(6,028)

 

Investment by joint venture partner

 

2,577

 

410

 

Excess tax benefit from restricted stock awards

 

777

 

2,670

 

Other

 

(8)

 

-

 

Net cash used in financing activities

 

(22,303)

 

(16,491)

 

Effect of exchange rate changes

 

(1,606)

 

900

 

Decrease in cash and cash equivalents

 

(21,965)

 

(5,307)

 

Cash and cash equivalents

         

Beginning of period

 

53,571

 

50,222

 

End of period

 

$              31,606

 

$              44,915

 

 

 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

Quarterly Results of Operations

(In thousands, except per share amounts, unaudited)

 
 

First

 

Second

 

Third

 

Total

     

2013

                   

Revenue

                   

   Manufacturing

$    285,368

 

$    294,047

 

$   284,591

 

$   864,006

     

   Wheels, Repair & Parts

112,100

 

111,952

 

131,167

 

355,219

     

   Leasing & Services

17,906

 

17,167

 

17,905

 

52,978

     
 

415,374

 

423,166

 

433,663

 

1,272,203

     

Cost of revenue

                   

   Manufacturing

258,492

 

262,650

 

253,360

 

774,502

     

   Wheels, Repair & Parts

101,476

 

103,134

 

120,476

 

325,086

     

   Leasing & Services

7,627

 

9,107

 

9,808

 

26,542

     
 

367,595

 

374,891

 

383,644

 

1,126,130

     
                     

Margin

47,779

 

48,275

 

50,019

 

146,073

     
                     

Selling and administrative expense

26,100

 

24,942

 

25,322

 

76,364

     

Net gain on disposition of equipment

(1,408)

 

(3,076)

 

(5,131)

 

(9,615)

     

Goodwill impairment

-

 

-

 

76,900

 

76,900

     

Earnings (loss) from operations

23,087

 

26,409

 

(47,072)

 

2,424

     
                     

Other costs

                   

   Interest and foreign exchange

5,900

 

6,322

 

5,905

 

18,127

     

Earnings (loss) before income tax and

   loss from unconsolidated affiliates

 

17,187

 

 

20,087

 

 

(52,977)

 

 

(15,703)

     
                     

Income tax expense

(4,586)

 

(5,590)

 

(2,729)

 

(12,905)

     
                     

Earnings (loss) from unconsolidated affiliates

(40)

 

(105)

 

82

 

(63)

     

Net earnings (loss)

12,561

 

14,392

 

(55,624)

 

(28,671)

     

Net earnings attributable to

   noncontrolling interest

 

(2,134)

 

 

(553)

 

 

(406)

 

 

(3,093)

     

Net earnings (loss) attributable to Greenbrier

$      10,427

 

$     13,839

 

$   (56,030)

 

$         (31,764)

     
                     

Basic earnings (loss) per common share: (1)

$         0.38

 

$         0.51

 

$       (2.10)

 

$             (1.20)

     

Diluted earnings (loss) per common share: (2)

$         0.35

 

$         0.45

 

$       (2.10)

 

$             (1.20)

     
   

(1)

Quarterly amounts do not total to the year to date amount as each period is calculated discretely.

   

(2)

Quarterly amounts do not total to the year to date amount as each period is calculated discretely.  For the first and second quarter, diluted earnings per common share includes the outstanding warrants using the treasury stock method and the dilutive effect of shares underlying the 2018 Convertible Notes using the "if converted" method in which debt issuance and interest costs, net of tax, were added back to net earnings.

      

 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

Quarterly Results of Operations

(In thousands, except per share amounts, unaudited)

 
 

First

 

Second

 

Third

 

Fourth

 

Total

 

2012

                   

Revenue

                   

   Manufacturing

$   262,656

 

$   320,206

 

$   364,930

 

$       306,172

 

$   1,253,964

 

   Wheels, Repair & Parts

117,749

 

119,894

 

125,145

 

119,077

 

481,865

 

   Leasing & Services

17,794

 

18,086

 

17,722

 

18,285

 

71,887

 
 

398,199

 

458,186

 

507,797

 

443,534

 

1,807,716

 

Cost of revenue

                   

   Manufacturing

236,188

 

290,851

 

325,424

 

269,921

 

1,122,384

 

   Wheels, Repair & Parts

105,891

 

106,554

 

111,610

 

109,486

 

433,541

 

   Leasing & Services

9,663

 

9,295

 

8,825

 

9,588

 

37,371

 
 

351,742

 

406,700

 

445,859

 

388,995

 

1,593,296

 
                     

Margin

46,457

 

51,486

 

61,938

 

54,539

 

214,420

 
                     

Selling and administrative expense

23,235

 

24,979

 

28,784

 

27,598

 

104,596

 

Net gain on disposition of equipment

(3,658)

 

(2,654)

 

(2,585)

 

(67)

 

(8,964)

 

Earnings from operations

26,880

 

29,161

 

35,739

 

27,008

 

118,788

 
                     

Other costs

                   

   Interest and foreign exchange

5,383

 

6,630

 

6,560

 

6,236

 

24,809

 

Earnings before income tax and earnings 

   (loss) from unconsolidated affiliates

 

21,497

 

 

22,531

 

 

29,179

 

 

20,772

 

 

93,979

 
                     

Income tax expense

(7,797)

 

(5,348)

 

(8,655)

 

(10,593)

 

(32,393)

 
                     

Earnings (loss) from unconsolidated

  affiliates

 

(372)

 

 

72

 

 

201

 

 

(317)

 

 

(416)

 

Net earnings

13,328

 

17,255

 

20,725

 

9,862

 

61,170

 

Net (earnings) loss attributable to

   Noncontrolling interest

 

1,189

 

 

415

 

 

(1,608)

 

 

(2,458)

 

 

(2,462)

 

Net earnings attributable to Greenbrier

$     14,517

 

$     17,670

 

$     19,117

 

$           7,404

 

$        58,708

 
                     

Basic earnings per common share:

$         0.57

 

$         0.66

 

$         0.71

 

$             0.27

 

$            2.21

 

Diluted earnings per common share: (1)

$         0.48

 

$         0.57

 

$         0.61

 

$             0.26

 

$            1.91

 
   

(1)

Quarterly amounts do not total to the year to date amount as each period is calculated discretely.  Diluted earnings per common share includes the outstanding warrants using the treasury stock method and the dilutive effect of shares underlying the 2018 Convertible Notes using the "if converted" method in which debt issuance and interest costs, net of tax, were added back to net earnings.

 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, excluding backlog and delivery units, unaudited)

 

Reconciliation of Net earnings (loss) attributable to Greenbrier to Adjusted EBITDA

 
     

Three Months Ended

     
     

May 31,

2013

 

February 28,

2013

     

Net earnings (loss) attributable to Greenbrier

$       (56,030)

 

$       13,839

     

Interest and foreign exchange

5,905

 

6,322

     

Income tax expense

2,729

 

5,590

     

Depreciation and amortization

10,125

 

10,475

     

Goodwill impairment (pre-tax)

76,900

 

-

     
                     

Adjusted EBITDA (1)

$       39,629

 

$       36,226

     
   

(1)

Adjusted EBITDA is not a financial measure under generally accepted accounting principles (GAAP).  We define Adjusted EBITDA as Net earnings (loss) attributable to Greenbrier before interest and foreign exchange, income tax expense, goodwill impairment (pre-tax), 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.

 

 

     

Three Months Ended May 31, 2013

   

Backlog Activity (units)

         

Beginning backlog

11,700

   

Orders received

5,500

   

Production held as Leased railcars for syndication

(700)

   

Production sold directly to third parties

(2,300)

   

Ending backlog

14,200

   
       

Delivery Information (units)

     

Production sold directly to third parties

2,300

   

Sales of Leased railcars for syndication

200

   

Total deliveries

2,500

   

 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, except per share amounts, unaudited)

 

Reconciliation of common shares outstanding and diluted earnings per share

 

The shares used in the computation of the Company's basic and diluted earnings per common share and Adjusted diluted earnings per common share are reconciled as follows:

 
 

Three Months Ended

 

May 31,

2013

 

February 28,

2013

Weighted average basic common shares outstanding (1)

26,619

 

27,210

Dilutive effect of warrants (2)

-

 

789

Dilutive effect of convertible notes (2)(4)

-

 

6,045

Weighted average diluted common shares outstanding

26,619

 

34,004

       

Dilutive effect of warrants

847

   

Dilutive effect of restricted stock and restricted stock units (3)

627

   

Dilutive effect of convertible notes (4)

6,045

   

Adjusted weighted average diluted common shares outstanding (5)

34,138

   
 

(1)

Restricted stock grants are treated as outstanding when issued and are included in Weighted average basic common shares outstanding when the Company is in a net earnings position.  Shares outstanding exclude shares of unvested restricted stock for the three ended May 31, 2013 due to a net loss.

   

(2)

The dilutive effect of common stock equivalents is excluded from the Weighted average diluted common shares outstanding for the three months ended May 31, 2013 due to a net loss.

   

(3)

Restricted stock units were granted during the three months ended May 31, 2013.   The dilutive effect of restricted stock units is included in the Weighted average diluted common shares outstanding and the Adjusted weighted average diluted common shares outstanding when the Company is in a net earnings position.

   

(4)

The dilutive effect of the 2018 Convertible notes are included in the Adjusted weighted average diluted common shares outstanding for the three months ended May 31, 2013 and the Weighted average diluted common shares outstanding for the three months ended February 28, 2013 as they were considered dilutive under the "if converted" method as further discussed below.  The dilutive effect of the 2026 Convertible notes was excluded from the share calculations as the stock price for each period presented was less than the initial conversion price of $48.05 and therefore considered anti-dilutive.

   

(5)

Adjusted weighted average diluted common shares outstanding is not a financial measure under GAAP.  We define Adjusted weighted average diluted common shares outstanding as Weighted average diluted common shares outstanding plus the dilutive effect of common stock equivalents related to warrants, restricted stock, restricted stock units and convertible notes to the extent that they are considered dilutive in the Adjusted dilutive earnings per common share calculation.  Adjusted weighted average diluted common shares outstanding is a performance measurement tool used by Greenbrier.  You should not consider Adjusted weighted average diluted common shares outstanding in isolation or as a substitute for other financial statement data determined in accordance with GAAP. 

Diluted earnings per share excluding goodwill effect for the three months ended May 31, 2013 and dilutive earnings per share for the three months ended February 28, 2013 was calculated using the more dilutive of two approaches.  The first approach includes the dilutive effect of outstanding warrants and shares underlying the 2026 Convertible notes in the share count using the treasury stock method.  The second approach supplements the first by including the "if converted" effect of the 2018 Convertible notes issued in March 2011.  Under the "if converted method" debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes.  The 2026 Convertible notes would only be included in the calculation of both approaches if the current stock price is greater than the initial conversion price of $48.05 using the treasury stock method.

 

 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

 (In thousands, except per share amounts, unaudited)

 

Reconciliation of Net earnings (loss) attributable to Greenbrier to Net earnings excluding goodwill effect

 

Three Months Ended

 

May 31, 2013

Net earnings (loss) attributable to Greenbrier

$     (56,030)

Goodwill impairment (after-tax)

71,778

Net earnings excluding goodwill effect (1)

$        15,748

   

(1)

Net earnings excluding goodwill effect is not a financial measure under GAAP.  We define Net earnings excluding goodwill effect as Net earnings (loss) attributable to Greenbrier before goodwill impairment (after-tax). Net earnings excluding goodwill effect is a performance measurement tool used by Greenbrier.  You should not consider Net earnings excluding goodwill effect in isolation or as a substitute for other financial statement data determined in accordance with GAAP. 

 

 

Three Months Ended

 

May 31,

2013

 

February 28,

2013

Net earnings excluding goodwill effect

$         15,748

 

$         13,839

Add back:

     

Interest and debt issuance costs on the 2018 Convertible 

     notes, net of tax

 

1,416

 

 

1,416

Earnings before interest and debt issuance costs on

     convertible notes

 

$         17,164

 

 

$         15,255

       

Adjusted weighted average diluted common shares outstanding

34,138

 

34,044

       

Diluted earnings per share excluding goodwill effect (2)

      $         0.50 (3)

 

      $         0.45 (4)

     

(2)

Diluted earnings per common share excluding goodwill effect is not a financial measure under GAAP.  We define Diluted earnings per common share excluding goodwill effect as Net earnings excluding goodwill effect before interest and debt issuance costs (net of tax) on convertible notes divided by Adjusted weighted average diluted common shares outstanding.  Diluted earnings per common share excluding goodwill effect is a performance measurement tool used by Greenbrier.  You should not consider Diluted earnings per common share excluding goodwill effect in isolation or as a substitute for other financial statement data determined in accordance with GAAP.  In addition, because Diluted earnings per common share excluding goodwill effect is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Diluted earnings per common share excluding goodwill effect measure presented may differ from and may not be comparable to similarly titled measures used by other companies.

 
     

(3)

Adjusted diluted earnings per share was calculated as follows:

 
     
 

Net earnings excluding goodwill effect before interest and debt issuance costs (net of tax) on convertible notes

 
 

Adjusted weighted average diluted common shares outstanding

 
     

(4)

Diluted earnings per share was calculated as follows:

 
     
 

Net earnings excluding goodwill effect before interest and debt issuance costs (net of tax) on convertible notes

 
 

Weighted average diluted common shares outstanding

 

 

 
 

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, except per share amounts, unaudited)

 

Reconciliation of basic earnings per share to economic earnings per share excluding goodwill effect

 

The shares used in the computation of the Company's basic and economic earnings per common share excluding goodwill effect are reconciled as follows:

 
 

Three Months Ended

     
 

May 31,

2013

 

February 28,

2013

     

Weighted average basic common shares outstanding

26,619

 

27,210

     

Dilutive effect of warrants

847

 

789

     

Dilutive effect of restricted stock and restricted stock units

627

 

-

     

Weighted average economic diluted

common shares outstanding

 

28,093

 

 

27,999

     
             

Net earnings excluding goodwill effect

$       15,748

 

$       13,839

     
             

Economic earnings per share excluding goodwill effect (1)

$           0.56

 

$           0.49

     
             

(1)

Economic earnings per share excluding goodwill effect is not a financial measure under GAAP. Economic earnings per share excluding goodwill effect is used to measure the current economic impact of our Convertible Bonds due in 2018 that have a conversion strike price of $38.05/share, which exceeds our current stock price. We define Economic earnings per share excluding goodwill effect as Net earnings excluding goodwill effect divided by the sum of Weighted average basic common shares outstanding, including the dilutive effect of restricted stock, restricted stock units and warrants. This calculation excludes the dilutive effect of the shares underlying the 2018 bonds under the "if converted" method, which is included in the calculation of Diluted earnings per share. You should not consider Economic earnings per share excluding goodwill effect in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Economic earnings per share excluding goodwill effect is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Economic earnings per share excluding goodwill effect measure presented may differ from and may not be comparable to similarly titled measures used by other companies.

 

 

SOURCE The Greenbrier Companies, Inc. (GBX)