The Greenbrier Companies
Consistent with its strategy to preserve and improve cash flow and liquidity, the Company also announced plans to recapitalize its ownership in Europe, and focus on core North American markets. Accordingly, Europe is now treated as discontinued operations for financial reporting purposes. KPMG has been retained as special advisors to the Company on its European strategy. The Company remains committed to its customers in Europe and will consult with customers, financiers and employees before finalizing its plans.
Financial Results:
The $26.1 million net loss for 2002 includes: (i) a special charge to continuing operations taken in the second quarter of $1.9 million pre-tax, related to one-time actions to reduce North American operating expenses, (ii) a special charge to discontinued European operations taken in the second quarter of $17.1 million pre-tax, related to an impairment writedown of European railcar designs and patents and actions to reduce the scale of European operations, (iii) a $14.8 million pre-tax charge to discontinued operations in the fourth quarter to adjust the net assets of European operations to estimated realizable value, and (iv) a $21.5 million U.S. income tax benefit, of which $7.7 million was recognized in the second quarter and $13.8 million in the fourth quarter, related to the Company's investment in European operations. Substantially all of the special charges and write-downs are non-cash in nature. The tax benefits are a cash item, with a majority of the cash benefits to be received within the next six months.
Since May 31, 2002, the Company has received orders for 4,300 railcars valued at $230 million. The orders push the Company's combined European and North American new railcar manufacturing backlog at September 30, 2002 to 5,500 railcars valued at $305 million, the highest level in two years. The Company's August 31, 2002 fiscal year end backlog was 5,200 railcars valued at $280 million, more than doubling its third quarter May 31, 2002 backlog of 2,500 railcars valued at $135 million.
European Operations:
Greenbrier plans to recapitalize its European investment in an orderly manner. The objectives of the plan are to improve the Company's after tax cash flow and liquidity. The Company is in discussions with both financial and strategic investors who, with members of the European management team, may participate in the new capitalization.
William A. Furman, president and chief executive officer, noted, "Greenbrier Europe has made significant progress in 2002 with its restructuring efforts. In addition to implementing substantial cost reductions, our markets and production plans have become concentrated on fewer products and longer production runs. Quality goals are being met, and backlog has improved significantly. Nevertheless, Greenbrier Europe has not achieved desired levels of profitability, even though market share has increased dramatically to 20% of the total European market and revenues have grown from almost nothing a few years ago to nearly $100 million anticipated in 2003. All of the above factors contributed to our decision to recapitalize our ownership in Greenbrier Europe and treat as a discontinued operation."
Liquidity Goals; Expense and Overhead Reductions:
Furman added, "The plan for Greenbrier Europe is part of a wider restructuring which has taken place at Greenbrier in response to a global downturn in economic conditions. The Company is being managed for liquidity and cash flow during the present uncertain economic conditions. Greenbrier has enacted substantial company-wide reductions in general and administrative costs during the past two years. G&A costs were reduced by a further $10 million in 2002 on top of $5 million in reductions in 2001. During the year, the Company implemented tax strategies and recognized a $21.5 million tax benefit related to European operations. Most of the benefit will be received in cash within the next six months."
North American Operations:
Furman added, "Our focus on core North American markets is paying off both in our manufacturing, and in our leasing and services business segments. Greenbrier's North American backlog is at the highest level in over two years and exceeds production for all of fiscal 2002. While pricing pressures remain, margins are improving due to higher production rates and improved pricing. This is evident by our positive fourth quarter earnings from North American operations."
"We continue to see growth in railcar repair and refurbishment, wheel, and maintenance and administrative services, as customers in North America look to outsourcing many of their non-core needs. Our marine construction business also remains strong, generating revenues of about $20 million annually. Deliveries of the Company's first ocean-going double-hulled barges for petroleum products are now taking place. Combined with our railcar leasing business, these units altogether accounted for a revenue base of $160 million in fiscal 2002."
Mark Rittenbaum, senior vice president and treasurer, stated, "Results for continuing operations through most of 2002 were impacted by the cyclical downturn in North America. Greenbrier's North American new railcar deliveries in 2002 were only 3,300 units compared to 7,300 units in 2001. We are now seeing evidence of a market rebound. Industry orders and backlog increased in the second and third quarters. Greenbrier has participated in this recovery to an even greater extent than its share of industry capacity. During the past quarter, the Company doubled its backlog and increased its market share to about 35% of total market backlog. The Company anticipates higher railcar deliveries, improved margins, and operating profits in North America during fiscal year 2003."
Rittenbaum added, "Greenbrier ended the year meeting its liquidity and cash flow objectives, with cash balances of nearly $60 million, paydowns of term debt of about $50 million, and over $110 million in unused lines of credit in North America. We will continue to manage the Company for liquidity rather than reported earnings until a firm economic recovery is evident. North American manufacturing EBITDA was $2 million positive for the fourth quarter of 2002. Our leasing and services, marine manufacturing and rail services businesses continue to provide a stable revenue base and positive earnings and cash flow."
The Greenbrier Companies, headquartered in Lake Oswego, Oregon, is a leading supplier of transportation equipment and services to the railroad industry in North America. Greenbrier builds new railroad freight cars in the U.S., Canada and Mexico, and repairs and refurbishes freight cars and wheels at thirteen locations across North America. The Company also builds new railroad freight cars and refurbishes freight cars for the European market through its manufacturing operations in Poland and various sub-contractor facilities throughout Europe. At Greenbrier's Portland, Oregon manufacturing facility, it builds ocean-going barges for the maritime industry. Greenbrier owns or manages a fleet of approximately 50,000 railcars.
Except for historical information contained herein, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements as to expectations, beliefs, and future financial performance. These forward-looking statements are dependent on a number of factors, business risks and issues, a change in which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Such factors, risks and issues are set forth from time to time under "Forward-Looking Statements," in Management's Discussion and Analysis of Financial Condition and Results of Operations in Greenbrier's SEC filings and reports. Any forward-looking statement speaks only as of the date on which such statement is made. Greenbrier undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
The Greenbrier Companies will host a teleconference to discuss fourth quarter results. Teleconference details are as follows:
Wednesday, November 6, 2002
7:30 am Pacific Standard Time
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 site.
Condensed Consolidated Balance Sheets THE GREENBRIER COMPANIES, INC.
August 31,
(Unaudited, in thousands, except per share amounts)
Assets 2002 2001
Cash and cash equivalents $58,777 $74,547
Accounts and notes receivable 45,135 35,949
Inventories 56,868 54,191
Investment in direct finance leases 69,536 103,576
Equipment on operating leases 151,580 150,126
Property, plant, and equipment 58,292 64,264
Other 21,507 25,821
Discontinued operations 65,751 99,571
$527,446 $608,045
Liabilities and Stockholders' Equity
Revolving notes $3,571 $7,856
Accounts payable and accrued liabilities 108,244 88,485
Deferred participation 52,937 56,176
Deferred income taxes 13,823 26,920
Notes payable 136,577 168,703
Discontinued operations 77,188 83,407
Subordinated debt 27,069 37,491
Minority interest 4,898 4,898
Stockholders' equity 103,139 134,109
$527,446 $608,045
Consolidated Statements of Operations THE GREENBRIER COMPANIES, INC.
Years ended August 31,
(Unaudited, in thousands, except
per share amounts) 2002 2001 2000
Revenue
Manufacturing $231,810 $427,841 $488,672
Leasing & services 73,819 80,986 91,189
305,629 508,827 579,861
Cost of revenue
Manufacturing 217,238 393,422 428,829
Leasing & services 44,694 43,295 46,711
261,932 436,717 475,540
Margin 43,697 72,110 104,321
Other Costs
Selling and administrative expense 30,003 38,558 46,262
Interest expense 15,456 18,478 19,637
Special charges 1,896 -- --
47,355 57,036 65,899
Earnings (loss) before income tax,
minority interest and equity in
unconsolidated subsidiary (3,658) 15,074 38,422
Income tax benefit (expense) 2,072 (6,804) (16,052)
Earnings (loss) before minority
interest and equity in unconsolidated
subsidiary (1,586) 8,270 22,370
Minority interest -- -- (2,308)
Equity in earnings (loss) of
unconsolidated subsidiary (2,578) (641) 1,054
Earnings (loss) from continuing
operations (4,164) 7,629 21,116
Loss from discontinued operations
(net of tax) (21,930) (6,510) (6,762)
Net earnings (loss) $(26,094) $1,119 $14,354
Basic earnings (loss) per common share:
Continuing operations $(0.30) $0.54 $1.48
Discontinued operations (1.55) (0.46) (0.47)
Net earnings (loss) $(1.85) $0.08 $1.01
Diluted earnings (loss) per common share:
Continuing operations $(0.30) $0.54 $1.48
Discontinued operations (1.55) (0.46) (0.47)
Net earnings (loss) $(1.85) $0.08 $1.01
Weighted average common shares:
Basic 14,121 14,151 14,227
Diluted 14,121 14,170 14,241
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements
of Cash Flows
Years ended August 31,
(Unaudited, in thousands) 2002 2001 2000
Cash flows from operating activities:
Net earnings (loss) $(26,094) $1,119 $14,354
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:
Loss from discontinued operations 21,930 6,510 6,762
Deferred income taxes (10,291) 1,682 7,604
Deferred participation (3,239) 1,910 3,827
Depreciation and amortization 17,960 17,796 16,472
Gain on sales of equipment (910) (1,390) (4,527)
Other (2,660) (1,492) 1,349
Decrease (increase) in assets:
Accounts and notes receivable (6,980) 20,300 (9,238)
Inventories (3,600) 42,141 (38,000)
Other 2,977 2,507 (1,019)
Increase (decrease) in liabilities:
Accounts payable and accrued
liabilities 38,180 (25,064) (11,879)
Net cash provided by (used in)
operating activities 27,273 66,019 (14,295)
Cash flows from investing activities:
Acquisitions, net of cash acquired -- (282) (530)
Principal payments received under
direct finance leases 18,828 20,761 18,143
Proceeds from sales of equipment 24,042 47,772 49,789
Investment in joint venture -- (4,000) --
Investment in discontinued
operations (16,843) (4,660) (20,462)
Capital expenditures (21,402) (70,136) (87,082)
Net cash provided by (used in)
investing activities 4,625 (10,545) (40,142)
Cash flows from financing activities:
Changes in revolving notes (4,285) (227) 8,083
Proceeds from borrowings 4,285 50,000 16,180
Repayments of borrowings (36,399) (31,604) (26,987)
Repayment of subordinated debt (10,422) (257) --
Dividends (847) (5,086) (5,132)
Purchase of minority interest -- -- (7,190)
Purchase of common stock -- (959) (246)
Net cash provided by (used in)
financing activities (47,668) 11,867 (15,292)
Increase (decrease) in cash and cash
equivalents (15,770) 67,341 (69,729)
Cash and cash equivalents
Beginning of period 74,547 7,206 76,935
End of period $58,777 $74,547 $7,206
THE GREENBRIER COMPANIES, INC.
Summarized results of operations related to discontinued operations are:
Years ended August 31,
(Unaudited, in thousands) 2002 2001 2000
Revenues $61,695 $85,170 $39,568
Cost of Revenue 60,770 76,954 37,519
Margin 925 8,216 2,049
Selling and administrative expense 9,050 10,989 7,940
Interest expense 3,542 3,778 1,528
Special charges 17,129 -- --
Loss from operations (28,796) (6,551) (7,419)
Estimated loss on discontinued
operations (14,776) -- --
Loss before income taxes and minority
interest (43,572) (6,551) (7,419)
Income tax benefit (expense) 21,515 (3) --
Minority interest 127 44 657
Loss from discontinued operations $(21,930) $(6,510) $(6,762)
The following assets and liabilities of the European operations were reclassified as discontinued operations as of August 31,:
(Unaudited, in thousands) 2002 2001
Cash and cash equivalents $8,953 $2,752
Accounts receivable 9,645 16,471
Inventory (A) 39,304 40,390
Property, plant, and equipment 1,072 12,634
Other assets 6,777 27,324
Total assets - Discontinued operations $65,751 $99,571
Revolving notes $22,249 $25,130
Accounts payable and accrued liabilities (A) 47,385 49,405
Notes payable 7,554 8,872
Total liabilities - Discontinued operations $77,188 $83,407
(A) Includes $26.9 million in 2002 and $11.9 million in 2001 for railcars
delivered to customer for which cash was received, but revenue
recognition delayed, pending final railcar certification. Final
certification was obtained in October 2002.
THE GREENBRIER COMPANIES, INC.
Quarterly Results of Operations
Unaudited operating results by quarter for fiscal years ending
August 31, 2002 and 2001 are as follows:
(In thousands, except per share amounts)
First Second Third Fourth Total
2002
Revenue
Manufacturing $53,217 $52,265 $53,792 $72,536 $231,810
Leasing & services 18,239 19,557 18,431 17,592 73,819
71,456 71,822 72,223 90,128 305,629
Cost of revenue
Manufacturing 49,692 52,899 51,619 63,028 217,238
Leasing & services 10,231 10,632 12,142 11,689 44,694
59,923 63,531 63,761 74,717 261,932
Margin $11,533 $8,291 $8,462 $15,411 $43,697
Earnings (loss)
from continuing
operations (801) (4,773) (495) 1,905 (4,164)
Earnings (loss)
from discontinued
operations (4,242) (12,053) (1,476) (4,159) (21,930)
$(5,043) $(16,826) $(1,971) $(2,254) $(26,094)
Basic earnings
(loss) per common
share:
Continuing
operations $(.06) $(.34) $(.03) $.13 $(.30)
Net earnings
(loss) $(.36) $(1.19) $(.14) $(.16) $(1.85)
Diluted earnings
(loss) per common
share:
Continuing
operations $(.06) $(.34) $(.03) $.13 $(.30)
Net earnings
(loss) $(.36) $(1.19) $(.14) $(.16) $(1.85)
2001
Revenue
Manufacturing $113,990 $109,252 $97,052 $107,547 $427,841
Leasing & services 19,205 21,743 19,317 20,721 80,986
133,195 130,995 116,369 128,268 508,827
Cost of revenue
Manufacturing 104,033 105,031 86,398 97,960 393,422
Leasing & services 10,195 10,983 10,851 11,266 43,295
114,228 116,014 97,249 109,226 436,717
Margin $18,967 $14,981 $19,120 $19,042 $72,110
Earnings (loss)
from continuing
operations 1,559 2,633 1,145 2,292 7,629
Earnings (loss)
from discontinued
operations 1,440 (2,563) (2,472) (2,915) (6,510)
Net earnings
(loss) $2,999 $70 $(1,327) $(623) $1,119
Basic earnings
(loss) per common
share:
Continuing
operations $.11 $.19 $.08 $.16 $.54
Net earnings
(loss) $.21 $.00 $(.09) $(.04) $.08
Diluted earnings
(loss) per common
share:
Continuing
operations $.11 $.19 $.08 $.16 $.54
Net earnings
(loss) $.21 $.00 $(.09) $(.04) $.08
SOURCE: The Greenbrier Companies
CONTACT: Mark Rittenbaum of The Greenbrier Companies, +1-503-684-7000
Web site: http://www.gbrx.com/