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Greenbrier Companies Reports Third Quarter Results
Earnings Growth Driven by Margin Expansion and Strong Industry Fundamentals
PRNewswire-FirstCall
LAKE OSWEGO, Ore.

The Greenbrier Companies , a leading supplier of transportation equipment and services to the railroad industry, today reported financial results for its fiscal third quarter ended May 31, 2006.

  Highlights

  -- Net earnings, excluding previously disclosed charges for a tentative
     settlement reached with the Internal Revenue Service on a tax audit,
     were $13.7 million, or $.86 per diluted share, for the third quarter of
     2006.  These earnings are up 28% from net earnings, excluding special
     charges for prepayment of certain debt, of $10.7 million, or $.69 per
     diluted share, for the third quarter of 2005.

  -- GAAP net earnings for the third quarter of 2006 grew 18% to $10.7
     million, or $.67 per diluted share, compared to GAAP net earnings of
     $9.0 million, or $.58 per diluted share for the same period in fiscal
     2005. GAAP net earnings include a charge of: $3.0 million after tax, or
     $.19 per diluted share, for settlement of the tax audit in 2006, and
     $1.7 million after tax, or $.11 per diluted share for pre-payment of
     certain debt in 2005.

  -- The Company raised its fiscal 2006 earnings guidance to $2.45 to $2.50
     per diluted share.  This guidance excludes charges of $.19 per diluted
     share for the tentative tax settlement in the third fiscal quarter.

  -- New railcar manufacturing backlog was 16,900 units valued at $1.14
     billion at May 31, 2006.

  -- Subsequent to quarter-end, the Company received an order for 600
     double-stack intermodal platforms.

  -- EBITDA for the quarter increased 25% from the third quarter of fiscal
     2005, to $32.9 million, as a result of significant manufacturing and
     leasing and services margin expansion.  EBITDA was 12.4% of revenues
     for the quarter, compared to 9.2% of revenues in the third quarter of
     fiscal 2005.

  -- During the quarter, the Company completed a $100 million convertible
     senior notes offering, which is immediately accretive to earnings per
     share.  The offering further positions the Company's balance sheet and
     liquidity to act quickly on both organic and acquisitive growth
     opportunities in its core businesses:  new railcar and marine
     manufacturing, railcar repair and refurbishment, and leasing and
     services.

  Third Quarter Results:

Revenues for the 2006 fiscal third quarter were $266 million, compared to $286 million in the prior year's third quarter. EBITDA increased to $32.9 million, or 12.3% of revenues for the quarter, compared to $26.3 million, or 9.2% of revenues in the prior year's third quarter. Net earnings increased to $10.7 million, or $.67 per diluted share for the quarter, compared to net earnings of $9.0 million, or $.58 per diluted share for the same period in 2005.

Results for the third quarter of 2006 include a charge of $3.0 million after-tax, or $.19 per diluted share. As previously disclosed, the charge resulted from a tentative settlement reached with the Internal Revenue Service on the audit of the Company's federal tax returns for the years ended 1999 to 2002. Results for the third quarter of fiscal 2005 include special charges of $1.7 million after tax, or $.11 per diluted share, for prepayment of certain debt.

New railcar manufacturing backlog was 16,900 units valued at $1.14 billion at May 31, 2006, compared to 18,300 units valued at $1.19 billion on February 28, 2006. Subsequent to quarter-end, the Company received an order for 600 double-stack intermodal platforms.

William A. Furman, president and chief executive officer, said, "All major lines of business performed well this quarter, with significant margin enhancement driving the Company's earnings growth. Our operating execution remains on track, as we continue to see strong rail industry fundamentals. Going forward, we remain optimistic about the market outlook across all our business lines."

In the Manufacturing segment, third quarter revenues were $236 million, compared to $266 million in the third quarter of 2005. Railcar deliveries for the quarter were 3,000 units, compared to 3,600 units in the third quarter of 2005. Lower current period railcar deliveries were the result of changes in production rates to meet customer delivery requirements, a slower European freight car market over the past year and the prior period including deliveries under a subcontract arrangement. Manufacturing margin for the quarter grew to 10.4% of revenues, compared to 9.2% of revenues in the third quarter of 2005, as margins continued to benefit from cost reduction efforts and efficiencies of long production runs.

Revenues in the Leasing & Services segment grew to $30.0 million, an increase of 51% from $19.9 million in the same quarter last year. Revenue growth was driven by higher gains on railcar sales and increases in rent on lease fleet additions and leased railcar assets held for future sale. Leasing & Services margin grew to 66% of revenues, compared to 52% of revenues in the same quarter last year. Margins benefited from many of the same factors that drove revenue growth. In addition, renewal of leases at higher rates, diversification of railcar types in the lease fleet and newer lease equipment with lower maintenance costs contributed to the increased margin.

Mark Rittenbaum, senior vice president and treasurer added, "We are particularly pleased with the performance of our leasing and services business this quarter. Through active management of our railcar leasing portfolio, we continue to re-balance the fleet to a more diversified portfolio of younger lived assets with longer average remaining lease termination dates. We regularly sell assets from our lease fleet and re-balance our lease portfolio. During the quarter, as planned, we sold a portion of our older assets and realized some of the embedded equity in our lease fleet, as gains on sales of equipment were $7.8 million. We will continue to review our lease portfolio in order to maximize current and long term value on an ongoing basis."

Business Outlook:

The Company raised its fiscal 2006 earnings guidance to ($2.45 to $2.50) per diluted share. This guidance excludes charges of $.19 per diluted share for the tentative tax settlement in the third fiscal quarter.

Furman continued, "Our balance sheet and liquidity position are further strengthened by the recent $100 million convertible notes offering, which is also immediately accretive to earnings per share. This capital gives us the added flexibility to execute on our strategy of growing each of our core businesses, both organically and through potential acquisition. As we execute on this strategy, we will continue to deploy capital in leased railcar assets, both for our owned lease fleet and into railcars held for sale. These assets can be readily monetized for reinvestment opportunities in our core businesses when we so choose."

Furman concluded, "We intend to maintain our leadership position in the double-stack intermodal marketplace, where underlying fundamentals and growth remain robust. We have also expanded our new railcar product offerings into other markets where future demand is also anticipated to be strong. As previously disclosed, several new railcar manufacturing line changeovers will occur over the next several quarters. Management is keenly focused on successful changeovers and start-up of new production lines, which are all occurring as planned."

The Greenbrier Companies (www.gbrx.com), headquartered in Lake Oswego, OR, is a leading supplier of transportation equipment and services to the railroad industry. In addition to building new railroad freight cars in its manufacturing facilities in the U.S., Canada, and Mexico and to repairing and refurbishing freight cars and wheels at 17 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 135,000 railcars.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This release may contain forward-looking statements. Greenbrier uses words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, actual future costs and the availability of materials and a trained workforce; steel price increases and scrap surcharges; changes in product mix and the mix between manufacturing and leasing & services segment; 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; all as may be discussed in more detail under the heading "Forward Looking Statements" on pages 3 through 4 of Part I of our Annual Report on Form 10-K for the fiscal year ended August 31, 2005. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

The Greenbrier Companies will host a teleconference to discuss third quarter fiscal 2006 results. Teleconference details are as follows:

  Thursday, June 29, 2006
  6:30 am Pacific Daylight Time
  Phone #: 630-395-0143, Password: "Greenbrier"

Webcast Real-time Audio Access: ("Newsroom" at http://www.gbrx.com/) Please access the website 10 minutes prior to the start time. Following the call, a replay will be available on the same website.

  THE GREENBRIER COMPANIES, INC.
  Condensed Consolidated Balance Sheets
  (In thousands, unaudited)

                                                   May 31,      August 31,
                                                    2006          2005
  Assets
   Cash and cash equivalents                      $186,660        $73,204
   Restricted cash                                   2,059             93
   Accounts and notes receivable                    94,947        122,957
   Inventories                                     148,662        121,698
   Railcars held for sale                           60,675         59,421
   Equipment on operating leases                   242,380        183,155
   Investment in direct finance leases               4,968          9,974
   Property, plant and equipment                    78,755         73,203
   Other                                            32,755         27,502

                                                  $851,861       $671,207

  Liabilities and Stockholders' Equity
   Revolving notes                                 $21,313        $12,453
   Accounts payable and accrued liabilities        188,478        195,258
   Participation                                    11,086         21,900
   Deferred income taxes                            34,626         31,629
   Deferred revenue                                 14,395          6,910
   Notes payable                                   369,789        214,635

   Subordinated debt                                 5,003          8,617

   Subsidiary shares subject to
    mandatory redemption                                --          3,746

   Stockholders' equity                            207,171        176,059

                                                  $851,861       $671,207


  THE GREENBRIER COMPANIES, INC.
  Consolidated Statements of Operations
  (In thousands, except per share amounts, unaudited)

                          Three Months Ended        Nine Months Ended
                                May 31,                   May 31,
                           2006         2005          2006         2005
  Revenue
   Manufacturing        $236,052     $266,090     $609,570     $700,295
   Leasing & services     30,036       19,944       79,094       58,701
                         266,088      286,034      688,664      758,996

  Cost of revenue
   Manufacturing         211,444      241,491      539,835      642,149
   Leasing & services     10,172        9,561       31,281       30,512
                         221,616      251,052      571,116      672,661

  Margin                  44,472       34,982      117,548       86,335

  Other costs
   Selling and
    administrative        18,082       15,276       51,025       41,392
   Interest and foreign
    exchange               5,963        2,285       17,406        9,639
   Special charges            --        2,913           --        2,913
                          24,045       20,474       68,431       53,944
  Earnings before income
   taxes and equity in
   unconsolidated
   subsidiaries           20,427       14,508       49,117       32,391

  Income tax expense     (9,866)      (5,881)     (22,266)     (12,833)
  Earnings before equity
   in unconsolidated
   subsidiaries           10,561        8,627       26,851       19,558

  Equity in earnings
   (loss) of
   unconsolidated
   subsidiaries              119          417          409        (322)

  Net earnings           $10,680       $9,044      $27,260      $19,236

  Basic earnings per
   common share            $0.67        $0.60        $1.74        $1.29

  Diluted earnings per
   common share            $0.67        $0.58        $1.71        $1.24

  Weighted average common shares:
   Basic                  15,887       15,020       15,685       14,957
   Diluted                15,979       15,605       15,918       15,564


  THE GREENBRIER COMPANIES, INC.
  Condensed Consolidated Statements of Cash Flows
  (In thousands, unaudited)

                                                      Nine Months Ended
                                                           May 31
                                                     2006          2005
  Cash flows from operating activities:
    Net earnings                                   $27,260        $19,236
    Adjustments to reconcile net earnings to net
     cash provided by (used in) operating
     activities:
     Deferred income taxes                           3,049            679
     Tax benefit of stock options exercised and
      dividends on restricted stock awards           1,949          1,941
     Depreciation and amortization                  19,170         16,840
     Gain on sales of equipment                   (10,606)        (4,300)
     Other                                              59            499
     Decrease (increase) in assets:
      Accounts and notes receivable                 29,633       (34,535)
      Inventories                                 (22,959)          7,969
      Railcars held for sale                      (25,523)       (27,558)
      Other                                          (147)        (3,656)
     Increase (decrease) in liabilities:
      Accounts payable and accrued liabilities    (10,671)            (5)
      Participation                               (10,814)       (15,660)
      Deferred revenue                               7,242          1,148
   Net cash provided by (used in)
    operating activities                             7,642       (37,402)

  Cash flows from investing activities:
   Principal payments received under direct
    finance leases                                   1,710          4,524
   Proceeds from sales of equipment                 23,665         23,125
   Investment in and advances to
    unconsolidated subsidiary                          517           (49)
   Acquisition of joint venture interest                --          8,435
   Decrease (increase) in restricted cash          (1,961)            624
   Capital expenditures                           (67,146)       (49,478)
   Net cash used in investing activities          (43,215)       (12,819)

  Cash flows from financing activities:
   Changes in revolving notes                        7,858          6,541
   Proceeds from issuance of notes payable net
    of issuance costs                              154,933        170,028
   Repayments of notes payable                     (5,740)       (66,334)
   Repayment of subordinated debt                  (3,615)        (5,157)
   Dividends                                       (3,766)        (2,692)
   Net proceeds from sale of common stock               --        127,466
   Purchase and retirement of common stock              --      (127,538)
   Proceeds from exercise of stock options           5,010          1,727
   Purchase of subsidiary shares subject to
    mandatory redemption                           (4,636)             --
   Net cash provided by financing activities       150,044        104,041
  Effect of exchange rate changes                  (1,015)          1,358

  Increase in cash and cash equivalents            113,456         55,178

  Cash and cash equivalents
   Beginning of period                              73,204         12,110

   End of period                                  $186,660        $67,288


  THE GREENBRIER COMPANIES, INC.
  Supplemental Disclosure
  Reconciliation of Net Cash Provided by Operating Activities to Adjusted
   EBITDA (1)
  (In thousands, unaudited)

                          Three Months Ended         Nine Months Ended
                                May 31                    May 31
                           2006         2005         2006        2005
  Net cash provided by
   (used in) operating
   activities            $31,007      $13,099       $7,642    $(37,402)
  Changes in working
   capital              (21,738)        2,627       33,239       72,297
  Special charges             --        2,913           --        2,913
  Deferred income taxes      692      (1,266)      (3,049)        (679)
  Tax benefit of stock
   options exercised
   and dividends on
   restricted stock
   awards                  (650)        (453)      (1,949)      (1,941)
  Gain on sales
   of equipment            7,794          782       10,606        4,300
  Other                     (11)          402         (59)        (499)
  Income tax expense       9,866        5,882       22,266       12,833
  Interest and foreign
   exchange                5,964        2,284       17,406        9,639

  Adjusted EBITDA
   from operations       $32,924      $26,270      $86,102      $61,461

  (1)   Adjusted EBITDA is not a financial measure under GAAP.  We define
        adjusted EBITDA as earnings from operations before special charges,
        interest and foreign exchange, taxes, depreciation and amortization.
        We consider net cash provided by operating activities to be the most
        directly comparable GAAP financial measure.  Adjusted EBITDA is a
        liquidity measurement tool commonly used by rail supply companies
        and we use adjusted EBITDA in that fashion.  You should not consider
        adjusted EBITDA in isolation or as a substitute for cash flow from
        operations or other cash flow 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.

SOURCE: The Greenbrier Companies

CONTACT: Mark Rittenbaum of The Greenbrier Companies, +1-503-684-7000

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