The Greenbrier Companies
Financial Highlights
Fiscal 2006:
-- Net earnings were a record $39.6 million, or $2.48 per diluted share,
up 33% from $29.8 million or $1.92 per diluted share in fiscal 2005.
-- Record EBITDA for fiscal 2006 was $112 million, up 27% over 2005 EBITDA
of $88 million.
-- Total new railcar deliveries of 11,400 in fiscal 2006, compared to
13,200 units in fiscal 2005.
-- Net earnings for the year include a tax benefit of $0.7 million, or
$.04 per diluted share, for two tax items. This tax benefit consists
of:
-- (i) a charge in the third quarter of $3.0 million after tax, or
$.19 per diluted share, for settlement of a tax audit in 2006,
and
-- (ii) a benefit in the fourth quarter of $3.7 million, or $.23 per
diluted share, for a realization of a deferred tax asset relating
to net operating loss carry-forwards at the Company's Mexican
subsidiary.
-- Growing backlog of 14,700 units valued at $1.0 billion on August 31,
2006, compared with 9,600 units valued at $550 million on August 31,
2005, and 13,100 units at $760 million on August 31, 2004.
Fourth Quarter:
-- Net earnings were $12.3 million, or $.76 per diluted share -- up 16%
from the $10.6 million, or $.68 per diluted share in the fourth quarter
of fiscal 2005.
-- Net earnings for the quarter include a $3.7 million tax benefit, or
$.23 per diluted share, for a realization of a deferred tax asset
relating to net operating loss carry-forwards at the Company's Mexican
subsidiary.
-- EBITDA was $25.8 million, compared to $29.0 million for the fourth
quarter of fiscal 2005.
-- New railcar deliveries were 3,200 units for the quarter, compared to
3,300 units for the fourth quarter of 2005.
Strategic Accomplishments:
-- During 2006, the Company expanded its new railcar offerings into car
types where future demand is expected to be strong. These car types
include covered hopper cars, Auto-Max®, automotive vehicle carrying
railcars and mill gondola cars for scrap steel service.
-- As the result of active portfolio management and growth initiatives,
the Company enhanced the quality of its owned lease fleet, reducing the
average car age from 22 years to 16 years while extending the average
lease term to 3.3 years from 2.7 years as compared to a year ago.
Lease fleet utilization was 97.2%.
-- Subsequent to year end, the Company executed on three major strategic
initiatives: 1) the acquisition of the assets of RailCar America; 2)
an agreement to acquire the stock of Meridian Rail Services; and 3) the
formation of a new joint venture, Greenbrier GIMSA, to build new
freight cars in Mexico. These initiatives will: improve the Company's
competitive position in new railcar manufacturing; nearly triple the
annual revenues of the Company's railcar repair and refurbishment
business, and reduce the overall cyclicality of its business, while
further distinguishing the Company in the marketplace.
-- The Company continued to strengthen its liquidity position by issuance
of $100 million of convertible senior notes, $60 million add-on of
senior unsecured notes, and a commitment for a new five-year, $275
million revolving credit facility.
Fourth Quarter Results:
Revenues for the fourth quarter of fiscal 2006 were $265 million, flat with $265 million in the prior year's fourth quarter. EBITDA was $25.8 million, or 9.7% of revenues for the quarter, compared to $29.0 million, or 10.9% of revenues in the prior year's fourth quarter. Net earnings were $12.3 million, or $.76 per diluted share -- up 16% from the $10.6 million, or $.68 per diluted share in the fourth quarter of fiscal 2005. The Company realized a $3.7 million tax benefit, or $.23 per diluted share, during the quarter for a realization of a deferred tax asset relating to net operating carry-forwards at its Mexican subsidiary.
New railcar deliveries for the quarter of 3,200 units and gains on equipment sale of $0.3 million were both lower than previously anticipated. This was principally due to timing differences, as some lease syndication and equipment sales activities were deferred. As well, the growth of the lease fleet, and therefore production for the lease fleet, was higher than earlier guidance. New additions to the lease fleet for the year were nearly $120 million, compared to earlier expectations of $110 million of additions. These factors were mitigated in part by the continued expansion of manufacturing margins, as a result of operating leverage. The overall effect of these factors was to continue to grow the Company's leasing operations and longer- term profitability, but in the short term reduce fourth quarter earnings. The Company expects its lease fleet expansion efforts will drive long-term profitability and contribute to stable earnings going forward, outweighing the short term effect of deferring revenues from Q4 2006 into future periods.
In the Manufacturing segment, fourth quarter revenues were $242 million, compared to $241 million in the fourth quarter of 2005. Deliveries for the quarter were 3,200 units, compared to 3,300 units in prior comparable period. The revenue per unit increased due to a change in product mix. A higher percentage of conventional rather than intermodal railcars were shipped during the quarter, as the Company continued to diversify its product offerings. Manufacturing margin for the quarter grew to 11.2% of revenues, compared to 10.4% of revenues in the fourth quarter of 2005, as margins continued to benefit from cost reduction efforts and efficiencies of long production runs.
Revenues in the Leasing & Services segment were $23.4 million, compared to $24.4 million in the same quarter last year. Leasing & Services margin were 54.2% of revenues, compared to 56.5% of revenues in the same quarter last year. The slightly lower revenues and margins in the current quarter are due to lower gains on equipment sales of $0.3 million in the current quarter, compared to $2.5 million in the prior comparable period. After excluding gains on equipment sales for both periods, leasing and services revenues grew by $1.2 million, or 6%, and leasing and services margins grew from 51.6% to 53.3% of revenues.
Future Outlook:
The Company anticipates revenues for fiscal 2007 in the range of $1.2 to $1.3 billion and earnings in the range of $3.10-$3.40 per diluted share. The principal drivers for this growth are anticipated to be from the RailCar America and Meridian acquisitions, along with improved operating performance in Europe. The Company expects this growth to be partially offset by lower gains on equipment sales from the Company's lease fleet and a slightly high effective tax rate, due to the geographic mix of earnings in 2007. Financial performance from the Company's TrentonWorks freight car manufacturing operation in Canada is expected to decline in 2007 compared to 2006, due to weaker markets for forest product railcars and the strong Canadian dollar.
William A. Furman, president and chief executive officer, noted, "Fiscal 2006 was another very successful year for the Company, with our second consecutive year of record earnings and numerous strategic accomplishments. Over the past year, we have taken several steps to bolster our growth, increase our profitability and competitive positioning, and diversify the business."
Furman added, "As we enter fiscal 2007, we are excited about the prospects for the year. This optimism is driven by a combination of continued strength in railroad industry fundamentals, coupled with the Company's enhanced competitive position, as the result of recent strategic initiatives."
Furman concluded, "In the near term, we will continue to focus on integrating our three recent strategic initiatives and realizing the synergies associated with them. We will also continue to selectively seek growth opportunities."
Mark Rittenbaum, senior vice president and treasurer, said, "We are pleased with our financial performance during the fourth quarter and the year as we continued to see gross margin expansion across all business lines. While deliveries for the quarter and gains on equipment sale were lower than previously anticipated, this was principally due to timing differences as some lease syndication and equipment sales activities were deferred. We also made more additions to the lease fleet for the year than expected. The net effect of these factors is positive as we continue to grow our leasing operations and long-term profitability. However, in the short-term these factors impacted our fourth quarter earnings. As we look at 2007, we are optimistic about the Company's ability to continue to grow revenues and earnings, driven by many of our strategic initiatives."
The Greenbrier Companies (www.gbrx.com ), headquartered in Lake Oswego, OR, is a leading supplier of transportation equipment and services to the railroad industry. The Company builds new railroad freight cars in its manufacturing facilities in the U.S., Canada, and Mexico and marine barges at its U.S. facility. It also repairs and refurbishes freight cars and provides wheels and railcar parts at 30 locations (post Meridian acquisition) 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.
EBITDA is not a financial measure under GAAP. We define 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. EBITDA is a liquidity measurement tool commonly used by rail supply companies and we use EBITDA in that fashion. You should not consider 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 EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the EBITDA measure presented may differ from and may not be comparable to similarly titled measures used by other companies.
The Greenbrier Companies will host a teleconference to discuss fourth quarter and fiscal year end results. Teleconference details are as follows:
Tuesday, October 31, 2006
7:30 a.m. Pacific Standard Time
Phone #: 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 November 18, 2006 at 203-369-1424.
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Balance Sheets
August 31,
(In thousands, except per share amounts)
Assets 2006 2005
Cash and cash equivalents $142,894 $73,204
Restricted cash 2,056 93
Accounts and notes receivable 115,565 122,957
Inventories 163,151 121,698
Railcars held for sale 35,216 59,421
Investment in direct finance leases 6,511 9,974
Equipment on operating leases 301,009 183,155
Property, plant and equipment 80,034 73,203
Other 30,878 27,502
$877,314 $671,207
Liabilities and Stockholders' Equity
Revolving notes $22,429 $12,453
Accounts payable and accrued liabilities 204,793 195,258
Participation 11,453 21,900
Deferred income tax 37,472 31,629
Deferred revenue 17,481 6,910
Notes payable 362,314 214,635
Subordinated debt 2,091 8,617
Subsidiary shares subject to mandatory redemption -- 3,746
Stockholders' equity 219,281 176,059
$877,314 $671,207
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Operations
Years ended August 31,
(In thousands, except
per share amounts) 2006 2005 2004
Revenue
Manufacturing $851,289 $941,161 $653,234
Leasing & services 102,534 83,061 76,217
953,823 1,024,222 729,451
Cost of revenue
Manufacturing 754,421 857,950 595,026
Leasing & services 42,023 41,099 42,241
796,444 899,049 637,267
Margin 157,379 125,173 92,184
Other costs
Selling and administrative
expense 70,918 57,425 48,288
Interest and foreign exchange 25,396 14,835 11,468
Special charges -- 2,913 1,234
96,314 75,173 60,990
Earnings before income tax
and equity in unconsolidated
subsidiaries 61,065 50,000 31,194
Income tax expense (21,698) (19,911) (9,119)
Earnings before equity in
unconsolidated subsidiaries 39,367 30,089 22,075
Equity in earnings (loss) of
unconsolidated subsidiaries 169 (267) (2,036)
Earnings from continuing
operations 39,536 29,822 20,039
Earnings from discontinued
operations (net of tax) 62 -- 739
Net earnings $39,598 $29,822 $20,778
Basic earnings per common share:
Continuing operations $2.51 $1.99 $1.38
Discontinued operations -- -- 0.05
$2.51 $1.99 $1.43
Diluted earnings per common share:
Continuing operations $2.48 $1.92 $1.32
Discontinued operations -- -- 0.05
$2.48 $1.92 $1.37
Weighted average common shares:
Basic 15,751 15,000 14,569
Diluted 15,937 15,560 15,199
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Cash Flows
Years ended August 31,
(In thousands) 2006 2005 2004
Cash flows from operating
activities:
Net earnings $39,598 $29,822 $20,778
Adjustments to reconcile net
earnings to net cash provided
by (used in) operating activities:
Earnings from discontinued
operations (62) -- (739)
Deferred income taxes 5,893 5,807 9,646
Tax benefit of stock
options exercised -- 2,393 --
Depreciation and amortization 25,253 22,939 20,840
Gain on sales of equipment (10,948) (6,797) (629)
Special charges -- -- 1,234
Other 278 651 1,332
Decrease (increase) in assets:
Accounts and notes receivable 8,948 (32,328) (37,786)
Inventories (37,517) 15,403 (22,355)
Railcars held for sale 156 (38,495) 14,097
Other 2,577 (5,167) 2,940
Increase (decrease) in
liabilities:
Accounts payable and
accrued liabilities 5,487 3 30,956
Participation (10,447) (15,207) (18,794)
Deferred revenue 10,326 4,285 (37,495)
Net cash provided by (used in)
operating activities 39,542 (16,691) (15,975)
Cash flows from investing
activities:
Principal payments received
under direct finance leases 2,048 5,733 9,461
Proceeds from sales
of equipment 28,863 32,528 16,217
Investment in and advances
to unconsolidated subsidiaries 550 92 (2,240)
Acquisition of joint
venture interest -- 8,435 --
Decrease (increase) in
restricted cash (1,958) 1,007 4,757
Capital expenditures (140,569) (69,123) (42,959)
Net cash used in investing
activities (111,066) (21,328) (14,764)
Cash flows from financing
activities:
Changes in revolving notes 8,965 2,514 (14,030)
Proceeds from notes payable 154,567 169,752 --
Repayments of notes payable (13,191) (67,691) (21,539)
Repayment of
subordinated debt (6,526) (6,325) (5,979)
Dividends (5,042) (3,889) (889)
Net proceeds from
equity offering -- 127,462 --
Repurchase and retirement
of stock -- (127,538) --
Stock options exercised and
restricted stock awards 5,757 3,286 6,093
Excess tax benefit of stock
options exercised 2,600 -- --
Purchase subsidiary's shares
subject to mandatory
redemption (4,636) -- (1,277)
Net cash provided by (used in)
financing activities 142,494 97,571 (37,621)
Effect of exchange rate changes (1,280) 1,542 3,172
Increase (decrease) in cash
and cash equivalents 69,690 61,094 (65,188)
Cash and cash equivalents
Beginning of period 73,204 12,110 77,298
End of period $142,894 $73,204 $12,110
THE GREENBRIER COMPANIES, INC.
Supplemental Disclosure
Reconciliation of Net Cash Provided by
(used in) Operating Activities to EBITDA
(In thousands, unaudited)
Year ending August 31,
2006 2005
Net cash (used in) provided by
operating activities $39,542 $(16,691)
Earnings from discontinued operations 62 --
Changes in working capital 20,470 71,506
Deferred income taxes (5,893) (5,807)
Tax benefit of stock options exercised -- (2,393)
Gain on sales of equipment 10,948 6,797
Other (278) (651)
Income tax expense 21,698 19,911
Interest and foreign currency 25,396 14,835
EBITDA from continuing operations $111,945 $87,507
Three months ending
August 31, August 31,
2006 2005
Net cash (used in) provided by
operating activities $33,849 $20,711
Earnings from discontinued operations 62 --
Changes in working capital (12,769) (791)
Deferred income taxes (2,844) (5,128)
Tax benefit of stock options exercised -- (452)
Gain on sales of equipment 342 2,497
Other (219) (152)
Income tax expense (benefit) (568) 7,078
Interest and foreign currency 7,990 5,196
EBITDA from continuing operations $25,843 $28,959
(1) "EBITDA" (earnings from continuing operations before interest, taxes,
depreciation and amortization) is a useful liquidity measurement tool
commonly used by rail supply companies and Greenbrier.It should not
be considered in isolation or as a substitute for cash flows from
operating activities or cash flow statement data prepared in
accordance with generally accepted accounting principles.
Supplemental Information
Quarterly Results of Operations (Unaudited)
Operating results by quarter for 2006 are as follows:
(In thousands, except
per share amounts)
First Second Third Fourth Total
2006
Revenue
Manufacturing $164,596 $208,922 $236,052 $241,719 $851,289
Leasing & services 21,766 27,292 30,036 23,440 102,534
186,362 236,214 266,088 265,159 953,823
Cost of revenue
Manufacturing 143,030 185,360 211,444 214,587 754,421
Leasing & services 10,439 10,671 10,172 10,741 42,023
153,469 196,031 221,616 225,328 796,444
Margin 32,893 40,183 44,472 39,831 157,379
Other costs
Selling and
administrative
expense 15,541 17,092 17,896 20,389 70,918
Interest and
foreign exchange 4,573 7,180 6,149 7,494 25,396
20,114 24,272 24,045 27,883 96,314
Earnings before income
tax and equity in
unconsolidated
subsidiaries 12,779 15,911 20,427 11,948 61,065
Income tax benefit
(expense) (4,934) (7,466) (9,866) 568 (21,698)
Equity in (loss)
earnings of
unconsolidated
subsidiaries 172 118 119 (240) 169
Earnings from
continuing
operations 8,017 8,563 10,680 12,276 39,536
Earnings from
discontinued
operations
(net of tax) -- -- -- 62 62
Net earnings $8,017 $8,563 $10,680 $12,338 $39,598
Basic earnings per
common share:
Continuing
operations $.52 $.55 $.67 $.77 $2.51
Discontinued
operations -- -- -- -- --
$.52 $.55 $.67 $.77 $2.51
Diluted earnings
per common share:
Continuing
operations $.51 $.54 $.67 $.76 $2.48
Discontinued
operations -- -- -- -- --
$.51 $.54 $.67 $.76 $2.48
Quarterly Results of Operations (Unaudited)
Operating results by quarter
for 2005 are as follows:
(In thousands, except
per share amounts)
First Second Third Fourth Total
2005
Revenue
Manufacturing $200,397 $233,808 $266,090 $240,866 $941,161
Leasing & services 17,651 21,105 19,944 24,361 83,061
218,048 254,913 286,034 265,227 1,024,222
Cost of revenue
Manufacturing 182,862 217,796 241,491 215,801 857,950
Leasing & services 10,380 10,570 9,561 10,588 41,099
193,242 228,366 251,052 226,389 899,049
Margin 24,806 26,547 34,982 38,838 125,173
Other costs
Selling and
administrative
expense 12,072 14,044 15,276 16,033 57,425
Interest and
foreign exchange 3,059 4,295 2,285 5,196 14,835
Special charges -- -- 2,913 -- 2,913
15,131 18,339 20,474 21,229 75,173
Earnings before
income tax and
equity in
unconsolidated
subsidiaries 9,675 8,208 14,508 17,609 50,000
Income tax benefit
(expense) (3,554) (3,397) (5,881) (7,079) (19,911)
Equity in (loss)
earnings of
unconsolidated
subsidiaries (731) (9) 417 56 (267)
Net earnings $5,390 $4,802 $9,044 $10,586 $29,822
Basic earnings
per common share $.36 $.32 $.60 $.71 $1.99
Diluted earnings
per common share $.35 $.31 $.58 $.68 $1.92
FCMN Contact: margaret.vallejos@gbrx.com
SOURCE: The Greenbrier Companies
CONTACT: Mark Rittenbaum, +1-503-684-7000, for Greenbrier Companies
Web site: http://www.gbrx.com/