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Greenbrier Reports Record EPS of $2.48 on Revenues of $954 Million for Fiscal 2006; Fourth Quarter EPS is $.76 on Revenues of $265 Million
PRNewswire-FirstCall
LAKE OSWEGO, Ore.

The Greenbrier Companies today reported results for its fiscal fourth quarter and fiscal year ended August 31, 2006.

  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

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