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Greenbrier Companies Reports Second Quarter Results
Company Takes Special Impairment Charge, Net of Tax, of $.49 per Diluted Share on Revenues of $240 Million; Announces Closure of Canadian New Railcar Facility

The Greenbrier Companies , a leading supplier of transportation equipment and services to the railroad industry, today reported financial results for its fiscal second quarter ended February 28, 2007.


  * Greenbrier's net loss for the quarter was $6.1 million, or $.38 per
    diluted share.
  * The Company will close its unprofitable railcar manufacturing facility
    in Nova Scotia, Canada during its third fiscal quarter, upon completion
    of a current railcar order.  Losses incurred by this facility during the
    second quarter were approximately $3.8 million, pre-tax, $2.2 million,
    after tax, or $.14 per diluted share before impairment charges.
  * Quarterly results also include a special charge of $16.5 million
    associated with the impairment of assets at the Company's Canadian
    manufacturing operation, and an $8.6 million tax benefit associated with
    the write-off of its investment in the Canadian operation for tax
    purposes, for a combined loss of $7.9 million, or $.49 per diluted
  * Exclusive of the Canadian facility's operating losses, the impairment
    charge, and the tax benefit, Greenbrier's earnings for the quarter were
    $4.0 million, or $.25 per diluted share.
  * EBITDA, before special charges, for the quarter was $21.3 million, or
    8.9% of revenues.
  * Total revenues were flat at $240 million.
  * New railcar manufacturing backlog was unchanged from the prior quarter
    at 14,300 units, valued at $990 million as of February 28, 2007.
  * Revenues from the refurbishment & parts segment grew to $95 million, or
    nearly 40% of total revenues, as a result of previous strategic
    diversification efforts.

  Second Quarter Results:

Revenues for the 2007 fiscal second quarter were $240.0 million, compared to $236.2 million in the prior year's second quarter. EBITDA before special charge was $21.3 million, or 8.9% of revenues for the quarter, compared to $29.8 million, or 12.6% of revenues in the prior year's second quarter. Net loss was $6.1 million, or $.38 per diluted share for the quarter, compared to net earnings of $8.6 million, or $.54 per diluted share for the same period in 2006.

The net loss for the current period includes a special charge of $16.5 million associated with the impairment of assets at the Company's Canadian manufacturing operation, and an $8.6 million tax benefit associated with the write-off of the Canadian investment for tax purposes, for a combined loss of $7.9 million, or $.49 per diluted share. In addition, the net loss for the period includes operating losses of the Company's Canadian facility of $2.2 million, or $.14 per share.

At a meeting held on April 3, 2007, the Board of Directors of Greenbrier authorized the permanent closure of the Company's Canadian manufacturing facility during the fiscal third quarter, upon completion of a current order for approximately 300 railcars.

New railcar manufacturing backlog as of February 28, 2007 was 14,300 units valued at $990 million, virtually unchanged from 14,300 units valued at $980 million on November 30, 2006. Approximately 7,700 units in backlog are subject to Greenbrier's fulfillment of certain competitive conditions.

The Company is withdrawing its previous earnings guidance for fiscal 2007 and suspending guidance for the balance of its fiscal year.

William A. Furman, president and chief executive officer, said, "Our diversified business model continues to position the Company for long-term success despite a currently challenging new railcar market, and losses associated with our Nova Scotia facility, which we are closing. Our refurbishment & parts business, strengthened by the acquisitions of Meridian Rail Services and Rail Car America as well as our leasing & services businesses continue to perform well. Certainly, we are not pleased with our overall results. Manufacturing continues to be adversely affected by a slowdown in demand for double-stack and forest products cars which we have traditionally produced in North America, operating losses at our Canadian facility, and higher than anticipated labor hours on certain marine and railcar orders. We are actively addressing all three of these issues through product and business diversification, closure of our Canadian facility and intense focus on improving productivity. In our second half, we expect to be operating at higher production rates and with a more favorable product mix. Also, in the second half, our second plant in Mexico will come on line to replace the capacity being lost with the closure of our Canadian facility. Management remains keenly focused on improving financial performance, enhancing liquidity and integrating our recent acquisitions."

Following the acquisitions of Meridian Rail Services and Rail Car America, the Company now reports its results from three business segments: manufacturing, refurbishment & parts, and leasing & services.

The Manufacturing segment now includes new railcar and marine barge manufacturing. Second quarter revenues for this segment were $119.2 million, down from $184.8 million in the second quarter of 2006. New railcar deliveries for the quarter were approximately 1,200 units compared to 2,800 units in the prior comparable period. Deliveries decreased principally as a result of reduced production rates due to lower demand for railcar types Greenbrier currently produces in North America, lower than anticipated production on one product line, and an approximate 500 unit increase in production for Greenbrier's owned lease fleet or assets held for sale. Revenues per unit increased due to a change in product mix more heavily weighted to conventional railcars, which have a higher unit sales value than intermodal cars. The Company sold over 500 intermodal units during the quarter.

Manufacturing gross margin for the quarter was 2.8% of revenues, compared to 11.0% of revenues in the second quarter of 2006. The decrease in margin was due principally to reduced production rates as a result of lower demand, a less favorable product mix, labor hour inefficiencies in the production of certain orders, and $3.0 million in negative margin associated with the Company's Canadian facility which was shut down for substantially all of the quarter.

The refurbishment & parts segment includes results for 33 shop and parts locations across North America, which repair and refurbish railcars, provide wheel, axle and bearing services, and recondition and provide replacement railcar parts. Revenues for this segment were $95.3 million, or nearly 40% of total revenues for the quarter and almost four times the $24.1 million of revenues for the prior comparable period. Nearly $67 million of this revenue growth was the result of the recent acquisitions of Rail Car America and Meridian Rail Services last quarter. The balance of the growth of about $4 million was organic.

Margins for the refurbishment and parts segment grew to 15.9%, as compared to 13.4% in the prior comparable period, as the result of increased wheel reconditioning work.

The leasing & services segment continues to include results from the Company's owned lease fleet of approximately 10,000 railcars and from fleet management services provided for approximately 135,000 railcars. Revenues for this segment were $25.5 million, compared to $27.3 million in the same quarter last year. Leasing & services gross margin was 52.0% of revenues, compared to 60.9% of revenues in the same quarter last year.

Leasing & Services revenue and margin decline was principally due to (i) reductions in interim rent on assets held for sale due to the timing of asset sales, and (ii) decreased interest income as a result of lower cash balances. Lease fleet utilization as of February 28, 2007 grew to 97.8%, compared to 94.0% as of November 30, 2006 and 97.2% as of August 31, 2006.

Business Outlook:

Furman continued, "Demand has slowed for certain new railcars manufactured by Greenbrier in North America, especially double-stack intermodal cars for carrying containers, and forest products cars. We have adjusted production accordingly. Secular forces continue to favor rail transportation. The fundamentals of the intermodal market are still strong and traffic growth outlook is still positive. We believe the current pause in double-stack orders is a temporary adjustment to the car supply side, given the large builds in recent years and recent improvements in rail velocity. While we believe there may be additional intermodal orders in 2007, it remains difficult to predict specific intermodal demand in the near term."

Furman concluded, "We continue to see good organic growth opportunities for our other business units: marine, refurbishment & parts, and leasing & services. These units are producing tangible benefits as a result of the strategic decisions we have made to create a more diversified and integrated business model. As an example, we were recently awarded the entire replacement wheels services business for one of our leasing company customers. In addition, about 5,000 wells of 48' double-stack intermodal platforms are expected to be cut-down over the next year or so to 40' double-stack platforms, which more efficiently match traffic flows and container loads. We believe we are well-positioned to capture a large portion of this business through our repair and new railcar shop network."

Mark Rittenbaum, senior vice president & treasurer, noted, "We anticipate higher new railcar production and delivery rates, a more favorable product mix and a substantially reduced drag on operating earnings (excluding closure costs) from our Canadian operations in the second half of the fiscal year. Current estimated costs of closure of this facility are approximately $10 million pre-tax; these charges will be incurred over the next year, with no related tax benefit. Also, we expect improved manufacturing margins, as the result of higher production rates and improved efficiencies. We have lowered our new railcar delivery and margin expectations for the second half of the year, from those previously announced. Due to these factors, and the difficult operating environment, we do not expect to achieve our previously stated 2007 earnings guidance, and we are suspending guidance at this time. We remain focused on managing through this troubling market period, and will continue to position the Company for future growth opportunities."

Rittenbaum concluded, "Last week, our leasing subsidiary issued $100 million of 7-year senior notes secured by a pool of leased railcar assets. The entire proceeds from this financing were used to pay down revolving notes. Borrowings under our revolving credit facilities have been reduced to approximately $100 million as of March 31, 2007, as a result of this financing, cash flow from operations, and proceeds from asset sales. This debt reduction and term financing is consistent with our stated objective of paying down debt and enhancing corporate liquidity."

The Greenbrier Companies (, 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 33 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 10,000 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, fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; 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 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 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 headings "Risk Factors" on page 8 of Part I , Item 1a and "Forward Looking Statements" on page 25 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 31, 2006. 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 second quarter fiscal 2007 results. Teleconference details are as follows:

  Wednesday, April 4, 2007
  8:00 am Pacific Daylight Time
  Phone #: 630-395-0143, Password: "Greenbrier"

  Webcast Real-time Audio Access:  ("Newsroom" at

Please access the website 10 minutes prior to the start time. Following the call, a replay will be available on the same website. Telephone replay will be available through April 21, 2007 at 203-369-0370.

  Condensed Consolidated Balance Sheets
  (In thousands, unaudited)

                                                 February 28,   August 31,
                                                     2007          2006
    Cash and cash equivalents                       $6,169       $142,894
    Restricted cash                                  2,602          2,056
    Accounts and notes receivable                  164,867        115,565
    Inventories                                    230,287        163,151
    Assets held for sale                            82,152         35,216
    Equipment on operating leases                  305,148        301,009
    Investment in direct finance leases              8,594          6,511
    Property, plant and equipment                  101,892         80,034
    Goodwill                                       182,179          2,896
    Intangibles and other assets                    41,975         27,982

                                                $1,125,865       $877,314

  Liabilities and Stockholders' Equity
    Revolving notes                               $242,925        $22,429
    Accounts payable and accrued liabilities       239,212        204,793
    Participation                                    2,736         11,453
    Deferred income taxes                           46,965         37,472
    Deferred revenue                                14,330         17,481
    Notes payable                                  361,909        362,314

    Subordinated debt                                  824          2,091

    Minority interest
                                                     1,610             --
    Stockholders' equity                           215,354        219,281

                                                $1,125,865       $877,314

  Condensed Consolidated Statements of Operations
  (In thousands, except per share amounts, unaudited)

                                 Three Months Ended    Six Months Ended
                                    February 28,         February 28,
                                   2007       2006       2007       2006
    Manufacturing               $119,201   $184,818   $287,893   $326,652
    Refurbishment & parts         95,311     24,104    146,546     46,866
    Leasing & services            25,466     27,292     52,161     49,058
                                 239,978    236,214    486,600    422,576

  Cost of revenue
    Manufacturing                115,822    164,491    277,509    287,522
    Refurbishment & parts         80,114     20,869    125,121     40,869
    Leasing & services            12,220     10,671     23,031     21,109
                                 208,156    196,031    425,661    349,500

  Margin                          31,822     40,183     60,939     73,076

  Other costs
    Selling and administrative    18,800     17,092     35,925     32,633
    Interest and foreign exchange 10,416      7,180     20,056     11,753
    Special charges               16,485         --     16,485         --
                                  45,701     24,272     72,466     44,386

  Earnings (loss) before
   income taxes and equity
   in unconsolidated
   subsidiaries                  (13,879)    15,911    (11,527)    28,690

  Income tax benefit (expense)     8,229     (7,466)     7,649    (12,400)
  Earnings (loss) before
   equity in unconsolidated
   subsidiaries                   (5,650)     8,445     (3,878)    16,290

  Minority interest                   42         --         40         --
  Equity in earnings (loss) of
   unconsolidated subsidiaries      (463)       118       (363)       290

  Net earnings (loss)            $(6,071)    $8,563    $(4,201)   $16,580

  Basic earnings (loss)
   per common share               $(0.38)     $0.55     $(0.26)     $1.06

  Diluted earnings (loss)
   per common share               $(0.38)     $0.54     $(0.26)     $1.04

  Weighted average common shares:
  Basic                           15,982     15,655     15,972     15,583
  Diluted                         16,022     15,911     16,016     15,880

  Condensed Consolidated Statements of Cash Flows
  (In thousands, unaudited)

                                                      Six Months Ended
                                                        February 28,
                                                     2007           2006

  Cash flows from operating activities
    Net earnings (loss)                            $(4,201)       $16,580
    Adjustments to reconcile net earnings (loss)
     to net cash used in operating activities:
      Deferred income taxes                         (2,587)         3,741
      Depreciation and amortization                 16,178         12,445
      Gain on sales of equipment                    (5,775)        (2,812)
      Special charges                               16,485             --
      Other                                            106             48
      Decrease (increase) in assets
       (net of acquisitions):
        Accounts and notes receivable              (28,988)        21,693
        Inventories                                (23,533)         5,248
        Assets held for sale                       (32,224)       (47,856)
        Intangibles and other                       (2,057)           802
      Increase (decrease) in liabilities
       (net of acquisitions):
        Accounts payable and accrued liabilities     3,884        (25,068)
        Participation                               (8,717)       (11,199)
        Deferred revenue                            (5,276)         3,158
    Net cash used in operating activities          (76,705)       (23,220)
  Cash flows from investing activities
    Principal payments received
     under direct finance leases                       340          1,317
    Proceeds from sales of equipment                64,662          8,793
    Investment in and net advances
     to unconsolidated subsidiary                      115            216
    Acquisitions, net of cash acquired            (264,470)            --
    Increase in restricted cash                       (481)        (1,442)
    Capital expenditures                           (78,352)       (61,624)
    Net cash used in investing activities         (278,186)       (52,740)
  Cash flows from financing activities
    Changes in revolving notes                     219,777          5,108
    Proceeds(expense) from notes payable               (71)        58,556
    Repayments of notes payable                     (3,246)        (4,276)
    Repayment of subordinated debt                  (1,267)        (2,507)
    Dividends                                       (2,557)        (2,495)
    Stock options exercised
     and restricted stock awards                     1,648          3,622
    Excess tax benefit of stock options exercised    1,772          1,299
    Investment by joint venture partner              1,650             --
    Purchase of subsidiary shares
     subject to mandatory redemption                    --         (4,636)
    Net cash provided by financing activities      217,706         54,671
  Effect of exchange rate changes                      460           (250)
  Decrease in cash and cash equivalents           (136,725)       (21,539)
  Cash and cash equivalents
    Beginning of period                            142,894         73,204
    End of period                                   $6,169        $51,665

  Supplemental Disclosure
  Reconciliation of Net Cash Provided by Operating Activities to EBITDA
  before special charge (1)
  (In thousands, unaudited)

                                  Three Months Ended     Six Months Ended
                                 Feb. 28,  Feb. 28,   Feb. 28,  Feb. 28,
                                   2007      2006       2007       2006
  Net cash used in
   operating activities         $(34,766)  $(32,072)  $(76,705)  $(23,220)
  Changes in working capital      48,455     49,878     96,911     53,222
  Deferred income taxes            2,890     (4,863)     2,587     (3,741)
  Gain on sales of equipment       2,553      2,200      5,775      2,812
  Other                              (66)        (8)      (106)       (48)
  Income tax expense              (8,229)     7,466     (7,649)    12,400
  Interest and foreign exchange   10,416      7,180     20,056     11,753

  Adjusted EBITDA from operations
   before special charge         $21,253    $29,781    $40,869    $53,178

(1) "EBITDA" (earnings from continuing operations before interest and foreign exchange, taxes, depreciation, amortization, and before special charge) 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.

FCMN Contact:

SOURCE: The Greenbrier Companies

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