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Greenbrier Companies Reports Fiscal Third Quarter 2007 Financial Results
Company posts net earnings of $0.81 per share on revenues of $387 million; results include special charges of $.19 per share, record quarter for refurbishment business
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, 2007.

  Highlights

  *  Revenues for the quarter were $387 million, a 45% increase from the
     $266 million in the prior year's third quarter.

  *  Net earnings for the quarter were $13.0 million, or $.81 per diluted
     share.  These results include a special charge of $3.1 million, or $.19
     per diluted share, with no related tax benefit, associated with closure
     costs of the Company's Canadian railcar manufacturing facility.

  *  Earnings before special charges for the quarter were $16.1 million, or
     $1.00 per diluted share.

  *  EBITDA before special charges for the quarter was $46.4 million, or
     12.0% of revenues.

  *  Debt balances, net of cash, were reduced by over $100 million during
     the quarter.

  *  Revenues for the refurbishment and parts business segment were a record
     $118 million, or just over 30% of total revenues for the third quarter,
     with margins improving to 18.5%, compared to 16.5% in the prior
     comparable period.

  *  Greenbrier's new railcar manufacturing backlog as of May 31, 2007 was
     14,100 units valued at $970 million, compared to 14,300 units valued at
     $990 million as of February 28, 2007.

  *  Marine backlog as of May 31, 2007 was a record nine vessels valued at
     approximately $90 million.

  Third Quarter Results:

Revenues for the 2007 fiscal third quarter were $386.6 million, compared to $266.1 million in the prior year's third quarter. Gross margins during the quarter were 14.9% compared to 16.7% in the prior comparable period. EBITDA before special charges was $46.4 million, or 12% of revenues for the quarter, compared to $32.9 million, or 12.3% of revenues in the prior year's third quarter. Net earnings were $13.0 million, or $0.81 per diluted share for the quarter, compared to net earnings of $10.7 million, or $0.67 per diluted share for the same period in 2006. Current period net earnings include a special charge of $3.1 million, or $0.19 per diluted share, with no related tax benefit, associated with severance and other closure costs of our Canadian railcar manufacturing facility. This facility's last order was completed in early May 2007, and the facility is now in the process of being permanently shut down.

Greenbrier's new railcar manufacturing backlog as of May 31, 2007 was 14,100 units valued at $970 million, compared to 14,300 units valued at $990 million as of February 28, 2007. Approximately 3,900 units in backlog are subject to Greenbrier's fulfillment of certain competitive conditions. The backlog is scheduled for delivery through 2010 and has been priced to cover potential material price increases or decreases and surcharges.

William A. Furman, president and chief executive officer, said, "We have been keenly focused on our stated objectives of improving financial performance, enhancing liquidity, and integrating our recent acquisitions. I am pleased to report substantial progress on all three of these fronts this quarter. Each of our three business segments realized revenue and margin growth, when compared to the first and second fiscal quarters of this year. Our third quarter results reflect our strategic product and business diversification efforts, the decision to close our Canadian manufacturing facility, and focus on improving manufacturing productivity. In addition, our manufacturing results this quarter benefited from higher production rates and a more favorable product mix, as compared to the first half of the fiscal year."

Furman concluded, "While year to date rail loadings in North America have been muted due to a slowdown in the economy, we continue to believe that the secular forces that favor the rail industry will persist and that the fundamentals of markets we serve will translate into robust business activity for the rail supply sector over the long term. We remain focused on continuing to execute on our strategic initiatives and are confident that our diversified and integrated business model continues to position the Company for long-term success."

Third quarter revenues for the manufacturing segment were $241.4 million, compared to $208.4 million in the corresponding prior period. This $33.0 million, or 15.8%, increase was due primarily to a shift in product mix to more conventional railcars which typically have higher per unit sales prices than intermodal platforms. New railcar deliveries for the quarter were approximately 3,000 units, consistent with the prior comparable period. However a majority of deliveries in the current quarter were conventional railcars; compared to the prior period last year when the majority of deliveries were intermodal railcars.

Manufacturing gross margin for the quarter was 8.4%, compared to 9.6% in the third quarter of 2006. The decrease in margin was due principally to a change in product mix, negative margin of $.3 million at our Canadian facility which is being permanently shut down, and production and supply issues in our European operations.

The refurbishment & parts segment includes results for 34 shop 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 $118.2 million, up from $27.6 million in the third quarter of 2006. This segment generated slightly over 30% of total Company revenues for the third quarter, on a revenue increase of $90.6 million over the same period of last year. About $85 million of this growth was from the acquisitions of Rail Car America and Meridian Rail Services and start-up of new locations. The remainder of the growth was due to increases in wheelset sales, higher volumes of refurbishment and retrofitting work at repair and refurbishment facilities and favorable scrap prices.

Gross margins for the refurbishment and parts segment grew to 18.5%, as compared to 16.5% in the prior comparable period. The margin growth is the result of increased railcar program maintenance volumes, high scrap prices, and a greater mix of wheel reconditioning work resulting from the acquisition of Meridian.

The leasing & services segment includes results from the Company's owned lease fleet of approximately 9,000 railcars and from fleet management services provided for approximately 136,000 railcars. Revenues for this segment were $27.0 million, compared to $30.0 million in the same quarter last year. Leasing & services gross margin was 58.0% of revenues, compared to 66.1% of revenues in the same quarter last year. Leasing & services revenue and margin decline was a result of a $2.8 million decrease in gains on disposition of assets from the lease fleet, and a $1.0 million decline in lease revenues from railcars held for sale, partially offset by an increase in lease revenue from new lease additions.

Business Outlook:

"As anticipated, the financial trends experienced by our manufacturing operations in the third quarter were distinctly improved from those we faced in the first half of fiscal 2007," said Mark Rittenbaum, senior vice president and treasurer. "During the third quarter, manufacturing benefited from higher new railcar production and delivery rates, a more favorable product mix, a substantially reduced drag on our operating earnings from our Canadian operations, and improved operating efficiencies, as compared to the first half of the fiscal year. We believe this momentum will continue in our fourth fiscal quarter. New railcar deliveries during the third quarter were 3,000 units, and fiscal year to date were 6,200 units. We currently estimate total fiscal 2007 deliveries will be 8,500 - 8,800 units, higher than our previous estimate of 8,000 - 8,500 units. This upward revision reflects higher production rates resulting from orders received during the third quarter. We also expect continuing operating momentum in the fourth quarter from our refurbishment & parts and leasing & services segments, but with lower gains on disposition of leased assets in the fourth quarter as compared to the third quarter."

Rittenbaum added, "The closure of TrentonWorks, our Canadian new railcar manufacturing facility, is proceeding according to plan. Closure costs are currently estimated to be approximately $10.0 million, of which $3.1 million was incurred in the third quarter and included in special charges. The balance of these costs is expected to be incurred over the next year. There is no tax benefit associated with the closure costs, as TrentonWorks does not have tax loss carrybacks or current taxable income to offset against these costs."

Rittenbaum concluded, "We are pleased with the substantial operating cash flow generated during the third quarter and in the corresponding progress made in reducing net debt balances by more than $100 million during the quarter. We anticipate ending the fiscal year with net debt approximating balances outstanding as of May 31, 2007."

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. and Mexico and marine barges at its U.S. facility. It also repairs and refurbishes freight cars and provides wheels and railcar parts at 34 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 136,000 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 third quarter fiscal 2007 results. Teleconference details are as follows:

  Tuesday, July 10, 2007
  8:00 am Pacific Daylight Time
  Phone #: 1-630-395-0143, 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. Telephone replay will be available through July 28, 2007 at 1-203-369-1260.

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

                                                    May 31,      August 31,
                                                     2007          2006

  Assets
    Cash and cash equivalents                      $28,319       $142,894
    Restricted cash                                  2,651          2,056
    Accounts and notes receivable                  134,440        115,565
    Inventories                                    197,642        163,151
    Assets held for sale                            45,898         35,216
    Equipment on operating leases                  296,946        301,009
    Investment in direct finance leases              9,195          6,511
    Property, plant and equipment                  109,645         80,034
    Goodwill                                       166,813          2,896
    Intangibles and other assets                    70,963         27,982
                                                $1,062,512       $877,314

  Liabilities and Stockholders' Equity
    Revolving notes                                $58,300        $22,429
    Accounts payable and accrued liabilities       224,225        204,793
    Participation                                    2,975         11,453
    Deferred income taxes                           53,920         37,472
    Deferred revenue                                26,093         17,481
    Notes payable                                  461,876        362,314

    Subordinated debt                                   --          2,091

    Minority interest                                5,082             --

    Stockholders' equity                           230,041        219,281

                                                $1,062,512       $877,314



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

                          Three Months Ended         Nine Months Ended
                               May 31,                    May 31,
                          2007         2006         2007         2006

  Revenue
    Manufacturing       $241,399     $208,405     $529,293     $535,058
    Refurbishment &
     parts               118,213       27,647      264,760       74,512
    Leasing & services    26,994       30,036       79,154       79,094
                         386,606      266,088      873,207      688,664

  Cost of revenue
    Manufacturing        221,203      188,353      498,713      475,875
    Refurbishment &
     parts                96,288       23,091      221,408       63,960
    Leasing & services    11,339       10,172       34,370       31,281
                         328,830      221,616      754,491      571,116

  Margin                  57,776       44,472      118,716      117,548

  Other costs
    Selling and
     administrative       20,092       17,896       56,017       50,528
    Interest and foreign
     exchange             10,930        6,149       30,986       17,903
    Special charges        3,091           --       19,576           --
                          34,113       24,045      106,579       68,431

  Earnings before income
   tax expense, minority
   interest and equity
   in unconsolidated
   subsidiaries           23,663       20,427       12,137       49,117
  Income tax expense     (11,047)      (9,866)      (3,398)     (22,266)
  Earnings before
   minority interest and
   equity in
   unconsolidated
   subsidiaries           12,616       10,561        8,739       26,851

  Minority interest          178           --          217           --
  Equity in earnings
   (loss) of
   unconsolidated
   subsidiaries              223          119         (140)         409

  Net earnings           $13,017      $10,680       $8,816      $27,260

  Basic earnings per
   common share            $0.81        $0.67        $0.55        $1.74

  Diluted earnings per
   common share            $0.81        $0.67        $0.55        $1.71

  Weighted average common
   shares:
    Basic                 16,105       15,887       16,017       15,685
    Diluted               16,139       15,979       16,058       15,918


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

                                                      Nine Months Ended
                                                           May 31,
                                                     2007          2006
  Cash flows from operating activities
    Net earnings                                    $8,816        $27,260
    Adjustments to reconcile net earnings to
     net cash provided by operating activities:
      Deferred income taxes                          2,688          3,049
      Depreciation and amortization                 24,496         18,673
      Gain on sales of equipment                   (10,781)       (10,606)
      Special charges                               19,576             --
      Other                                           (148)            59
      Decrease (increase) in assets
       excluding acquisitions:
        Accounts and notes receivable                4,553         29,633
        Inventories                                 10,916        (22,959)
        Assets held for sale                         1,556        (25,523)
        Intangible and other                        (1,667)           350
      Increase (decrease) in liabilities
       excluding acquisitions:
        Accounts payable and accrued liabilities   (27,831)       (10,671)
        Participation                               (8,478)       (10,814)
        Deferred revenue                             6,114          7,242
    Net cash provided by operating activities       29,810          5,693

  Cash flows from investing activities
    Principal payments received under
     direct finance leases                             426          1,710
    Proceeds from sales of equipment               114,719         23,665
    Investment in and net advances to
     unconsolidated subsidiary                        (869)           517
    Acquisitions, net of cash acquired            (267,903)            --
    Increase in restricted cash                       (445)        (1,961)
    Capital expenditures                          (126,442)       (67,146)
    Net cash used in investing activities         (280,514)       (43,215)

  Cash flows from financing activities
    Changes in revolving notes                      34,106          7,858
    Proceeds from issuance of notes payable         99,441        154,933
    Repayments of notes payable                     (4,082)        (5,740)
    Repayment of subordinated debt                  (2,091)        (3,615)
    Investment by joint venture partner              5,400             --
    Dividends paid                                  (3,851)        (3,766)
    Stock options and restricted stock awards
     exercised                                       2,616          5,010
    Excess tax benefit of stock options exercised    2,774          1,949
    Purchase of subsidiary shares subject to
     mandatory redemption                               --         (4,636)
    Net cash provided by financing activities      134,313        151,993
  Effect of exchange rate changes                    1,816         (1,015)
  Increase (decrease) in cash and cash
   equivalents                                    (114,575)       113,456
  Cash and cash equivalents
    Beginning of period                            142,894         73,204
    End of period                                  $28,319       $186,660



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

                          Three Months Ended          Nine Months Ended

                          May 31,      May 31,       May 31,      May 31,
                           2007         2006          2007         2006

  Net cash provided by
   operating activities $106,515      $28,913       $29,810       $5,693
  Changes in working
   capital               (82,074)     (20,480)       14,837       32,742
  Deferred income taxes   (5,275)         692        (2,688)      (3,049)
  Gain on sales of
   equipment               5,006        7,794        10,781       10,606
  Other                      254          (11)          148          (59)
  Income tax expense      11,047        9,866         3,398       22,266
  Interest and foreign
   exchange               10,930        6,150        30,986       17,903

  Adjusted EBITDA from
   operations before
   special charge        $46,403      $32,924       $87,272      $86,102

(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.

First Call Analyst:
FCMN Contact: margaret.vallejos@gbrx.com

SOURCE: The Greenbrier Companies

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

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