Greenbrier Boosts 2015 Outlook As Q2 Results Top Estimates

(RTTNews) - Railroad freight car equipment maker Greenbrier Cos., Inc. (GBX) reported Tuesday a profit for the second quarter that more than tripled from last year, reflecting continued margin expansion and double-digit revenue growth. Earnings per share and quarterly revenues topped analysts' expectations. The company also raised its guidance for the full-year 2015.

Following the announcement of strong quarterly results, the company's shares are surging more the seven percent in pre-market trading.

"Our record results this quarter, including margin expansion and earnings growth, reflect the soundness of our diversified and integrated business model, improved business execution and greater scale. Our aggregate gross margin in the second quarter grew to 19.9%, nearly twice last year's level; at the same time we continue to execute on ramping up production on new manufacturing lines," Chairman and CEO William Furman said in a statement.

The Lake Oswego, Oregon-based reported net earnings attributable to the company of $50.35 million or $1.57 per share for the second quarter, sharply higher than $15.59 million or $0.50 per share in the prior-year quarter.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $1.20 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew to $630.15 million from $502.22 million in the same quarter last year, and topped nine Wall Street analysts' consensus estimate of $613.93 million.

Manufacturing revenues grew 25.5 percent to $505.24 million from $347.76 million, and leasing & services revenues increased to $22.27 million from $17.92 million, while wheels & parts revenues declined $102.64 million from $136.54 million last year.

New railcar deliveries were 5,200 units, up from 4,000 units in the previous quarter. The company also received orders for 10,100 new railcars valued at $1.09 billion during the quarter.

At the end of the second quarter, new railcar backlog stood at a record 46,000 units with an estimated value of $4.78 billion, up from 41,200 units with an estimated value of $4.20 billion at the end of the previous quarter.

The company continued its aggregate gross margin expansion to 19.9 percent from 17.8 percent in the previous quarter, nearly reaching the goal of at least 20% gross margin by the second half of fiscal 2016.

Further, the company's board also declared a quarterly dividend of $0.15 per share, payable on May 6 to shareholders of record as of April 15, 2015.

Looking ahead fiscal 2015, Greenbrier raised its guidance, and now expects earnings in a range of $5.65 to $5.95 per share on revenues between about $2.6 billion and $2.7 billion, with deliveries of about 21,500 units. Street is currently looking for full-year 2015 earnings of $5.43 per share, on annual revenues of $2.62 billion.

Previously, the company projected earnings in a range of $5.20 to $5.50 per share on revenues of about $2.6 billion and deliveries of about 21,000 units.

The company also said it remains on track to achieve the goal of at least 25 percent ROIC by the second half of fiscal 2016.

The company added that the financial results in the second half of the year are expected to be stronger than the first half as was in the previous years, with gross margins also expected to increase overall. However, the management does not believe this track will be linear.

"Our strong order book, which includes several core leasing company partners, provides us good visibility through fiscal 2016 and beyond. If the strong new railcar cycle continues to play out over the next 3-4 years, as many forecast it will, then Greenbrier should be well positioned to generate significant free cash flow," Furman added.

The company noted that it expects its 20 percent equity investment in Brazil's Amsted-Maxion Hortolândia, the leading railcar manufacturer in South America, to close during the third quarter. Greenbrier had agreed to acquire the ownership in Amsted-Maxion Hortolandia for $15 million in early January.

GBX closed Monday's regular trading session at $60.60, up $2.21 on a volume of 0.99 million shares.