exv99w1
Exhibit 99.1
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For release: July 8, 2011, 6:00 am EDT
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Contact:
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Mark Rittenbaum |
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503-684-7000 |
Greenbrier Reports Fiscal Third Quarter 2011 Results; Concludes New Revolving Credit Facility
Lake Oswego, Oregon, July 8, 2011 The Greenbrier Companies [NYSE:GBX] today reported
results for its fiscal third quarter ended May 31, 2011.
Third Quarter Highlights
Financial Highlights:
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Revenues for the third quarter of 2011 were $317 million, up from $207 million in
the prior years third quarter. |
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Adjusted EBITDA for the quarter was $25.7 million, or 8.1% of revenues, compared to
$25.9 million, or 12.5% of revenues in the third quarter of 2010. |
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Net loss for the quarter was $3.3 million or $0.14 per diluted share, compared to net
earnings of $4.6 million, or $0.23 per diluted share, in the prior years third quarter.
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Excluding a one-time charge of $10.0 million pre-tax, $6.0 million after-tax, for costs
associated with the retirement of $235 million of senior unsecured notes during the
quarter, net earnings were $2.7 million, or $0.10 per share. |
Liquidity Summary:
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The Company ended the quarter with $34.3 million of cash and $112.2 million of
committed additional borrowing capacity. |
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Greenbrier extended debt maturity dates, lowered its interest costs, and increased its liquidity through: |
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the sale during the quarter of $230 million of 3.5% senior convertible notes due 2018, and |
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a five-year, $245 million revolving line of credit, which closed on June 30, 2011,
and replaces the $100 million credit facility that would have matured November 2011.
In connection with this financing, Greenbrier fully repaid $72 million outstanding
under its term loan due June 2012 with affiliates of WL Ross & Co. LLC. |
Railcar Deliveries and Backlog:
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New railcar deliveries in the third quarter of 2011 were 2,200 units, compared to
700 units in the third quarter of 2010. |
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Greenbriers new railcar manufacturing backlog as of May 31, 2011 was 13,600 units with
an estimated value of $1.05 billion, compared to 9,500 units valued at $720 million at
February 28, 2011. |
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Net earnings (loss) is now referred to in
the Consolidated Statements of Operations, in accordance with GAAP, as Net
earnings (loss) attributable to controlling interest. |
Discussion of Quarterly Results and Outlook
William A. Furman, president and chief executive officer, said, As anticipated, we returned
to profitability during the quarter, excluding the one-time charge associated with retiring our
$235 million senior unsecured notes. However, these results did not fully meet our expectations,
principally due to a temporary shortage of castings in North America and a temporary delay in
certification of railcars in Europe, which dampened new railcar deliveries by about 300 units. In
addition, about $2 million of certain other non-recurring general & administrative costs were
incurred during the third quarter.
Furman added, Business momentum continues in what we believe is the early stage of an upturn
in the markets we serve. Revenue in our Manufacturing and Wheel Services, Refurbishment & Parts
segments and lease rates on our lease fleet have grown for the third consecutive quarter, driven by
stronger demand for our products and services. Business visibility continues to improve,
particularly in new railcar manufacturing, where we are experiencing a cyclical recovery and
benefitting from the strength of our diversified and expanded product portfolio and the ramping up
of additional capacity. Since the beginning of our fiscal year, we have received new railcar orders
for over 14,000 units, 6,400 of which were received during the third quarter. We are also on track
with our plans to open an additional production line in July 2011 that will provide more capacity
and a lower cost manufacturing footprint. We currently expect to deliver around 9,300 new railcars
in fiscal 2011.
Furman concluded, We remain on track to achieve our fiscal 2011 objectives. In the fourth
quarter, we will continue to focus on expanding gross margins, improving working capital usage and
operational efficiencies, meeting increased demand and enhancing our leasing platform. We expect
to produce increased earnings leverage as we continue to benefit from operating at higher plant
utilization levels, and achieve economies of scale. Our recent debt refinancing strengthened our
balance sheet and will save us over $10 million in annual pre-tax interest expense.
Segment Details
The Manufacturing segment consists of marine and new railcar production in Europe and North
America. Manufacturing segment revenue for the third quarter was $173.5 million, compared to $77.9
million in the third quarter of 2010. The revenue increase was primarily due to higher railcar
deliveries, somewhat offset by a change in railcar product mix with lower per unit sales prices.
New railcar deliveries in the current quarter were 2,200 units, up from 700 units in the same quarter last
year. Manufacturing gross margin for the third quarter was 8.5% of revenues, compared to
11.5% in the third quarter of 2010. The gross margin decline was due principally to a
marine and
new railcar product mix which had less favorable pricing, as the
prior period contained multi-year contracts entered into prior to the
downturn, Although the current quarter benefitted from economies of
operating at higher production levels, margins were impacted by
inefficiencies associated with temporary shortages of castings.
The Wheel Services, Refurbishment & Parts segment, consisting of a network of 38 locations,
repairs and refurbishes railcars and provides wheel services and railcar parts across North
America. Revenue for this segment in the current quarter was $126.3 million, compared to $111.2
million in the third quarter of 2010. The revenue increase was primarily due to higher sales
volumes, principally related to the Companys wheel service business, a product mix with a higher
average sales price and metal scrapping programs that were just ramping up in the prior comparable
period. Gross margin for the Wheel Services, Refurbishment & Parts segment was 12.0% of revenues,
compared to 13.1% of revenues in the same quarter last year. The decrease was primarily the result
of a change in product mix and higher freight costs associated with severe weather at some of our
locations.
The Leasing & Services segment includes results from the Company-owned lease fleet of
approximately 9,000 railcars and from fleet management services provided for approximately 214,000
railcars. Revenue for this segment was $17.5 million, compared to $18.3 million in the same quarter
last year. Leasing & Services gross margin for the quarter was 47.0% of revenues, compared to
45.8% of revenues in the same quarter last year. The increase was primarily a result of higher
rents earned on leased railcars for syndication, partially offset by the discontinuation of a
certain management services contract. Lease fleet utilization was 96.8%, compared to 94.5% in the
same period last year.
Selling and administrative costs were $22.6 million for the quarter, or 7.1% of revenues,
versus $17.5 million, or 8.4% of revenues, for the same quarter last year. The increase was
primarily due to employee-related costs which include the partial restoration of previous salary
reductions taken during the downturn and increases in incentive
compensation, revenue-based fees
paid to our joint venture partner in Mexico due to both higher activity levels and a contractual
increase in fee percentages, and higher research and development costs associated with our
manufacturing products.
Gains on disposition of equipment, previously included in revenue, were $1.7 million for the
quarter, compared to $4.0 million for the same quarter last year. The current quarter includes a
$.3 million gain from disposition of leased assets and $1.4 million from insurance proceeds related
to the January 2009 fire at one of our wheel facilities. The prior comparable period includes a
$3.1 million gain from disposition of leased assets and $0.9 million from insurance proceeds
related to
the 2009 fire. Assets from Greenbriers lease fleet are periodically sold in the normal
course of business in order to take advantage of market conditions, manage risk and maintain
liquidity.
Interest and foreign exchange expense was $9.8 million for the quarter, compared to $10.8
million for the same period in 2010. During the quarter, $235 million of senior unsecured loans
at 83/8% were repaid and replaced with $230.0 million of convertible debt at 3.5%.
Liquidity Update
During the quarter, the Company enhanced and optimized its balance sheet, cash flow and
liquidity through the sale of $230 million of 3.5% senior convertible notes due 2018, which were
convertible into shares of Greenbrier common stock at an initial conversion price of $38.05 per
share. The proceeds were used to fully retire $235 million of outstanding 8 3/8% Senior Notes due
2015. The difference in cash interest expense between the newly issued notes and the retired notes
will be over $10 million annually. A charge of $10.0 million was recorded to Other costs during
the third quarter for the write-off of unamortized debt acquisition costs, prepayment premiums and
other costs associated with the full retirement of the $235 million senior unsecured notes.
Subsequent to quarter end, Greenbrier completed the refinancing of its North American credit
facility and fully repaid $72 million outstanding under a term loan due June 2012. The new
facility is a five-year, $245 million revolving line of credit maturing June 30, 2016. Borrowings
under the facility currently bear interest at Libor + 2.50%. During the fourth quarter, the
Company expects to take a one-time charge of about $6 million, pre-tax, related to the early
retirement of the term loan and revolving line of credit.
As a result of these refinancings, the Company extended its average loan maturity date from
three to five years and added nearly $75 million of liquidity and borrowing capacity. As
previously noted, the Company will also realize $10 million per annum in cash interest savings.
Business Outlook
Based on current business trends, management continues to anticipate that both revenues and
Adjusted EBITDA will be higher in the fourth quarter than the third quarter of 2011. Management
anticipates the Company will continue to be profitable in the fourth quarter of the year and for
the year as a whole, excluding any one-time charges associated with the early retirement of debt.
Profitability will be driven by continued new railcar delivery momentum, production efficiencies,
an optimized balance sheet and anticipated higher wheel services and repair volumes.
Conference Call
The Greenbrier Companies will host a teleconference to discuss third quarter results.
Teleconference details are as follows:
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Friday, July 8, 2011 |
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8:00 am Pacific Daylight Time |
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Phone : 1-630-395-0143, Password: Greenbrier |
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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 July 23
at 402-220-2146.
About Greenbrier Companies
Greenbrier, (www.gbrx.com), headquartered in Lake Oswego, Oregon, is a
leading supplier of transportation equipment and services to the railroad industry. Greenbrier
builds new railroad freight cars in its three 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 38 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 214,000 railcars.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This
release may contain forward-looking statements, including statements regarding the Companys
anticipated use of proceeds from its convertible notes offering, expected new railcar production
volumes and schedules, expected customer demand for the Companys products and services, plans to
increase manufacturing capacity, new railcar delivery volumes and schedules, growth in demand for
the Companys railcar services and parts business, and the Companys future financial performance.
Greenbrier uses words such as anticipates, believes, forecast, potential, contemplates,
expects, intends, plans, seeks, estimates, could, would, will, may, can, and
similar expressions to identify forward-looking statements. These forward-looking statements are
not guarantees of future performance and are subject to certain risks and uncertainties that could
cause actual results to differ materially from in the results contemplated by the forward-looking
statements. Factors that might cause such a difference include, but are not limited to, reported
backlog is not indicative of our financial results; turmoil in the credit markets and
financial services industry; high levels of indebtedness and compliance with the terms of our
indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient
availability of borrowing capacity; fluctuations in demand for newly manufactured railcars
or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant
customers; customer payment defaults or related issues; actual future costs and the
availability of materials and a trained workforce; failure to design or manufacture new products or
technologies or to achieve certification or market acceptance of new products or technologies;
steel or specialty component price fluctuations and availability 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 and risks related to car hire and residual values; difficulties associated
with governmental regulation, including environmental liabilities; integration of current
or future acquisitions; succession planning; all as may be discussed in more detail under the
headings Risk Factors and Forward Looking Statements in our Annual Report on Form 10-K for the
fiscal year ended August 31, 2010 and in our Quarterly Report on Form 10-Q for the fiscal
quarter ended February 28, 2011, and our other reports on file with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect managements opinions only as of the date hereof. Except as otherwise
required by law, we do not assume any obligation to update any forward-looking statements.
Adjusted EBITDA is not a financial measure under generally accepted accounting principles
(GAAP). We define Adjusted EBITDA as earnings (loss) attributable to Greenbrier before gain (loss)
on extinguishment
of debt, interest and foreign exchange, income tax expense (benefit),
depreciation and amortization. Adjusted EBITDA is a performance measurement tool commonly used by
rail supply companies and Greenbrier. You should not consider Adjusted EBITDA in isolation or as a
substitute for other financial statement data determined in accordance with GAAP. In addition,
because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to
varying calculations, the Adjusted EBITDA measure presented may differ from and may not be
comparable to similarly titled measures used by other companies.
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
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May 31, |
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August 31, |
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2011 |
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2010 |
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Assets |
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Cash and cash equivalents |
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$ |
34,302 |
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$ |
98,864 |
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Restricted cash |
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2,217 |
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2,525 |
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Accounts receivable, net |
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143,491 |
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89,252 |
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Inventories |
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289,740 |
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204,626 |
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Leased railcars for syndication |
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58,316 |
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12,804 |
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Equipment on operating leases, net |
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314,106 |
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302,663 |
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Investment in direct finance leases |
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123 |
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1,795 |
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Property, plant and equipment, net |
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150,091 |
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132,614 |
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Goodwill |
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137,066 |
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137,066 |
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Intangibles and other assets |
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88,290 |
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90,679 |
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$ |
1,217,742 |
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$ |
1,072,888 |
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Liabilities and Equity |
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Revolving notes |
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$ |
13,897 |
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$ |
2,630 |
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Accounts payable and accrued liabilities |
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261,361 |
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181,638 |
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Deferred income taxes |
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75,860 |
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81,136 |
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Deferred revenue |
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5,821 |
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11,377 |
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Notes payable |
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496,828 |
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498,700 |
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Total equity Greenbrier |
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351,456 |
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285,938 |
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Noncontrolling interest |
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12,519 |
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11,469 |
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Total equity |
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363,975 |
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297,407 |
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$ |
1,217,742 |
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$ |
1,072,888 |
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THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
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Three Months Ended |
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Nine Months Ended |
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May 31, |
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May 31, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenue |
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Manufacturing |
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$ |
173,487 |
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$ |
77,877 |
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$ |
415,548 |
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$ |
226,020 |
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Wheel Services, Refurbishment & Parts |
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126,317 |
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111,242 |
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333,600 |
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297,870 |
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Leasing & Services |
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17,476 |
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18,312 |
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51,406 |
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53,550 |
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317,280 |
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207,431 |
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800,554 |
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577,440 |
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Cost of revenue |
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Manufacturing |
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158,674 |
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68,931 |
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385,974 |
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206,386 |
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Wheel Services, Refurbishment & Parts |
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111,202 |
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96,725 |
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299,026 |
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263,398 |
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Leasing & Services |
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9,254 |
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9,931 |
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27,099 |
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31,638 |
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279,130 |
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175,587 |
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712,099 |
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501,422 |
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Margin |
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38,150 |
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31,844 |
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88,455 |
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76,018 |
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Selling and administrative |
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22,580 |
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17,519 |
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58,212 |
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50,686 |
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Gain on disposition of equipment |
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(1,678 |
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(4,024 |
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(6,148 |
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(5,659 |
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Earnings from operations |
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17,248 |
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18,349 |
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36,391 |
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30,991 |
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Other costs |
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Interest and foreign exchange |
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9,807 |
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10,811 |
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30,646 |
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34,328 |
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Loss (gain) on extinguishment of debt |
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10,007 |
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(1,275 |
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10,007 |
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(1,275 |
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Earnings (loss) before income taxes and
loss from unconsolidated affiliates |
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(2,566 |
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8,813 |
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(4,262 |
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(2,062 |
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Income tax benefit (expense) |
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301 |
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(2,418 |
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812 |
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1,025 |
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Earnings (loss) before loss from
unconsolidated affiliates |
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(2,265 |
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6,395 |
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(3,450 |
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(1,037 |
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Loss from unconsolidated affiliates |
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(539 |
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(318 |
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(1,700 |
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(632 |
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Net earnings (loss) |
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(2,804 |
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6,077 |
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(5,150 |
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(1,669 |
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Net earnings attributable to
noncontrolling interest |
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(510 |
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(1,514 |
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(1,019 |
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(1,764 |
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Net earnings (loss) attributable to
Greenbrier |
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$ |
(3,314 |
) |
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$ |
4,563 |
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$ |
(6,169 |
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$ |
(3,433 |
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Basic earnings (loss) per common share |
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$ |
(0.14 |
) |
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$ |
0.25 |
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$ |
(0.27 |
) |
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$ |
(0.20 |
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Diluted earnings (loss) per common share |
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$ |
(0.14 |
) |
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$ |
0.23 |
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$ |
(0.27 |
) |
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$ |
(0.20 |
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Weighted average common shares: |
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Basic |
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24,127 |
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18,220 |
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22,893 |
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17,477 |
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Diluted |
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24,127 |
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20,058 |
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22,893 |
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17,477 |
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THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
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Nine Months Ended |
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May 31, |
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2011 |
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2010 |
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Cash flows from operating activities |
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Net loss |
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$ |
(5,150 |
) |
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$ |
(1,669 |
) |
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(5,276 |
) |
|
|
17,084 |
|
Depreciation and amortization |
|
|
28,174 |
|
|
|
27,967 |
|
Gain on sales of equipment |
|
|
(2,901 |
) |
|
|
(4,032 |
) |
Accretion of debt discount |
|
|
5,446 |
|
|
|
6,701 |
|
Stock based compensation expense |
|
|
4,961 |
|
|
|
4,264 |
|
Loss (gain) on extinguishment of debt (non-cash portion) |
|
|
2,868 |
|
|
|
(1,275 |
) |
Other |
|
|
91 |
|
|
|
(1,467 |
) |
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(51,427 |
) |
|
|
(1,615 |
) |
Inventories |
|
|
(83,293 |
) |
|
|
(27,195 |
) |
Leased railcars for syndication |
|
|
(48,465 |
) |
|
|
10,504 |
|
Other |
|
|
5,834 |
|
|
|
3,428 |
|
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
77,273 |
|
|
|
11,352 |
|
Deferred revenue |
|
|
(5,442 |
) |
|
|
(7,824 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
(77,307 |
) |
|
|
36,223 |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Principal payments received under direct finance leases |
|
|
52 |
|
|
|
358 |
|
Proceeds from sales of equipment |
|
|
14,179 |
|
|
|
14,794 |
|
Investment in and advances to unconsolidated affiliates |
|
|
(979 |
) |
|
|
(650 |
) |
Contract placement fee |
|
|
|
|
|
|
(6,050 |
) |
Decrease (increase) in restricted cash |
|
|
308 |
|
|
|
(632 |
) |
Capital expenditures |
|
|
(59,689 |
) |
|
|
(28,266 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(46,129 |
) |
|
|
(20,446 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
|
3,694 |
|
|
|
(7,828 |
) |
Proceeds from revolving notes with maturities longer than 90 days |
|
|
13,373 |
|
|
|
5,698 |
|
Repayments of revolving notes with maturities longer than 90 days |
|
|
(6,194 |
) |
|
|
|
|
Proceeds from issuance of notes payable |
|
|
231,250 |
|
|
|
1,821 |
|
Debt issuance costs |
|
|
(7,857 |
) |
|
|
(109 |
) |
Repayments of notes payable |
|
|
(238,569 |
) |
|
|
(28,357 |
) |
Gross proceeds from equity offering |
|
|
63,180 |
|
|
|
56,250 |
|
Expenses from equity offering |
|
|
(420 |
) |
|
|
(3,525 |
) |
Other |
|
|
26 |
|
|
|
29 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
58,483 |
|
|
|
23,979 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
391 |
|
|
|
652 |
|
Increase (decrease) in cash and cash equivalents |
|
|
(64,562 |
) |
|
|
40,408 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Beginning of period |
|
|
98,864 |
|
|
|
76,187 |
|
|
|
|
|
|
|
|
End of period |
|
$ |
34,302 |
|
|
$ |
116,595 |
|
|
|
|
|
|
|
|
THE GREENBRIER COMPANIES, INC.
Supplemental Disclosure
Reconciliation of Net loss attributable to Greenbrier to Adjusted EBITDA (1)
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
May 31, |
|
|
May 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Net earnings (loss)
attributable to Greenbrier |
|
$ |
(3,314 |
) |
|
$ |
4,563 |
|
|
$ |
(6,169 |
) |
|
$ |
(3,433 |
) |
Loss (gain) on extinguishment of
debt |
|
|
10,007 |
|
|
|
(1,275 |
) |
|
|
10,007 |
|
|
|
(1,275 |
) |
Interest and foreign exchange |
|
|
9,807 |
|
|
|
10,811 |
|
|
|
30,646 |
|
|
|
34,328 |
|
Income tax expense (benefit) |
|
|
(301 |
) |
|
|
2,418 |
|
|
|
(812 |
) |
|
|
(1,025 |
) |
Depreciation and amortization |
|
|
9,548 |
|
|
|
9,351 |
|
|
|
28,174 |
|
|
|
27,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
25,747 |
|
|
$ |
25,868 |
|
|
$ |
61,846 |
|
|
$ |
56,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted EBITDA is not a financial measure under generally accepted
accounting principles (GAAP). We define Adjusted EBITDA as earnings (loss) attributable to
Greenbrier before loss (gain) on extinguishment of debt, interest and foreign exchange, income tax
expense (benefit), depreciation and amortization. Adjusted EBITDA is a performance measurement tool
commonly used by rail supply companies and Greenbrier. You should not consider Adjusted EBITDA in
isolation or as a substitute for other financial statement data determined in accordance with GAAP.
In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is
susceptible to varying calculations, the Adjusted EBITDA measure presented may differ from and may
not be comparable to similarly titled measures used by other companies. |