The Greenbrier Companies, Inc. announced Oct. 7, 2015 that it received diversified new orders in its fourth quarter ended Aug. 31, 2015 for 2,900 railcar units valued at $470 million. Orders for the quarter include medium- and hi-cube covered hopper cars, automobile carrying cars, boxcars and tank cars, include a recent award for 1,200 tank cars from Saudi Railway Company, marking Greenbrier’s entry into the Middle East.
Greenbrier also said it expects to exceed previously provided diluted EPS guidance of $5.70 to $5.85 (excluding non-recurring costs in the third quarter of $0.16 per share) for the fiscal year ended Aug. 31, 2015. “These higher expectations are principally driven by increased margins in our manufacturing segment, which includes lease syndications and a lower than anticipated tax rate related to geographic mix of earnings,” the company sais.
“Our diversified backlog of 41,300 units valued at $4.71 billion is near all-time highs, giving us visibility well into 2016, 2017 and beyond,” said Chairman and CEO William A. Furman. “Additionally, our recent expansion into Brazil and Saudi Arabia extends our geographical reach into new international markets and further diversifies our business. Production facilities now include major factories in Mexico to serve North America and Latin America; Brazil, which can reach African and Latin American export markets; Poland for Europe, near-Asia, Saudi Arabia and other Middle East markets; as well as our flagship factory, Gunderson, in the U.S.”
During its 2015 fiscal year, Greenbrier received orders for 32,400 new railcar units valued at $3.44 billion. The average sales price of $106,000 for the orders received is $11,000 higher than in fiscal year 2014 “and is a testament to the value and diversity of railcar types ordered,” said Furman. “We have recently confirmed production schedules with many of our major customers, including those operating in the energy sector, and have received no order cancellations. In select cases, we have worked with customers to change product mix or reschedule a portion of production, in return for attractive current and future benefits to Greenbrier. These changes, which are consistent with our longstanding practices, have freed production capacity to receive orders in areas of rising demand such as automotive, and medium- and large-cube covered hopper cars.”
“We remain confident in the strength of our strategy and integrated business model and are committed to achieving operational excellence in each of our businesses. Our strategy to diversify our product mix, add efficient, flexible capacity in low-cost facilities, increase revenue diversity in international markets, and drive considerably more value through our leasing model is paying off. We anticipate another strong year in our fiscal 2016, and expect to generate significant free cash flow. We will continue a balanced approach of reinvesting free cash flow into projects that generate high rates of return, seeking acquisitions in our core competencies and returning capital to shareholders. Since we initiated our share repurchase program in October 2013, we have returned more than $130 million of capital to shareholders through the repurchase of 2.3 million shares and payment of dividends.”
Greenbrier’s 1,200 tank cars for Saudi Railway Company (SAR) will be built to U.S. standards on production lines certified by the Association of American Railroads. Track dimensions in Saudi Arabia are identical to those in the U.S. Three types of tank cars will support Saudi industrial mining operations led by the national mining company, Ma’aden, at Wa’ad al Shamal Industrial City in the Sirhan-Turaif region of northern Saudi Arabia. The tank cars will facilitate rail transportation of molten sulfur and phosphoric acid, products that are used in a range of industrial activities.
Greenbrier will build the tank cars for SAR under U.S. supervision and management at its wholly owned Wagony Swidnica subsidiary in Swidnica, Poland. Delivery of the first tank cars to SAR will begin in the second half of calendar year 2016, and will be completed in 2017 and 2018, depending on car type.
Saudi Arabia is a member of the Gulf Cooperation Council (GCC), which also includes Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. “A number of large-scale infrastructure projects are either currently under way or being planned in the region. These projects will require railroad rolling stock, repair and wheel service facilities, and specialized know-how,” Furman noted. “As a result, the aggregate railcar demand for GCC countries investing in rail is expected to be strong through the next decade. We’re fully committed to our global manufacturing network. We demonstrated this earlier in 2015 when we announced the reorganization of our Global Manufacturing Operations business unit to ensure all of our manufacturing activities in North America, South America and Europe operate under common leadership and follow shared best-practices manufacturing systems developed through decades of experience and work with global partners like Bombardier in Mexico and Amsted Rail in Brazil. Our entry into Saudi Arabia’s railcar market is a great honor and a great responsibility as we participate with the Kingdom in one of its premier economic development and engineering projects at Wa’ad al Shamal City.”
“To support our current activities in the Kingdom and secure future business opportunities there and in neighboring GCC states, we intend to hire and train Saudi employees who will create a sustained base of operations in Saudi Arabia,” said Furman. “These highly trained and qualified employees will create a vibrant and sustained operation in Saudi Arabia that supports and contributes to the Kingdom’s rail and infrastructure investments. We are extraordinarily pleased to work with an enterprise of the caliber of SAR. Through our work, we hope to help SAR meet its objectives, create more employment opportunities for Saudi engineers and technicians and assist the Kingdom with its broader goals of economic growth and diversity. We will open offices in Saudi Arabia, led by an on-site Greenbrier country manager and supported by project managers in Riyadh and at Wa’ad al Shamal City.”