Enterprising Investor
9年前
Greenbrier Reports Second Quarter Results (4/05/16)
Posts EPS of $1.41
Announces orders for 3,000 units with average sales price of $103,000
LAKE OSWEGO, Ore., April 5, 2016 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) today reported financial results for its second fiscal quarter ended February 29, 2016.
Second Quarter Highlights
• Net earnings attributable to Greenbrier for the quarter were $44.9 million, or $1.41 per diluted share, on revenue of $669.1 million.
• Adjusted EBITDA for the quarter was $108.2 million, or 16.2% of revenue.
• Net debt was reduced by over $175 million during the quarter. Net debt to LTM EBITDA down to 0.2x.
• New railcar backlog as of February 29, 2016 was 34,100 units with an estimated value of $4.0 billion (average unit sale price of $116,000), compared to 36,000 units with an estimated value of $4.1 billion (average unit sale price of $115,000) as of November 30, 2015.
• Diversified orders for 3,000 new railcars were received during the quarter, valued at nearly $310 million, or an average price of approximately $103,000 per railcar.
• New railcar deliveries totaled 4,500 units for the quarter, compared to 6,900 units for the quarter ended November 30, 2015.
• Marine backlog as of February 29, 2016 was approximately $18 million.
• Board declared a quarterly dividend of $0.20 per share payable on May 4, 2016 to shareholders of record as of April 13, 2016. This marks the seventh straight quarterly dividend.
• Repurchased 533,061 shares of common stock at a cost of $13.3 million during the quarter. Board authorization for approximately $88.0 million remains available for further share repurchases.
• Subsequent to quarter end, formed a 50/50 joint venture with Sumitomo Corporation of Americas to establish a leading axle machining facility on West Coast.
Progress on Longer Term Financial Goals
• Second quarter aggregate gross margin, excluding the syndication of a railcar portfolio acquired in our first quarter, was 20.0%, consistent with our goal of at least 20% gross margin by the second half of fiscal 2016. The syndication generated high rates of return; however, the margin percentage had a dilutive impact, resulting in aggregate gross margin of 17.9%.
• Second quarter annualized ROIC of 31.0% continues ROIC performance above 25% for the second consecutive quarter. We expect to maintain or exceed our 25% ROIC target for the second half of fiscal 2016.
William A. Furman, Chairman and CEO said, "Greenbrier delivered solid results again this quarter across all business units. Our leasing and management services business profitably syndicated the majority of the 4,000 railcar portfolio acquired in our first quarter. We continue to manage these assets and earn fee income, deriving the benefits of our strong balance sheet and integrated model. Based on our current outlook, we remain on track to achieve our fiscal 2016 guidance for deliveries, revenue and diluted EPS."
Furman added, "Greenbrier has transformed itself through the ongoing contributions of our employees and partners. Over the past five years, we have refined our business model and as industry demand moderates and customer requirements shift to different railcar types, Greenbrier is well-positioned. In recent years, we have diversified our product mix, and launched new high-value products while developing a low cost, flexible, international manufacturing base. Our aftermarket businesses in railcar repair, wheels and parts provide ongoing stability. In an extension of our aftermarket business, I am pleased to announce that we have formed GBSummit, a 50/50 joint venture with Sumitomo Corporation of Americas. When it opens in early 2017, GBSummit will be the preeminent axle machining location on the US West Coast that supports growing intermodal rail activity and will create value for our customers and partners."
Furman concluded, "Greenbrier is adapting well to the present industry and economic climate. We enjoy a diversified backlog, with non-energy related railcars representing 83% of our total backlog. Our healthy backlog and our integrated business model, unique in the industry, position us for steady performance into 2017 and beyond. Greenbrier has a strong balance sheet and we will continue to strategically invest globally in assets and projects generating high rates of return while returning capital to shareholders."
Business Outlook
Based on current business trends and production schedules for fiscal 2016, Greenbrier narrows previously provided guidance for:
• New railcar deliveries to be approximately 20,000 – 22,000 units
• Revenue to exceed $2.8 billion
• Diluted EPS in the range of $5.70 to $6.10
We expect financial results to be weighted toward the first half of the year primarily due to line changeovers, product mix changes and lower production rates on certain lines in the second half of fiscal 2016.
As noted in the "Safe Harbor" statement, there are risks to achieving this guidance. Certain orders and backlog in this release are subject to customary documentation and completion of terms.
Financial Summary
Conference Call
Greenbrier will host a teleconference to discuss its second quarter 2016 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:
•April 5, 2016
•8:00 a.m. Pacific Daylight Time
•Phone: 1-630-395-0143, Password: "Greenbrier"
•Real-time Audio Access: ("Newsroom" at http://www.gbrx.com)
Please access the site 10 minutes prior to the start time.
About Greenbrier
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 manufacturing facilities in the U.S., Mexico and Poland and marine barges at our U.S. manufacturing facility. Greenbrier sells reconditioned wheel sets and provides wheel services at locations throughout the U.S. We recondition, manufacture and sell railcar parts at various U.S. sites. Through GBW Railcar Services, LLC, a 50/50 joint venture with Watco Companies, LLC, freight cars are repaired and refurbished at over 30 locations across North America, including more than 10 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier owns a lease fleet of over 9,000 railcars and performs management services for over 250,000 railcars.
http://www.prnewswire.com/news-releases/greenbrier-reports-second-quarter-results-300246106.html
Enterprising Investor
9年前
Greenbrier Announces Order from Saudi Railway Company for 1,200 Railcars (10/07/15)
~ Tank cars will support Saudi Arabia's growing mining operations
~ Tank cars will be constructed in Europe to U.S. rail standards
~ Order is Greenbrier's market entry into a Middle East region with increasing rail projects
LAKE OSWEGO, Ore., Oct. 7, 2015 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) announced today that it received an order in its fourth quarter ended August 31, 2015 from the government-owned Saudi Railway Company (SAR) for approximately 1,200 railroad tank cars. Three types of tank cars will support 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. Track dimensions in Saudi Arabia are identical to those in the United States, and the tank cars will be built to U.S. standards on production lines certified by the Association of American Railroads. 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 underway or being planned in the region. These projects will require railroad rolling stock, repair and wheel service facilities, and specialized know-how. As a result, the aggregate railcar demand for GCC countries investing in rail is expected to be strong through the next decade.
William A. Furman, Chairman and CEO said, "Greenbrier is fully committed to its 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. 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," Furman said. "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."
About Greenbrier
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 our 4 manufacturing facilities in the U.S. and Mexico and marine barges at our U.S. manufacturing facility. Greenbrier also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. We recondition, manufacture and sell railcar parts at 4 U.S. sites. Greenbrier is a 50/50 joint venture partner with Watco Companies, LLC in GBW Railcar Services, LLC which repairs and refurbishes freight cars at 33 locations across North America, including 12 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through our operations in Poland. Greenbrier owns approximately 9,300 railcars, and performs management services for approximately 260,000 railcars.
http://www.prnewswire.com/news-releases/greenbrier-announces-order-from-saudi-railway-company-for-1200-railcars-300155425.html
Enterprising Investor
9年前
Greenbrier Expects to Exceed EPS Guidance for Fiscal Year; Announces Orders for 2,900 Railcars Valued at $470 Million (10/07/15)
~ Orders diversified, across multiple railcar types
~ Over $130 million of capital returned to shareholders
LAKE OSWEGO, Ore., Oct. 7, 2015 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) announced today that 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 August 31, 2015. These higher expectations are principally driven by increased margins in the Company's manufacturing segment, which includes lease syndications and a lower than anticipated tax rate related to geographic mix of earnings. In addition, Greenbrier disclosed it received diversified new orders in its fourth quarter ended August 31, 2015 for 2,900 railcar units valued at $470 million. Orders for the quarter include medium and large cube covered hopper cars, automobile carrying cars, boxcars and tank cars. The tank car orders include a recent award for 1,200 tank cars from Saudi Railway Company (SAR). (More details on the SAR order can be found in a separate news release issued today by the Company.)
William A. Furman, Chairman and CEO said, "Our diversified backlog of 41,300 units valued at $4.71 billion as of August 31, 2015 is near all-time highs, giving us visibility well into 2016, 2017 and beyond. 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 United States."
Furman continued, "During our fiscal year 2015, we 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."
"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."
Furman concluded, "Greenbrier 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 over $130 million of capital to shareholders through the repurchase of 2.3 million shares and payment of dividends."
Certain orders in this release are subject to customary documentation and completion of terms. A portion of the orders reflect an assumed product mix; the exact product mix will be determined in the future which may impact the dollar amount of backlog.
Greenbrier expects to release its August 31, 2015 fourth quarter and fiscal year-end financial results and hold its related quarterly conference call on Friday, October 30, 2015. Details for accessing the conference call will be issued on or about October 23, 2015.
About Greenbrier
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 our 4 manufacturing facilities in the U.S. and Mexico and marine barges at our U.S. manufacturing facility. Greenbrier also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. We recondition, manufacture and sell railcar parts at 4 U.S. sites. Greenbrier is a 50/50 joint venture partner with Watco Companies, LLC in GBW Railcar Services, LLC which repairs and refurbishes freight cars at 33 locations across North America, including 12 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through our operations in Poland. Greenbrier owns approximately 9,300 railcars, and performs management services for approximately 260,000 railcars.
http://www.prnewswire.com/news-releases/greenbrier-expects-to-exceed-eps-guidance-for-fiscal-year-announces-orders-for-2900-railcars-valued-at-470-million-300155492.html
Enterprising Investor
9年前
Why Railroads Can’t Keep Enough Boxcars in Service (6/21/15)
Aging symbol of U.S. economic might is being scrapped faster than replacements are built
By Bob Tita
A shrinking supply of boxcars—once the ubiquitous symbols of U.S. railroads and a rolling bellwether for the economy—is causing a freight-hauling crunch for industries that continue to use them.
The number of boxcars in service in North America fell by 41% in the past decade to slightly less than 125,000 last year as 101,600 cars were scrapped and only about 13,800 replacement were added. That downsizing accelerated a decadeslong shift by railroads to more specialized railcars and intermodal carriers that allow shipping containers to hop from trucks to trains.
While the transition has worked fine for many shippers, paper manufacturers, lumber producers and other companies that rely heavily on boxcars to protect and move heavy shipments say the fleet has declined so much that they’re struggling with a boxcar shortage.
Paper and building products maker Georgia-Pacific LLC. has had to periodically slow production at some paper mills, and idled one mill for a short time recently when it couldn’t obtain boxcars to move its paper. The paper industry accounted for half of the 1.25 million boxcar loads in North America last year.
“I can’t get more cars,” said Glen Courtwright, director of strategic operations for Atlanta-based Georgia-Pacific, which leases about 1,500 boxcars at any given time. “The boxcar supply is less than demand.”
Federal regulations limit boxcars to 50 years in service. More than 75,000 will reach that age over the next 15 years. Without significantly more new boxcars, paper company executives say they will have to rely more on trucks, which by some estimates cost 20% more per ton than shipping by rail. But the railroads, railcar-leasing companies and the companies that use the cars have shown little enthusiasm for big investments in new boxcars.
“There is a looming crisis,” said David Friedson, director of logistics and distribution for Memphis, Tenn.-based Evergreen Packaging Inc., which specializes in paperboard for milk and juice cartons. “The next three to five years is when we go over the cliff and boxcars just come out of service.”
Railroads attribute the difficulties with boxcars to congestion and operational problems at individual railroads rather than an overall shortage. The railroads say they are eliminating traffic bottlenecks and making other improvements that will enable faster round-trip times for railcars to better meet demand.
“A lot of the service metrics are moving in the right direction,” said Michael Rutherford, assistant vice president for industrial products at Jacksonville, Fla.-based railroad CSX Corp.
The boxcar’s origins stretch to the earliest days of railroading in the 19th century, when flatcars and open wagons were enclosed with wooden shells. Boxcars’ versatility made them indispensable for shippers and railroads, which introduced longer, steel-bodied cars last century. They remained kings of the rails until the 1960s, when businesses began shifting packaged freight to truck trailers and bulk commodities to specialized railcars.
Lower freight volumes in the wake of the 2008 recession and high prices for scrap steel hastened the boxcar’s decline-providing incentives for railcar owners to junk older boxcars—although such scrapping recently has slowed.
Today, boxcars account for only 3% of North American freight-rail traffic, but generated about $6.3 billion in revenue for the rail industry in 2014, or 8% of industry’s total revenue, according to AllTranstek LLC, a railcar management-and-consulting firm.
Railroads say they won’t stop running boxcars, but their capital spending is mostly devoted to locomotives and route expansions rather than new railcars. The railroads are backing a standard boxcar model that is 60 feet long, with maximum loaded weight of 286,000 pounds—10 feet longer and about 23,000 pounds more than many boxcars now in service. The added size means railroads could service customers with fewer cars, easing congestion.
“The larger and more versatile we can make these cars, the more [money] we’re going to make off them,” said Mike McClellan, vice president of industrial products for Virginia-based railroad Norfolk Southern Corp. , which operates about 14,000 boxcars that include 19 different configurations.
Still, railroads aren’t ordering many new cars. One big obstacle is price. New boxcars cost around $135,000. The rates that paper companies and other shippers pay for boxcar service typically include monthly equipment charges ranging between $450 and $700. That is decent revenue on a 30-year-old boxcar that has long since paid for itself, but well below the $940 to $1,100 in monthly car-hire fees needed to profitably deploy a new boxcar, said Richard Kloster, senior vice president of AllTranstek.
Those low rates effectively kept railcar leasing companies from soaking up demand for boxcars as happened when railroad-owned car fleets shrank for grain, coal and other commodities.Despite their complaints, shippers say a significant increase in boxcar-hire rates would erode the railroads’ cost advantage over trucks and cause companies to shift their freight to trucks. Some shippers are advocating for a regulatory extension of the service life for existing boxcars service to 65 years from 50. Nevertheless, higher costs for boxcars appear inevitable.
“Either the rates have to rise or the cost of a new boxcar has to come down,” said Mr. Kloster. “There’s just no consensus on what’s required to create an economically viable boxcar fleet.”
The problem perpetuates itself, because low demand prevents the top companies in North America building new boxcars— Greenbrier Cos. and National Steel Car Ltd.—from scaling up production in a way that could bring down the average price of new cars. Industry analysts estimate about 4,000 new boxcars would be needed annually for the next several years to offset those being retired because of age. Manufacturers last year made just 692. During the first quarter of this year, they delivered just 67 and received 120 orders, according to railcar trade group Railway Supply Institute.
Meanwhile, the car manufacturers say they are devoting more assembly-line capacity and engineering resources to meeting a deluge of orders for tank cars to haul crude oil. “Tank cars are taking precedence over everything,” said Tom Jackson, vice president of marketing for Greenbrier. “The boxcar is not a top priority.”
There were more than 52,000 orders outstanding for tank cars at the end of the first quarter compared with just 4,363 orders for boxcars, said Railway Supply.
Write to Bob Tita at robert.tita@wsj.com
http://www.wsj.com/articles/why-railroads-cant-keep-enough-boxcars-in-service-1434879182?mod=WSJ_article_EditorsPicks_4&cb=logged0.09975318230583468
Enterprising Investor
9年前
Regulatory boost for rail tank car makers could be short lived (6/01/15)
By Nick Carey
Oil railcar makers hoping for a lasting boost in demand from tougher North American safety standards may be in for a disappointment.
Factors including volatile oil prices and a loophole allowing shippers to keep running older cars could leave rail car makers like Trinity Industries Inc and Greenbrier Co with a capacity glut, once initial orders for cars that comply with tougher safety rules are filled, analysts and industry officials said.
Investors cheered safety standards issued in early May after a string of deadly accidents involving trains hauling crude oil.
The U.S. rules call for retiring by 2025 older tank cars that lack safety features such as thicker hulls, shields to protect the ends of each car, and pressure-relief valves. Canadian rules are similar, but not harmonized with the U.S. ones.
The order backlog for tank cars hit record levels of over 52,000 in the first quarter. At current production levels, it would take five quarters to fill that demand. KeyBanc Capital Markets analyst Steve Barger estimates the rules could push the price tag for a tank car to $160,000, up from $130,000.
The top tank car manufacturers are a mixture of publicly-traded and private companies. Trinity is the market leader, followed by Greenbrier and American Railcar Industries Inc, then privately-held National Steel Car, Union Tank Car and a number of smaller operators.
Robert Pickel, senior vice president for marketing and sales at National Steel Car, said about 140,000 tank cars could be affected by the new rules. But he described the industry's outlook as "very fluid and changing" thanks to low energy prices.
'UNPROVEN AND UNRELIABLE'
"They all have to be modified to one degree or another," he said. "The question is how many will be replaced or retrofitted."
Leasing companies will have to decide whether to buy new cars or spend up to $60,000 refurbishing 20-year-old tank cars or $10,000 on year-old models, Pickel said.
Resistance from railroads to new technology is one risk to future demand for the tank car makers.
The U.S. regulations mandate electronically controlled pneumatic brakes, which trigger all axles simultaneously rather than one at a time as in the current design. The requirement should bolster brake makers Westinghouse Air Brake Technologies Corp and Knorr Brake Company, but the prospects for a jump in orders are cloudy given major railroads' firm opposition.
The electronically controlled brakes "remain unproven and unreliable," No. 2 U.S. railroad BNSF's Chief Executive Carl Ice said in a speech Wednesday at the annual meeting of the National American Rail Shippers Association.
Another potential problem for rail car makers is a loophole in the new U.S. regulations that could allow many older cars to stay in service.
The Transportation department rules apply only to trains with "a continuous block of 20 or more tank cars loaded with a flammable liquid or 35 or more tank cars loaded with a flammable liquid dispersed through a train."
'TOO MUCH CAPACITY'
A DOT spokesman said the rules are aimed at long trains hauling crude out of the Bakken shale formation in North Dakota. But shippers could keep older cars in service to haul other flammable liquids such as ethanol, and configure shorter trains to stay below the limits in the rule.
"In my opinion, you ought to be matching the regulation with what's inside the car" rather than to train length, said Ed Hamberger, who heads industry lobby group the Association of American Railroads.
Tank car makers have ramped up production in anticipation that all tank cars would need to be replaced, but the way the rules are written could mean up to a third of tank cars or more remain in service, said Art Hatfield, an analyst at Raymond James.
"The industry has hurt itself by building too much capacity," he said.
After the new tank car regulations were released, railcar lessor GATX Corp said 13,700 of its tank cars could be affected, but added that number "could be substantially less" depending on how many travel in larger trains.
A plant being built by equipment maker Vertex Rail will lift the U.S. industry's already swollen annual production capacity by 5,000 to 45,000, said Andreas Aeppli, a principal at consulting firm Cambridge Systematics. The industry normally replaces 10,000 tank cars a year.
"With this massive capacity overhang, we could see a pricing war," Aeppli said. (Editing by Joseph White and Christian Plumb)
http://www.reuters.com/article/2015/06/01/oil-railways-idUSL1N0YN1ET20150601
Enterprising Investor
9年前
Riding the Railcars (5/30/15)
Companies that manufacture freight railroad cars have profited handsomely off of the surge in U.S. oil production over the past five years.
By Avi Salzman
Companies that manufacture freight railroad cars have profited handsomely off of the surge in U.S. oil production over the past five years. Oil drillers used railroads to ship the commodity throughout the country, and received deliveries of fracking sand by rail, too. Industry leader Trinity Industries (TRN) shipped 30,255 railcars last year, up from 4,750 in 2010.
But investors now fear that the oil-driven boom is over. Railcar orders fell 57% between the fourth quarter to the first, and industry backlog—the number of railcars that have been ordered but not yet delivered—was down 3%, after hitting record levels in the fourth quarter.
The fear is not unwarranted. The railcar business is highly cyclical, and periods of rapid activity are often followed by much slower production. Once the order backlog declines, the stocks tend to follow closely behind.
But the counterargument—that the railcar boom still has a ways to go—is persuasive. The stocks of companies that make railcars are now trading at very attractive valuations, and haven’t had such clear earnings visibility in many years. Trinity trades at 7 times forward earnings; Greenbrier (GBX) trades at 9.5 times; and American Railcar Industries (ARII) at 9.9 times.
At current production rates, which are the highest since 1999, the current backlog for the entire industry should last for seven quarters, according to Susquehanna Financial analyst Bascome Majors. Trinity’s railcar backlog at the end of last year was worth $7.2 billion, nearly equal to the company’s entire enterprise value.
Several catalysts could sustain the trends, and defy analyst expectations for slowing earnings growth.
Following a series of oil-car explosions, the U.S. and Canada have released new standards for railcars carrying highly flammable material. The changes could affect almost 155,000 railcars. Majors says that “only a fraction of those are likely to be replaced prematurely.”
But the Street may be underestimating the opportunity from tank car replacements and retrofits. Ryan Thibodeaux, president and portfolio manager at Goodwood Capital Management, says that the dropoff in new tank car orders in the first quarter had a lot to do with companies taking a wait-and-see approach before the regulations were announced. He expects much more robust orders in the second half of the year, and sustainable demand for several more years. In just the next three years, railcar owners and lessors could be forced to replace or retrofit as many as 80,000 cars, with full replacements costing about $150,000 each, he argues. He sees a revenue opportunity worth as much as $8 billion to $10 billion.
The Street has also underestimated the benefits to rail companies from a boom in chemical production, which has expanded rapidly in the past few years as companies take advantage of cheap natural gas, Thibodeaux says. “All of the new chemical and plastics capacity on the Gulf Coast will add production that will have to be shipped,” he says. “The industry backlog will remain elevated longer than analysts think.”
Goodwood owns shares in both Trinity and Greenbrier. While Trinity is cheaper, the company lost a False Claims Act lawsuit over its highway guardrails and could be liable for as much as $709 million in civil penalties. It’s also facing a Department of Justice investigation into the guardrails. Eric Marshall, a portfolio manager at Hodges Capital, which owns 2 million shares of Trinity, says his company has studied the suit extensively. “It’s muddied things up for investors, but we don’t think these guys did anything wrong,” he says. “It’s created an opportunity to buy Trinity at a multiple that’s well below its historical norm.”
For investors who want better guardrails for their investment, Greenbrier also trades below its historical range and could benefit from similar trends.
http://online.barrons.com/articles/riding-the-railcars-1432948441
Enterprising Investor
10年前
California drought: Can railroads come to the rescue? (5/01/15)
As California's four-year drought worsens and water supplies dwindle in the state, an old technology—railroads—could play a role in alleviating some water shortages.
"We certainly have that capability today," said Mike Trevino, a spokesman for privately held BNSF Railway, which operates one of the largest freight railroad networks in North America. "We carry chlorine, for example. We carry liquefied commodities."
Experts say the East Coast's plentiful water could cost cents per gallon to Californians and provide a stable, potable water supply for small communities. Obstacles include identifying a state willing to share some of its water, and securing the construction funds for key infrastructure work, including terminals that can handle water.
"We've actually spent some time on this and some energy, and there's merit; there's value for railroads to play a role in moving water," said Ed McKechnie, chairman of the American Short Line and Regional Railroad Association.
Overall, McKechnie estimates it would cost upwards of $40 million to build the terminals needed to load and unload the water. He bases that figure on the investment for a similar facility to handle oil.
McKechnie, who also serves as executive vice president for short-line railroad holding company Watco Companies, said the estimated cost of the water would depend on how much is spent on construction. "It wasn't dollars per gallon," he said. "It was in the cents range per gallon."
Bulk water delivered by truck can run under 10 cents per gallon in parts of California's drought-parched Central Valley, but some of those supplies are at risk of drying up. The truck water tanks typically hold around 2,500 gallons, while each railroad tank car carries about 29,000 gallons, and sometimes more.
"We move trains that are 110 cars long with liquefied materials," said BNSF's Trevino. "There would be costs associated with shipping it, but those can certainly be overcome."
Trevino's not aware of any municipality or private enterprise that has approached BNSF about hauling bulk quantities of water. The railroad operates in the western half of the United States, so if the water were to come from the East Coast, it would likely require an eastern railroad, such as Norfolk Southern or CSX, to assist in the delivery.
During Union Pacific's quarterly earnings conference call last week, an analyst commented on how truckers were moving water into California and asked the railroad's management about water hauling. An executive essentially shot down the idea, saying: "I do not think that's material."
The concept of water by rail has historic precedent. Railroads with water tank cars played a role during earlier U.S. droughts, in the West, the Midwest and on the East Coast. Southern Pacific Railroad, which later became part of Union Pacific, was one of the railroads that hauled water in the late 19th century to small towns in California.
Only in modern times have arid communities been able to drill wells deep enough to pump water. If wells are running dry, or water isn't potable, the rail option could help for domestic use. But the idea faces big challenges.
According to California historian Richard Orsi, "It was extremely expensive to deliver it even then, and railroads only did it for their own operations and economic stimulus plans for their regions. It seems to me, that if this importing is indeed done, it would require vast infrastructure, and finance systems that I can't see actually emerging in this fractious, politically divisive society we live in."
http://www.cnbc.com/id/102640638
Enterprising Investor
10年前
Canada toughens oil tank car standards, wants even new ones out by 2025 (3/12/15)
By Randall Palmer
(Reuters) - Canada proposed tough new oil tank car standards on Wednesday and said even improved tank cars coming into service now would have to be off the rails by 2025 at the latest.
The announcement comes after a rash of fiery derailments in Canada and the United States, including some that involved the newer, improved rail cars, and as more oil increasingly travels by rail due to higher output and a shortage of pipelines.
The proposed standards call for a hull thickness of 9/16 inch, up from the current 7/16 inch or half inch, depending on car type. It also makes thermal protection jackets and increased shields at each end of the cars mandatory.
Older DOT-111 cars are being replaced in Canada by CPC-1232 cars, but even these will have to be phased out by 2023 or 2025, depending on whether they are jacketed or not, under the proposed standards.
The proposed rules were welcomed by the Canadian Association of Petroleum Producers, which represents the country's largest oil companies. The group supports retrofitting the older model tankers and the phase in of more robust cars.
"Rail is anticipated to remain an important mode of transportation to transport Canadian crude to market," said Chelsie Klassen, a spokeswoman for the lobby group.
"Given the integrated nature of the North American rail network, there's a need to harmonize Canadian and U.S. standards on rail car standards."
Canada, which moved ahead of the United States in ruling DOT-111 cars cannot carry crude as of May 2017, signaled it was prepared to move faster than its neighbor on the latest standards.
Canada said the U.S. is following its own regulatory process and will make its own decision on this standard. Nonetheless, Canada said the new car will be called TC/DOT-117. TC stands for Transport Canada and DOT for U.S. Department of Transportation.
Transport Minister Lisa Raitt told Reuters earlier that, while the Washington and Ottawa are near agreement on a tougher standard for oil tanker cars, they might diverge on the phase-in period.
"Time is of the essence for us," she said.
Derailments in the U.S. and Canada have added to pressure to make tankers less vulnerable to rupture and explosion in the event of a mishap.
In July 2013, an oil train derailed in Lac-Megantic, Quebec, killing 47 people. Long oil trains regularly pass through larger metropolitan areas.
Although they are deemed somewhat safer than the older DOT-111s, nine CPC-1232s ruptured in a fiery Canadian National Railway Co accident in Ontario on Saturday.
Reuters previously reported that advanced braking systems - electronically controlled pneumatic or ECP brakes - could be part of the standard.
Transport Canada said on Wednesday it planned to include braking requirements, including ECP, in separate regulations rather than the tank car standards.
The U.S. rail industry has been pushing the White House to drop the braking requirements, arguing that U.S. Transportation Department estimates overstate the benefits and understate the costs of such systems.
A senior executive from Canadian Pacific Railway Ltd was part of a delegation of more than a dozen rail executives who attended a meeting with the White House Office of Management and Budget on March 6, where the industry urged the Obama administration to scrap the proposed requirements for ECP brakes.
"CP welcomes any progress towards the full implementation of safer tank car standards," Martin Cej, a spokesman for the railway, said in an email, though he declined comment on the possible braking standard.
Canadian National spokesman Mark Hallman said the rules calling for thicker tank walls were a "clear advance in tank car safety."
The Railway Association of Canada, representing most of Canada's railway companies, welcomed the new tank car standard, saying it had wanted something more robust than CPC-1232s.
http://www.reuters.com/article/2015/03/11/canada-usa-railways-idUSL1N0WD1KQ20150311
Enterprising Investor
10年前
Greenbrier Reports Record Results for Fourth Quarter and Fiscal Year; Backlog Grows to Record 31,500 units
~ Posts Q4 EPS of $1.03, before gain on contribution to GBW
~~ Grows backlog by 5,100 units in quarter; receives orders for an additional 11,400 units after quarter end
~~ Issues 2015 earnings guidance of $4.25 to $4.55 per share
~~ Sets new goals of at least 20% aggregate gross margin and 25% ROIC by second half of fiscal 2016
LAKE OSWEGO, Ore., Oct. 30, 2014 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) today reported financial results for its fourth fiscal quarter and full year ended August 31, 2014.
Fourth Quarter Highlights
•Net earnings for the quarter were $33.7 million, or $1.03 per diluted share, excluding a non-cash gain of $13.6 million (net of tax) on contribution of our repair operations to GBW, on record revenue of $618.1 million.
•Net earnings attributable to Greenbrier for the quarter, which includes the gain on contribution to GBW, were $47.4 million, or $1.43 per diluted share.
•Record adjusted EBITDA for the quarter was $80.8 million, or 13.1% of revenue.
•Record railcar backlog as of August 31, 2014 was 31,500 units with an estimated value of $3.33 billion (average unit sale price of $106,000), compared to 26,400 units with an estimated value of $2.75 billion (average unit sale price of $104,000) as of May 31, 2014.
•Orders for 10,400 new railcars valued at $1.06 billion received during the quarter. After quarter end, Greenbrier received orders for an additional 11,400 units valued at nearly $1 billion.
•New railcar deliveries totaled 4,800 units for the quarter, compared to 4,300 units for the quarter ended May 31, 2014.
•Marine backlog as of August 31, 2014 totaled approximately $112 million.
•Formed GBW Railcar Services, LLC (GBW), a 50/50 joint venture with Watco Companies, LLC (Watco) focused on retrofitting, refurbishing and repairing railcars through a network of 38 shops across North America, including 14 sites certified for tank car retrofitting and repair. Greenbrier accounts for its interest in GBW under the equity method of accounting.
•Board declares a quarterly dividend of $0.15 per share payable on December 3, 2014 to shareholders of record as of November 12, 2014.
•To date, repurchased 1,017,562 shares of common stock completing the $50 million share repurchase program announced October 31, 2013.
•New $50 million share repurchase program authorized.
Fiscal Year 2014 Highlights
•Record net earnings, excluding gain on contribution to GBW and restructuring charges, were $99.3 million, or $3.07 per diluted share, on revenue of $2.2 billion.
•Adjusted EBITDA was a record $253.8 million or 11.5% of revenue.
•Achieved ROIC of 16.9% excluding gain on contribution to GBW and restructuring charges.
•New railcar deliveries totaled 16,200 units.
•Orders totaled 34,300 units valued at $3.42 billion across a
broad range of railcar types.
•Cash generated from operating activities was $136 million.
Strategic Initiatives
•Fourth quarter aggregate gross margin reached 17.2%, compared to 16.3% in the third quarter, surpassing our stated goal of a minimum 13.5% by the fourth quarter of fiscal 2014.
•Manufacturing gross margin reached a record 17.9% in the fourth quarter, driven by product mix, pricing, production efficiencies, and leasing strategy.
•Successfully met $100 million capital efficiency goal, driven by asset-light leasing model. Net debt has decreased nearly $149 million since February 2013 when goal was set.
•New goals set of at least 20% aggregate gross margin and 25% ROIC by the second half of fiscal 2016.
William A. Furman, Chairman and CEO, said, "We leveraged our integrated business model to achieve our best annual performance yet and are well positioned to continue to grow in 2015 and beyond. We are obtaining the highest level of new orders in Greenbrier's history. They are broad-based across many railcar types including tank cars, grain and sand covered hoppers, automotive, intermodal, boxcars, gondolas, and plastic pellet cars, among others. We also achieved record production levels and deliveries, all while improving operating efficiencies and enhancing our footprint in our manufacturing facilities. Our leasing business continues to grow and has been completely transformed into an asset-light model, as we syndicate increased volumes of leased railcars to multiple investors who have access to low-cost capital and who value Greenbrier's products and services. Our owned lease fleet has contracted by $85 million and railcars under our management have increased by 13,000 units since we announced this strategic initiative in April 2013. Our combined actions produced manufacturing gross margins in the fourth quarter of 17.9%, a nearly six percentage point increase from last year. With a diverse backlog of 31,500 units, of which less than 40% are tank cars, we have good visibility stretching into our fiscal 2016."
"We have refocused our Wheels, Refurbishment & Parts segment. Our 22 railcar repair shops and Watco's 16 shops have been moved into GBW, where the scale of a 38-shop network and operational excellence will yield long-lasting competitive advantages. Demand for shop capacity and, in particular, tank car shop capacity to address the need for safe rail transport solutions is robust. The GBW network includes 14 shops specializing in tank car repair. Our wheels and parts business at a combined 13 locations is well positioned to produce growth, as the aftermarket for railcar wheels, parts and related services rises along with an expanding North American railcar fleet."
"Looking ahead, we will continue our balanced approach to capital allocation among (i) investments needed to drive efficiency and margin improvement through our organization, (ii) growth capital; and, (iii) returning capital to shareholders through dividends and share repurchases. We will accelerate capital investments in 2015, which will drive operational efficiencies and complete previously announced capacity projects at our facilities in Mexico. These projects include the transitioning from one leased facility in Sahagun, Mexico to an owned facility in Tlaxcala, Mexico, a doubling of our tank car capacity with the flexibility to also build other railcar types on these lines and enhanced vertical integration."
"We continue to pioneer efforts to improve safety in the rail industry with our Tank Car of the Future design and investments in capacity at GBW to retrofit older legacy tank cars. Last month we filed comments with the U.S. Department of Transportation (USDOT), which we expect will issue a final rule on tank car standards by year end. We are confident that Washington will recognize Greenbrier's Tank Car of the Future, as described in the USDOT's proposed rule, as the best design for safer transportation of crude, ethanol and other flammables in North America and that GBW is well positioned to retrofit older legacy tank cars at an accelerated pace. Swift and appropriate action will help reinforce America's longstanding priority to protect the public and preserve the natural environment, while taking care not to impede the economic prosperity associated with the energy renaissance in North America."
"I am proud of our employees, our shared achievements together and our successful completion of the strategic initiatives we announced 18 months ago. I'm confident in the balanced and integrated approach our leaders are taking in each segment of our business in 2015, and that this approach will enhance shareholder value over the long term," continued Furman.
Business Outlook
Furman concluded, "We ended August with over $505 million of liquidity from cash balances and available borrowings on revolving credit facilities. With a strong backlog, good industry fundamentals and positive outlook, we are investing in capital projects with high returns where we will quickly recoup our investments. We are also pursuing growth opportunities in areas core to our business that will diversify our revenue base throughout the cycle. The future looks bright for Greenbrier. We remain committed to operational excellence in each of our businesses and enhancing the long-term trajectory of key metrics, such as gross margins, EBITDA and ROIC."
Based on current business trends and industry forecasts in fiscal 2015, Greenbrier believes:
•Deliveries in FY15 will exceed 20,000 units
•Revenue will exceed $2.5 billion, which excludes revenue from GBW as it is accounted for under the equity method of accounting
•Diluted EPS will be in the range of $4.25 to $4.55
Similar to previous years, financial results in the second half of the year are expected to be stronger than the first half. Also, while gross margins are expected to increase overall, management does not believe its track will be linear.
In addition, the Company has established two new financial goals:
•Aggregate gross margin of at least 20% by the second half of fiscal 2016
•ROIC of at least 25% by the second half of fiscal 2016
[tables removed]
Conference Call
Greenbrier will host a teleconference to discuss its fourth quarter 2014 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:
•October 30, 2014
•8:00 a.m. Pacific Daylight Time
•Phone: 1-630-395-0143, Password: "Greenbrier"
•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 webcast replay will be available for 30 days. Telephone replay will be available through November 15, 2014, at 1-402-280-9971.
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. We build new railroad freight cars in our 4 manufacturing facilities in the U.S. and Mexico and marine barges at our U.S. manufacturing facility. Greenbrier also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. We recondition, manufacture and sell railcar parts at 4 U.S. sites. Greenbrier is a 50/50 joint venture partner with Watco Companies, LLC in GBW Railcar Services, LLC which repairs and refurbishes freight cars at 38 locations across North America, including 14 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through our operations in Poland. Greenbrier owns approximately 8,500 railcars, and performs management services for approximately 238,000 railcars.
http://www.prnewswire.com/news-releases/greenbrier-reports-record-results-for-fourth-quarter-and-fiscal-year-backlog-grows-to-record-31500-units-280894742.html
Enterprising Investor
10年前
Greenbrier Announces Orders for 15,000 Railcars Valued at $1.37 Billion; New Marine Barge Order (9/17/14)
~~ Orders received since September 1, 2013 surpass $3.72 billion
~~ Broad orders across multiple railcar types
~~ Marine backlog extends to 2016
LAKE OSWEGO, Ore., Sept. 17, 2014 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) announced today that it received new orders in its fourth quarter ended August 31, 2014 and through the date of this release for 15,000 railcar units valued at $1.37 billion. Orders announced today comprise a broad range of railcar types including tank cars, small cube covered hopper cars for sand and cement service, medium cube covered hopper cars for grain service, automotive carrying cars, and a recent award for 3,100 double-stack intermodal units. In addition, Greenbrier received a recent deck cargo barge order which brings total marine backlog to $112 million and extends Greenbrier's marine backlog to 2016. (The orders announced today include orders received in June 2014 for 2,700 railcar units valued at approximately $320 million, which Greenbrier previously disclosed on July 2, 2014.)
Since September 1, 2013 through the date of this release, Greenbrier has received orders for almost 39,000 railcars in North America and Europe valued at $3.72 billion. The average sales price of $95,000 reflects the diversity of railcar types ordered.
Record Level of Order Activity
William A. Furman, Chairman and CEO said, "These new orders demonstrate that our strategy to diversify our product mix, add efficient capacity in lower-cost facilities, and drive considerably more volume through our leasing and asset management model is paying off. Our comprehensive new railcar product portfolio of virtually all railcar types includes innovative new products such as our Multi-Max™ automotive carrying railcars, large cube covered hopper cars for transport of plastic pellets and other commodities, pressurized tank cars, and our next generation Tank Car of the Future. Our flexible manufacturing footprint and capital programs will allow us to double our tank car manufacturing capacity to over 7,000 tank cars per year, while preserving the capability to nimbly produce other railcar types. Our leasing business continues to emphasize the syndication of increased volumes of leased railcars to investors who have access to low-cost capital and who value Greenbrier's full range of products and services over the life of the railcar. At the same time, we have reduced our longer-term ownership in leased railcars, liberating nearly $100 million in capital and improving our ROIC."
Furman continued, "We are particularly pleased by demand and strength in the intermodal market and Greenbrier's award of 3,100 double stack units, reflecting 100% market share of orders recently placed. This award, along with our marine backlog, stabilizes production at our flagship Gunderson facility in Portland, Oregon."
Furman added, "Strong automotive, agricultural and energy markets, and a recovering intermodal market are generating robust and broadening demand. In particular, the importance of the energy renaissance in North America cannot be understated. It is rapidly reshaping our industries and strengthening the American economy. Greenbrier appreciates its opportunity to lead as a provider of safe, reliable and high quality transportation equipment that moves energy products to market over both rail and marine routes."
"We anticipate that the U.S. Department of Transportation will issue its final rule on the safe movement of flammable liquids by rail before the end of 2014. A final rule will provide the clarity the industry needs to make investments that ensure that crude oil and other flammable commodities are classified properly and transported in tank cars that are safer at any speed. We continue to advocate for safety and champion a new design standard which includes a 9/16-inch thick steel shell, a feature of our Tank Car of the Future. Other safety features of our car include thicker steel, more robust top and bottom outlet protection and jacketed shells with ceramic insulation. We are gratified to have received awards for 3,500 Tank Cars of the Future. These cars are eight times safer than legacy DOT-111 cars most widely used in oil and ethanol service today and two times safer than the current state-of-the-art CPC 1232 tank cars, as measured by Conditional Probability of Release (CPR). Greenbrier is also prepared to meet the need for tank car retrofits through GBW Railcar Services, our newly launched joint venture with Watco Companies for railcar repair and retrofitting. With 38 shops, 14 of which can perform tank car repairs, GBW has the largest independent shop network in North America," concluded Furman.
Intermodal car loadings continue to increase and are up nearly 6% compared to the same period in 2013. Shipments of petroleum and petroleum products, including crude by rail, as well as shipments of sand used in hydraulic fracturing have each grown year to date by about 12%, continuing to drive demand for tank cars and small cube covered hoppers. Transport of agricultural products is also expanding rapidly as year-over-year railcar loadings for grain are up about 15%, leading to nearly 100% utilization of the existing North American grain railcar fleet.
New Orders Summary
Period Orders Received
Units
June 2014: 2,700
July & August 2014: 7,600
Total 4th Quarter: 10,300
Subsequent to August 31, 2014: 4,700
Total since June 1, 2014: 15,000
Fiscal Year 2014: 34,300
Subsequent to August 31, 2014: 4,700
Total since September 1, 2013: 39,000
Certain orders in this release are subject to customary documentation and completion of terms.
About Greenbrier
Greenbrier, (www.gbrx.com), headquartered in Lake Oswego, Oregon, is a leading supplier of transportation equipment and services to the railroad industry. We build new railroad freight cars in our 4 manufacturing facilities in the U.S. and Mexico and marine barges at our U.S. manufacturing facility. Greenbrier also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. We recondition, manufacture and sell railcar parts at 4 U.S. sites. Greenbrier is a 50/50 joint venture partner with Watco Companies, LLC in GBW Railcar Services, LLC which repairs and refurbishes freight cars at 38 locations across North America, including 14 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through our operations in Poland. Greenbrier owns approximately 8,600 railcars, and performs management services for approximately 238,000 railcars.
http://www.prnewswire.com/news-releases/greenbrier-announces-orders-for-15000-railcars-valued-at-137-billion-new-marine-barge-order-275410941.html
Enterprising Investor
10年前
Proposal Threatens to Aggravate Shortage of Railcars to Move Oil (8/12/14)
Thousands of Tank Cars Are Likely to Be Scrapped or Redeployed Under Federal Safety Move
Proposed federal regulations on hauling flammable liquids threaten to aggravate a shortage of railcars for transporting oil.
The proposal, which likely will mean scrapping or redeploying thousands of tank cars, could make it more expensive to ship oil and other fuels as crude-by-rail shipments have soared with U.S. oil production. The plan could also extend the wait times for new cars
Implementing new standards will hinge on the capacity of the railcar industry to upgrade existing cars or replace entire fleets with new cars. Demand for replacement cars is likely to collide with the crude-oil industry's growing need for additional cars. The backlog of orders for new tank cars was 52,589 at the end of the second quarter, according to the Railway Supply Institute.
With production capacity for new tank cars about 35,000 cars a year, industry analysts say the railcar industry could have difficulty expanding production fast enough to accommodate the short time frames proposed by regulators for ushering out older tank cars for transporting flammable liquids. At current production rates, cars ordered today couldn't be delivered until 2016.
Meanwhile, the capacity for extensive retrofitting is even murkier. Most railcar repair shops in the U.S. are regional operations intended for small-scale work. Car maker Trinity Industries Inc. is expanding a maintenance shop in Arkansas to retrofit tank cars on a large scale.
Tank cars have provided quick, flexible transportation of oil extracted from shale rock through hydraulic fracturing in locations far from pipelines. The sharp increase in rail shipment of crude has contributed to transportation bottlenecks for other cargo, such as grain and automobiles.
Many of the cars that would be most at risk for being scrapped under proposed regulations are owned by railcar-leasing companies or ethanol producers. Almost all the nearly 30,000 tank cars now used to haul ethanol would have to be extensively retrofitted or replaced. The government estimates that the retrofits alone would cost the industry about $1 billion.
But Bob Dinneen, president of the Renewable Fuels Association, which represents ethanol producers, figures the cost would be significantly higher. "We want to do whatever we can to improve safety, but as I look at this proposal, [the government has] been disproportionately focused on the tank car," Mr. Dinneen said. He has said that regulations should be crafted for specific flammable commodities based on the frequency of fires and explosions that occur during train derailments.
Industry groups and car owners have 60 days to comment on the regulations, which were proposed by the U.S. Transportation Department last month.
Regulators proposed a 2018 deadline for removing all the older, general-purpose tank cars, known as the DOT-111s, now used by the ethanol industry. DOT-111s have been involved in several crashes in recent years, including the explosion of a crude-oil train in Lac-Mégantic, Quebec, last year that killed 47 people.
Even 20,000 newer tank cars built to a higher standard than the DOT-111 could be subject to retrofits under some of the regulatory options being considered. Most of those newer cars have been in service for less than three years and are used by the oil industry.
Car owners say that retrofitting an older tank car could cost as much as $60,000, while the government estimates the cost at about $30,000 a car. Even if the actual cost is in between, tank-car owners say they are still concerned about earning sufficient returns from older, retrofitted cars. Tank cars can remain in service for 40 years.
"Given the great expense of this retrofit, and the older age profile of the our [tank cars], in most cases we're more likely to try to redeploy the cars into other types of service or send them to scrap," Brian Kenney, chief executive of car-leasing company GATX Corp., told analysts last month.
Chicago-based GATX has about 13,000 tank cars transporting flammable liquids, about 4,900 of which carry crude oil and ethanol. The remaining 8,100 tank cars haul other types of flammables generally considered less dangerous than oil from North Dakota's Bakken Shale, which has been identified as particularly volatile.
U.S. freight railroads shipped about 330,000 carloads of ethanol and 408,000 carloads of crude oil last year, according to the Association of American Railroads and the Renewable Fuels Association.
Regulators are soliciting feedback on options for upgrading tank cars. Two options would require tank cars hauling flammable liquids to have tanks with steel that is 9/16-inch thick, which is one-eighth inch thicker than on most cars now in service for flammable liquids. The tanks proposed by the government also would feature steel plates on both ends, better valves and heat-resistant exterior insulation that would be covered with metal. The government projects that the sturdier design would make tank cars 17% to 21% more effective against punctures in a crash than the DOT-111.
In lieu of replacing more than 90,000 tank cars that couldn't meet the tank-wall requirement, the government is offering car owners the option of adding an outer jacket made of steel that is one-eighth-inch thick. But the jacket and other requirements would increase weight. The steel jacket alone would lower a car's 30,000-gallon capacity by about 800 gallons, forcing shippers to deploy more cars, according to rail-industry analysts.
http://online.wsj.com/articles/thousands-of-tank-cars-likely-to-be-scrapped-under-new-rules-1407859765
56Chevy
10年前
Greenbrier Announces New Railcar Awards Including First For Tank Car Of The Future
LAKE OSWEGO, Ore., June 19, 2014 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) announced its first awards from multiple customers for construction of 3,500 units of its new Tank Car of the Future. These awards, along with other awards for 4,200 railcars across a full range of railcar types, bring aggregate awards to 7,700 railcars valued at more than $960 million since Greenbrier's press release dated May 21, 2014. In addition, the Company disclosed there is strong interest from multiple customers in the retrofit of pre-2011 built tank cars currently operating in flammable commodity service. Greenbrier expects that GBW Railcar Services, its recently announced repair, refurbishment and maintenance joint venture with Watco Companies, will benefit from substantial maintenance and retrofit awards when the joint venture begins operation later this year.
William Furman, Greenbrier Chairman and CEO, said, "We are inspired by the commitment to safety demonstrated by our railroad, leasing company and shipper clients. Long-awaited regulatory action in Washington, D.C. will soon reinforce America's longstanding priority to protect the public and preserve the natural environment. Current tank car rulemaking must take caution not to squelch or impede the economic miracle associated with the energy renaissance in North America. Development of unconventional energy, including oil and gas from shale formations, has been responsible for up to a 1.5% increase in GDP. This has led to the creation of more than 1.5 million jobs, with steady employment gains. Millions of additional jobs are predicted in the foreseeable future as production of downstream energy products such as plastics and chemicals gains strength throughout America in virtually all states. Meanwhile, manufacturing in America will continue to benefit from lower production costs driven by declining energy prices."
Greenbrier's Tank Car of the Future is designed for safer transportation of crude, ethanol and other flammables in North America as well as use for other hazardous traffic. The car has advanced safety features which include thicker steel, more robust top and bottom outlet protection and jacketed shells with ceramic insulation. These new design features combine to inhibit discharge of contents during a derailment, to reduce penetration of the tank shell and to slow "pool fires" that can result when hazardous contents of a tank car escape in a breach and are ignited. Fire that does not spread as rapidly allows more time for emergency responders to limit the potential damage to communities and the environment that can result after a tank car derailment. The new design will also be equal in capacity volume to the legacy DOT-111 tank car with a loading volume of 30,000 gallons.
Conditional Probability of Release (CPR) measures the likelihood of tank car spills in the event of a derailment at different speeds and by different car types. With the Tank Car of the Future design, at a derailment speed of 50 mph, CPR improves to just over 5% from 45% in bare DOT-111 legacy tank cars. This improves CPR by more than 8 times from the least-protected tank car to the most-protected tank car, the Tank Car of the Future. Also when measured by CPR, the Tank Car of the Future is twice as safe as the current state-of-the-art tank car for transporting hazardous materials—a fully jacketed and insulated CPC-1232.
http://www.thestreet.com/story/12749759/1/greenbrier-announces-new-railcar-awards-including-first-for-tank-car-of-the-future.html
56Chevy
10年前
Greenbrier, Watco Form Railcar-Repair Venture
GBW Railcar Services Aims to Meet Anticipated Demand for Retrofits for Tank Cars
June 4, 2014 12:08 a.m. ET
Railcar builder Greenbrier GBX +11.96% Cos. and short-line railroad operator Watco Cos. formed a railcar-repair company in anticipation of surging demand for retrofits to strengthen tank cars that carry crude oil and other flammable liquids.
The 50-50 joint venture, known as GBW Railcar Services LLC, is the first big move in the rail industry to increase capacity to retrofit tens of thousands of tank cars to meet tougher standards being formulated by U.S and Canadian regulators.
GBW would begin operations during the third quarter with a workforce of about 2,100, and have 38 repair shops in the U.S. and Canada, including 14 devoted to tank cars. Annual revenue is projected at $325 million.
"We're getting in front of a general need for tank car fixes," said Greenbrier Chief Executive William Furman. "This is right in the sweet spot of where we think the industry need is."
Regulators are considering expedited phase-ins for making cars that carry crude oil and ethanol more puncture-resistant in event of derailments. Greenbrier estimates about 68,200 general-purpose tank cars, known as DOT-111s, that carry crude oil and ethanol would need significant modifications, which would cost an estimated $15,000 to $80,000 a car. An additional 12,000 cars built after 2011 have sturdier tanks and components and would likely require less extensive work.
Canadian regulators have proposed that all of the older DOT-111s carrying flammable liquids be retrofitted or removed from service within three years. U.S. transportation officials are expected to adopt a similar timetable.
A series of derailments involving tank cars over the past year, punctuated by a catastrophic accident in Quebec last July that killed 47 people, have undermined confidence in the rail industry's ability to safely haul flammable liquids. Shipments are also surging from remote areas of North America not served by pipelines.
GBW will be headed by veteran executive Jim Cowan, currently senior vice president of operations for Greenbrier and former CEO of railcar manufacturer American Railcar Industries Inc. ARII +3.09% in St. Charles, Mo.
GBW will be able to perform maintenance and repairs on a full spectrum of railcar types, giving Greenbrier and Watco a large business platform in a repair-shop industry with few nationwide players.
Railroads hauled about 400,000 carloads of crude oil last year, compared with 4,700 in 2006. As tank cars haul more crude oil they rack up high mileage, requiring more frequent maintenance and repairs.
"We believe the [maintenance] business will grow tremendously," said Watco CEO Rick Webb. "We see the opportunity to be an industry leader."
Greenbrier manufactures tank cars and is the second-largest builder of railcars behind Texas-based Trinity Industries Inc. TRN +2.54% The Lake Oswego, Ore., company would be major beneficiary of tougher standards for tank cars, since some car owners would opt to purchase new cars, rather than invest in retrofits.
Mr. Furman earlier this year proposed a set of stopgap retrofits for older tank cars including installing sturdier valves and steel plates on the ends of cars to make them less susceptible to crumpling and leaking during collisions. GBW would be able to perform this work.
Watco, headquartered in Pittsburg, Kan., operates more than two-dozen shops for servicing railcars and locomotives. The company, which Mr. Webb's father started 30 years ago, operates 30 short-line railroads with 4,400 miles of track that connect railroad-dependent shippers with major railroads. The company also operates terminals where oil is transferred. Pipeline and energy storage company Kinder Morgan Energy Partners KMP -0.04% LP made a combined $150 million equity investment in Watco in 2010 and 2011.
http://online.wsj.com/articles/greenbrier-watco-form-new-railcar-repair-venture-1401852404
*Note that this JV will create 2,100 new and good paying AMERICAN jobs baby!! Right On!...Love it!! This is how America needs to heal its economic woes...not Gov't handouts and programs.
Marker:
Greenbrier Companies (GBX)
$64.61 up 6.9 (11.96%)
Volume: 3,303,080
56Chevy
10年前
Greenbrier Reports Record Third Quarter Revenue, Net Earnings, EPS, Adjusted EBITDA and Backlog
LAKE OSWEGO, Ore., July 2, 2014 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) today reported financial results for its third fiscal quarter ended May 31, 2014.
Third Quarter Highlights
•Net earnings attributable to Greenbrier for the quarter of $33.6 million, or $1.03 per diluted share, were over double the second quarter EPS of $0.50.
•Adjusted EBITDA for the quarter was $78.0 million, or 13.1% of revenue.
•Railcar backlog as of May 31, 2014 was 26,400 units with an estimated value of $2.75 billion (average unit sale price of $104,000), compared to 15,200 units with an estimated value of $1.54 billion (average unit sale price of $101,000) as of February 28, 2014.
•New railcar deliveries totaled 4,300 units for the quarter, compared to 3,400 units for the quarter ended February 28, 2014.
•Orders for 15,600 new railcars valued at $1.65 billion received during the quarter. After quarter end, Greenbrier received orders for an additional 2,700 units valued at approximately $320 million.
•Marine backlog as of May 31, 2014 totaled approximately $110 million.
•Board declares a quarterly dividend of $0.15 per share payable on August 5, 2014 to shareholders of record as of July 15, 2014.
•Repurchased 352,000 shares of common stock at a cost of $16.0 million during the quarter. To date, repurchased 641,327 shares of common stock at a cost of $26.3 million under a $50 million share repurchase program.
Progress on Strategic Initiatives
•Third quarter aggregate gross margin reached 16.3%, compared to 11.5% in the second quarter, and ahead of our stated goal of a minimum 13.5% by the fourth quarter of fiscal 2014.
•Manufacturing gross margin reached a record 17.3% in the quarter, driven by product mix, pricing and production efficiencies.
•Successfully met $100 million capital efficiency goal. Net debt has decreased nearly $160 million since February 2013 when goal was set. Management remains intensely focused on capital efficiency and ROIC.
•Greenbrier continues leadership role in tank car safety. Receives awards for 3,500 units of Tank Car of the Future; announces repair joint venture with Watco, GBW Railcar Services.
William A. Furman, Chairman and CEO, said, "This quarter represents a solid and sustainable performance level, and provides a good base for further growth and diversification. All three of our business segments improved their financial performance, with manufacturing and leasing continuing to lead the way. I am very proud of our employees for their achievements and execution against our strategic plan."
"We have diversified our product mix, added efficient capacity in lower cost facilities, and driven considerably more product through our leasing model, all in line with our announced strategy. This strategy is paying off and we expect growth from all areas in our integrated business model in the quarters ahead. Most recently, our planned repair joint venture with Watco, named GBW Railcar Services, will increase our scale in tank car repair, allowing us to participate in a meaningful way in the growing tank car repair business, with demand driven by retrofit, lining and maintenance needs from both the DOT-111 legacy and CPC-1232 fleets, as well as rapid growth in North American tank car traffic," Furman continued.
"In addition to tank car retrofits, we are also pioneering efforts to improve safety in the rail industry with our Tank Car of the Future design. Safety design features include thicker steel, more robust top and bottom outlet protections, and jacketed shells with ceramic insulation, along with full height head shields. Recently, Greenbrier received awards for 3,500 units of its Tank Car of the Future. These cars are eight times safer than legacy DOT-111 cars most widely used in oil and ethanol service today, and two times safer than the current state-of-the-art CPC 1232 tank cars, as measured by Conditional Probability of Release (CPR). We continue to call on regulators to issue new rules establishing safer tank car standards independent of rulemaking on railroad speed restrictions. Our government needs to act on this issue now. This will allow railroads to transport hazardous materials safer at any speed," Furman added.
[....]
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Greenbrier Companies (GBX)
$64.61 up 6.9 (11.96%)
Volume: 3,302,405
MWM
16年前
Greenbrier Stays In The Green
Ruthie Ackerman, 11.06.08, 9:29 PM ET
The Greenbrier Cos.
Railroads haven’t been buying new railcars due to the economic slowdown, but they’re still repairing old ones. That’s been a blessing for railcar maker Greenbrier, which announced fourth-quarter results on Thursday that beat expectations on robust growth in its refurbishment and parts unit, despite weakness in its manufacturing business.
Greenbrier shares shot up 10.0%, or 80 cents, to $8.82. Its shares have slumped 60.4% since the beginning of the year. In February, Carl Icahn acquired a 9.5% stake in the company because he believed its shares were undervalued. (See “ Icahn Grabs Greenbrier.”) The billionaire investor has said he's interested in a possible merger with St. Louis-based American Railcar Industries (nasdaq: ARII - news - people ).
Greenbrier’s earnings were hurt by weakness in new railcar deliveries, which declined to 1,800 units, down from 2,400 units in the prior year. Oversupply in the railcar market and higher steel prices have manufacturers buckling. (See " Boxcar Blues.”)
“In the near term, the turbulent economy and fragile credit markets continue to put pressure on new railcar demand and we continue to make changes to our new railcar production plans and rates,” Chief Executive William Furman said.
Furthermore, the company said it may not make a profit on certain backlog orders since rising raw material costs have made manufacturing so expensive.(See “ Greenbrier Dinged But Not Derailed.”)
Fourth-quarter net income was $7.4 million, or 45 cents a share, down from $13.2 million, or 82 cents a share, in the prior year, but well above analysts’ consensus forecast of 39 cents a share.
Revenue rose to $362 million, beating analysts’ expectations.
Sales at its refurbishment division, which provides wheel, axle and bearing services, and reconditions and replaces railcar parts, jumped 36.0% to $158.6 million.
The company said its revenue growth was helped by its recent acquisitions of American Allied Railway Equipment and Roller Bearings, which added about $32.0 million. Sales growth was also boosted by higher wheel volumes and scrap prices.
Railcar backlog as of Aug. 31 was 16,200 units, compared to 17,500 units in the year-ago period.
Furman said he’s optimistic about the long-term fundamentals of the railroad industry, although he expects railcar manufacturing will remain difficult in the near-term. “The economy will eventually recover and we believe demand for new freight cars will return to more normalized levels,” he said.
Mark Rittenbaum, Greenbrier's executive vice president and chief financial officer, said, “Our financial focus is on remaining liquid, paying down debt whenever possible, and prudently employing investment capital.”
Rittenbaum said that based on the company’s financial covenants as of Aug. 31, it has roughly $175.0 million in additional borrowing capacity. “As we enter a challenging fiscal 2009, we will have the benefit of a new railcar backlog which includes approximately 3,900 railcars to be produced in 2009, a fully booked marine barge backlog, a full year of results from our American Allied Railway Equipment and Roller Bearings acquisitions, and a lease fleet which is performing well,” he said, all of which is expected to help the company weather the downturn in new railcars in 2009.
Meanwhile, rival American Railcar Industries announced strong third-quarter results on Wednesday, due to an increase in the number of railcars sold. Its backlog also fell, sliding to 5,956 railcars, as of Sept 30.
American Railcar shares shot up 3.0%, or 29 cents, to $10.12 at the close on Thursday.
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