While railcar builders are receiving payments now from deliveries they made in the third quarter, a shortage of orders means they won't have as many of those payments to collect in the future.
New orders came in for 7,696 units, said the Railway Supply Institute, down from 8,121 a year earlier and 12,142 in this year's second quarter. That marks a new low since the industry ordered fewer than 7,000 cars in second-quarter 2003.
Deliveries, however, increased to 16,445 in the latest period, RSI said, from 15,032 a year ago and 14,802 in the second quarter. The gain came by drawing down the unfilled orders backlog to 52,154 as of Oct. 1 from 61,573 on July 1.
Major railcar manufacturers also showed higher net receivables in their latest financial reports as they wait for customers to pay bills, and reported lower amounts of cash on hand than last year.
Two of those firms still reported higher profits, but all the suppliers saw stresses in the marketplace even as railroads themselves have resisted the downturn.
The largest of the manufacturers, Trinity Industries, managed a 3.6 percent net profit gain, to $90.1 million, as quarterly sales from all business lines rose 14.5 percent to $1.15 billion.
Yet although Trinity's single largest unit, its railcar building operations, enjoyed increased revenue, that segment's profit dropped sharply to $57 million from about $97 million in the 2007 quarter.
Instead, Trinity depended on profits from its wind energy towers and barges, plus railcar leasing, to lift the bottom line. Timothy R. Wallace, the chairman, president and CEO, credited "the diversity of our portfolio of businesses" plus productivity improvement for net income rise.
Trinity alone accounted for half the industry shipments at 8,560 in the third quarter, which was up 21 percent from a year earlier. But Trinity said its backlog shrank to 24,130 cars on order worth $2 billion, from 31,300 worth $2.6 billion at that point in 2007.
Many rail freight customers have been hit with weak cargo demand much of this year, though until recently traffic was still rising for some categories.
However, demand has fallen further this fall, first as storms battered rail traffic in September and then October rail data showed a new economic crunch kicking in.
Trinity said it would not even make predictions for its 2009 earnings, given "the current uncertainty and volatility of the U.S. economy." But research firm FTR Associates is warning railcar deliveries will be down sharply next year (see related story, page 27).
Another large producer, Greenbrier Companies, saw profits fall 44 percent to $7.4 million in its Aug. 31 quarter, as revenue rose 3 percent to $362 million.
Its deliveries in that period were just 1,800 units, down from 2,400 a year earlier. The end-of-quarter backlog was 16,200 cars valued at $1.44 billion; a year earlier it had 17,500 worth $1.55 billion.
The company's financial performance was helped by barge sales, and by railcar refurbishment and parts. Over the last four quarter those segments, plus leasing and other services, brought in 53 percent of total revenue, up from 44 percent the previous year and just 26 percent two years ago.
William A. Furman, Greenbrier's president and CEO, said a strategy to diversify away from railcar building and get more sales from "less cyclical businesses" is paying off.
However, "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 railcar production plans and rates."
American Railcar Industries saw revenue and profit soar more than 50 percent, for net income of $7.4 million in the September quarter on revenue of $217 million. It shipped 2,116 tank and hopper units - its second-highest ever - versus 1,276 a year earlier.
But orders have been slow and its backlog has fallen to under 6,000 cars, so ARI said "we have slowed our production rates."
FreightCar America booked 47 percent higher sales at $238 million, but netted 15 percent less profit at $7.4 million. The company has diversified into new product lines and overseas sales, and cut costs.
President and CEO Chris Ragot said he expects "uneven industry trends" ahead in "a volatile period" for the economy and car demand.
FCA's orders were up to 2,329 cars in the third quarter from 1,262 a year earlier and from 1,436 just in this year's second quarter. But it ended the quarter with the backlog down to 4,401 cars - of which 196 are rebuild orders - from 4,930 at the same point in 2007.