Railcar and barge builder Greenbrier Companies almost broke even in its fiscal second quarter ending Feb. 28, with its loss of $550,000 a big improvement from losing nearly $4.8 million in the same period a year earlier.
Revenue rose 43 percent to $286 million, with gains in all its units - manufacturing on the strength of recovering orders for new railcars, plus its refurbishment and leasing operations.
But the largest gain came from the manufacturing segment, where sales of $157 million in the December-February quarter jumped 78 percent from the same period in 2010. That was powered by demand finally strengthening for new railcars after a long and deep recession that has left hundreds of thousands of units parked on rail sidings across North America.
With traffic consistently rising, the need for some types of railcars has already outgrown the parked fleet, so buyers are ordering new ones to be built. Major purchasers of new equipment include leasing fleets, railroads and some shippers, and industry officials say some of the new demand is fueled by a 100 percent write-off against 2011 taxes for the full cost of money spent on plant and equipment.
Greenbrier foreshadowed the improved performance in a statement last month, when it also announced a large new order for railcars that was mostly 53-foot well cars to carry domestic intermodal containers.
William A. Furman, president and CEO, said the company was able to move much closer to profit "during a quarter when we were ramping up railcar production, and were impacted by both severe weather at certain facilities and expiration of a management services contract." Its barge building declined some, and the company had some extra costs to boost car output.
So far in Greenbrier's fiscal year that began last September, it has taken orders for 10,200 new railcars. What's more, he said, "we believe the expanding product diversity of new orders signals the next stage of the recovery in the new railcar market. As we strive to meet ongoing demand, we continue to ramp up production and are on track with plans to open an additional production line in July 2011. We continue to expect to deliver between 9,000 and 10,000 new railcars in fiscal 2011."