Greenbrier Companies, one of North America’s major builders of freight railcars plus some barges, saw revenue soar 153 percent in its fiscal third quarter that ended May 31, mainly on the strength of new car manufacturing orders.
That helped the Lake Oswego, Ore.-based supplier return to profitability before taking a $10 million one-time charge to refinance debt and retire $235 million in senior unsecured notes, said President and CEO William A. Furman.
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The company posted a net loss of $3.3 million, down from a year earlier $4.6 million profit, but lengthened its debt maturities and will save more than $10 million a year in pre-tax interest.
Furman said the quarter’s results “did not fully meet our expectations,” but that business momentum points to “the early stage of an upturn in the markets we serve.”
Although Greenbrier’s fiscal year is timed differently than normal calendar quarters used by most rail industry firms, its results provide an early glimpse into rail demand trends at a time when broad economic indicators such as job growth are sputtering.
Rail traffic levels also fell during March and April, but many important cargo categories have strengthened since then. Furman indicated his customers feel confident, since “business visibility continues to improve . . . (and) we are experiencing a cyclical recovery” in railcar building.
Greenbrier delivered 2,200 new cars in the latest quarter, up from just 700 a year earlier. But its manufacturing gross margin slipped to 8.5 percent from 11.5 percent in the 2010 quarter as many of its new railcars and barges carry lower pricing than units built under multi-year contracts dating from before the recession.
The company also suffered from a temporary shortage of castings that cut into its efficiency in North America, along with a delay in European certification that sliced about 300 car deliveries for that market.
But Furman said adding the extra railcar line “will provide more capacity and a lower-cost manufacturing footprint.”