The Greenbrier Companies higher on Q3 profit
Shares of The Greenbrier Companies Inc. (NYSE: GBX) are on track for a solid gain today following news that the Lake Oswego, Ore.-maker of railroad freight car equipment reported quarterly results that outpaced Wall Street’s projections.
The net income for the third fiscal quarter ended May 31 was $13.0 million, or $0.81 per share, compared with a profit of $10.7 million, or $0.67 per share, during the same three months of 2006, the company announced before the start of trading. Nine analysts polled by Thomson Financial were looking for earnings of $0.39 per share.
Revenues were $387 million, an increase of 45% from revenues of $266 million a year earlier, well above the forecasted $299.50 million.
“We have been keenly focused on our stated objectives of improving financial performance, enhancing liquidity, and integrating our recent acquisitions,” Greenbrier President and CEO William Furman said. “I am pleased to report substantial progress on all three of these fronts this quarter.”
Profits would have been even higher save for a special charge of $3.1 million, or $0.19 per share, associated with the closing of a railcar manufacturing facility in Canada. The factory’s last order was completed in May 2007.
“Greenbrier has not had stable labor relations in Canada,” said Frank Magdlen, the Director of Research at brokerage firm The Robins Group, LLC. A combination of problems with labor unions and the depreciating U.S. dollar have made Canada uncompetitive as a manufacturing location, according to Magdlen.
Greenbrier also makes railcars and their components in the U.S., and Mexico, and serves the European market out of Poland.
The company has a backlog of orders for new railcars stretching out to 2010. As of May 31 the backlog was 14,100 units valued at $970 million, compared with 14,300 units valued at $990 million as of Feb. 28, 2007.
“While year to date rail loadings in North America have been muted due to a slowdown in the economy, the fundamentals of markets we serve will translate into robust business activity for the rail supply sector over the long term,” Furman said.
Frank Magdlen seems to agree. “They are a very good competitor and are changing their business to focus on less volatile components,” he said. “In the long term, railcars continue to be in demand.”
At 2:21 p.m. ET shares were up $5.12, or 18%, to $33.75. The 52-week high of $41.21 was established on Oct. 27, 2006. The 52-week low of $21.44 was set on April 5.
