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Actionable news in GBX: THE GREENBRIER COMPANIES Inc,

Greenbrier Reports Second Quarter Results

The following excerpt is from the company's SEC filing.

~ Posts EPS of $1.41 ~

~ Announces orders for 3,000 units with average sales price of $103,000 ~

Lake Oswego, Oregon, April 5, 2016

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 de bt 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%.

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Greenbrier Reports Second Quarter Results. . .

(Cont.)

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

Q2 FY16

Q1 FY16

Sequential Comparison Main Drivers

$669.1M

$802.4M

Down 16.6% primarily due to decreased deliveries

Gross margin

Down 510 bps due to inefficiencies associated with product line changeovers and marine production, and lower margin percentage on the syndication of acquired railcar portfolio

Selling and

administrative expense

$38.2M

$36.5M

Up 4.7% primarily due to consulting and higher employee related costs

Gain on disposition

of equipment

$10.7M

Timing of sales fluctuates and is opportunistic

$108.2M

$161.8M

Down 33.1% driven by lower deliveries and gross margin

Effective tax rate

Reflects a change in the geographic mix of earnings and the effects of discrete items

to noncontrolling interest

$21.3M

$29.3M

Driven by timing of deliveries and margin from our GIMSA JV

$44.9M

$69.4M

Segment Summary

Manufacturing

$454.5M

$698.7M

Down 35.0% primarily due to lower deliveries

Down 330 bps due to lower syndication volume and inefficiencies associated with line changeovers and marine production

Operating margin

Deliveries

Wheels & Parts

$90.5M

$78.7M

Up 15.0% primarily attributable to a seasonal increase in wheel and component volumes and more favorable product mix

Up 270 bps primarily due to higher sales volumes and more favorable product mix

Leasing & Services

$124.1M

$25.0M

Up due to the sale of acquired railcar portfolio

Down due to lower margin on the syndication of acquired railcar portfolio; excluding this activity, gross margin is 51.1%

(1) (2)

Lease fleet utilization

Decline driven by sale of leased railcars; number of off-lease railcars modestly lower than Q1

See supplemental segment information...


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