* Second-quarter revenue $423.2 mln vs est $442.9 mln
* Earnings $0.45/share vs est $0.37/share
* Deliveries fall 27 percent
* Says expects to free up $100 mln capital by August 2014
* Shares fall as much as 8 percent
By Sagarika Jaisinghani and Prateek Chatterjee
April 4 (Reuters) - Railcar maker Greenbrier Cos Inc , which was riding a surge in demand for oil tank cars until the middle of last year, said it was looking to sell some of its non-core businesses after overall deliveries fell for the third quarter in a row.
The company's shares fell 8 percent in morning trading but recovered to trade down 3 percent at 1250 ET.
"We think that investors were increasingly anticipating some form of restructuring at Greenbrier to further support (its) decision to walk away from Carl Icahn's bid," Jefferies & Co analyst Peter Nesvold wrote in a note.
Greenbrier late last year turned down two offers from activist investor Icahn to merge with rival American Railcar Industries Inc but said in January it remained open to talks. Icahn had a stake of 3.41 percent in Greenbrier as of Dec. 21, according to regulatory filings.
Top on the list of operations Greenbrier intends to sell is its underperforming wheel services, refurbishment and parts business. The business accounted for about 27 percent of Greenbrier's 2012 revenue of $1.81 billion.
"Our wheels, refurbishment and parts segment did not meet our expectations for the quarter ... due in part to lower scrap pricing and wheel volumes, but also due to some operating inefficiencies," Chief Financial Officer Mark Rittenbaum said on a conference call.
The company also said it intended to reduce working capital and refine its leasing model to take more of its assets and debt off the balance sheet. Greenbrier reduced its net debt by $55 million during the second quarter ended Feb. 28.
All these strategic actions are expected to free up $100 million in capital and expand gross margins by 200 basis points by the end of August 2014, the company said.
Greenbrier, which is based in Lake Oswego, Oregon, will set up additional product lines at its facilities in Mexico to cut costs further, Chief Executive William Furman said on the call.
"We also expect to benefit by a return to more normalized levels in our marine business, stronger forest products market, and over time, plastic pellet markets," he said.
Greenbrier benefited from demand for oil tank cars after the 2008 recession but total deliveries have fallen since it shifted focus to auto-carrying cars, which generate higher margins but take a longer time to make and require more manual work.
Deliveries fell 27 percent to 2,700 in the second quarter from a year earlier. Deliveries fell 7 percent from the preceding quarter, mainly due to a drop in demand in Europe.
The company said its order backlog fell 6 percent to 11,700 from the same period the previous year but it maintained its forecast for 13,000 deliveries in the year ending August.
Rittenbaum said he expected deliveries to pick up in the current and fourth quarters.
"We expect rising tank car production and improving non-tank railcar order flow to boost revenues, while efficiency initiatives simultaneously drive better margins and returns across the portfolio," Susquehanna Financial Group LLLP analyst Bascome Majors said.
Greenbrier's net income fell 22 percent to $13.8 million, or 45 cents per share, in the quarter from $17.7 million, or 57 cents per share, a year earlier. Revenue fell to $423.2 million from $458.2 million.
Analysts on average had expected earnings of 37 cents per share on revenue of $442.9 million, according to Thomson Reuters I/B/E/S.
Greenbrier shares, which have gained 30 percent since Jan. 9 when the company said it would remain open to talks with Icahn, were down 3 percent at $21.05 on Thursday afternoon on the New York Stock Exchange.