Greenbrier Q2 profit misses Street estimates, shrs fall
By Dhanya Ann Thoppil
BANGALORE (Reuters) - Greenbrier Cos (GBX.N), a railroad equipment supplier, posted a lower-than-expected quarterly profit as it was hurt by charges related to the closure of its Canadian facility and a higher tax rate, sending its shares down as much as 8 percent.
Greenbrier, which makes, repairs and refurbishes railroad freight cars, however, said it still expects the second half of 2008 to be stronger sequentially due to growth in its refurbishment and parts business, elimination of the drag on earnings from the Canadian facility and a favorable tax rate.
Although freight volumes in the U.S. rail industry slackened in 2007 due to the housing slowdown, railcar makers are expected to see growth in the years to come driven by rising demand for consumer goods, coal and other commodities such as ethanol.
For the second quarter, the company reported a net income of $1.4 million, or 9 cents a share. It posted a net loss of $6.1 million, or 38 cents a share, in the year-ago period.
Results for the latest second quarter were hurt by charges and costs of 19 cents a share related to the closure of the company's Canadian facility, TrentonWorks.
TrentonWorks filed for bankruptcy in March after months of seeking a buyer for the facility.
Revenue rose 8 percent to $259.6 million.
Analysts were expecting earnings of 32 cents a share, before special items, on revenue of $272.3 million, according to Reuters Estimates.
The tax rate for the quarter rose to 112 percent, weighed down by losses at the company's international operations with no related accrual of tax benefit.
The quarterly tax rate compares to an expected 63 percent for the second half of the fiscal year ending Aug. 31 and the year as a whole, the Lake Oswego, Oregon-based company said.
NEW RAILCAR BACKLOG WOES
New railcar deliveries for the second quarter rose to 1,300 units from 1,200 units a year ago. However, backlog for new railcars fell to 18,800 as of February 29, 2008 from 22,200 at November 30, 2007.
"We think that the profitability of the backlog is trending downward," Wachovia Capital Markets analyst Wendy Caplan said.
Wendy, who has a "market perform" rating on the stock, said pricing pressure on new railcar builds also hurt the company's margins.
Greenbrier CEO William Furman said in a statement, "The slowing economy, declining railcar loadings and turbulent financial markets are contributing to a cyclical downturn in the new railcar market in North America."
Greenbrier repairs and refurbishes freight cars and provides wheels and railcar parts at 39 locations across North America.
In February, billionaire investor Carl Icahn suggested a possible merger of the company with American Railcar Industries (ARII.O), which makes covered hopper and tank railcars.
However, Icahn, who owns a 9.45 percent stake in Greenbrier, made no offer for American Railcar and did not suggest when a merger could take place or what the structure of the offer would be.
Greenbrier shares were down 51 cents at $25.93 in morning trade on the New York Stock Exchange. They touched a low of $24.30 earlier in the session.
(Editing by Himani Sarkar)
