August 25, 2010 / 3:55 PM / 7 years ago

UPDATE 2-Greenbrier gets $130 mln railcar deal, shares rise

* Says to add 260 jobs

* Co says may lose key marine barge order

* Says to cut production of marine barges

* Says marine revenue, margins to fall if deal goes

* Shares rise as much as 8 pct (Recasts throughout; adds background, details)

Aug 25 (Reuters) - Greenbrier Cos Inc (GBX.N) said it received about $130 million worth of new railcar and refurbishment orders and plans to add jobs at its plant, in a sign that the nascent recovery in the railcar market is on track.

Shares of the company were up 4 percent at $9.90 in late morning trade Wednesday on the New York Stock Exchange. They touched a high of $10.30 in early trade. The stock has shed nearly a quarter of its value in the last 12 months due to uncertainties in the freight market.

The company’s railcar business, which accounts for a major chunk of its revenue, has been picking up steadily this year as long-idled railcars come out of storage and are in need of repair.

In a statement, Greenbrier said it received orders for more than 1,000 new double-stack intermodal containers and covered hopper cars, which are used to transport commodities like coal and iron ore.

It will also re-engineer and modify about 1,100 existing double-stack platforms, which are large-sized cargo containers, from smaller dimensions.

The orders are from five separate customers including major railroad and leasing companies in North America, the company said. Some of Greenbrier’s biggest railcar customers include GE (GE.N), and railroad operators BNSF and Union Pacific (UNP.N).

In April, the company acquired a lease portfolio of nearly 4,000 railcars along with private equity form WL Ross & Co.

Lake Oswego, Oregon-based Greenbrier, which competes with American Railcar (ARII.O) and FreightCar America (RAIL.O), will also add 260 employees at its Gunderson facility by recalling furloughed workers or hiring new ones.


The company’s marine market continues to remain uncertain as it indicated it may lose a contract from a top customer.

Greenbrier said if the orders are cancelled, it plans to cut production of barges and plans to divert about 175 workers from its marine barge construction facility to new railcar production.

Faced with the possible loss of the large order, Greenbrier said it was in talks with the customer, which accounts for 85 percent of its marine order backlog of $75 million, for modification of the contract.

The company said the loss or postponement of the contract could reduce revenue and margins at its marine unit in the fourth quarter and the next fiscal year.

Greenbrier did not identify the customer but its annual filing shows that ocean transportation and logistics firm Crowley Maritime is one of its top marine customers.

The news follows Greenbrier’s decision earlier this year to cut production of marine barges due to uncertainty caused by the Gulf of Mexico oil spill and other regulatory issues. [ID:nSGE64R0A9]

The company was faced with a similar situation about a year back when one of its railcar customers, GE (GE.N), wanted a renegotiation of a contract due to weak freight market.

In December 2009, GE modified contract terms with Greenbrier to cut a railcar supply order by half to 6,000 railcars. [ID:nSGE5BE0GK] (Reporting by A.Ananthalakshmi in Bangalore; Editing by Saumyadeb Chakrabarty and Gopakumar Warrier)

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