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11/13/2009



Rail News: Rail Industry Trends

Updates from Global Railway Industries, Greenbrier, Thales, Savage Services and Axion International


• Today, Global Railway Industries Ltd. reported third-quarter revenue of $16.1 million, an 11.8 percent increase compared with $14.4 million in the same 2008 period. “Railroads continue to store about 20 percent of their locomotive and rail-car fleets, and maintain tight control over operating and capital expenditures to address reduced freight revenues and operating income,” said Chairman, President and CEO Terry McManaman in a prepared statement. But Global’s rail product and service offering to passenger rail and transit operators “was the catalyst to our overall revenue growth in Q3, rising 12 percent,” he added. Subsidiary Bach-Simpson Corp., which serves passenger-rail customers, has generated a year-to-date sales increase of 59 percent and “continues to forecast strong growth throughout the remainder of the year,” McManaman said. And despite reduced demand for track and signal and rail gear products, G&B Specialties’ sales and gross margins “met management's expectations” and the Global subsidiary has been “able to maintain the same level of sales compared to 2008.” But diminishing sales in the locomotive and component markets continued to “negatively impact” the operating results for Global’s largest subsidiary, CAD Railway Industries. As a result, Global posted a third-quarter net loss of $506,860 compared with net income of $516,387.

• Yesterday, The Greenbrier Cos. reported results for its fourth fiscal quarter and year, which  ended Aug. 31. For the quarter, the rail-car builder, lessor and repair firm generated revenue of $230.4 million, a 63.5 percent decline compared with revenue from the same year-ago period. Net earnings were $6.7 million, a 9.5 percent slip compared with $7.4 million. The company delivered 900 new rail cars compared with 1,800 in the same 2008 period. For the fiscal year, Greenbrier had revenue of $1 billion, a 21 percent decrease compared with FY2008’s total. The company posted a net loss of $54.1 million compared with  net earnings of $19.5 million, and delivered 3,700 new rail cars compared with 7,300 the previous year. Greenbrier's manufacturing backlog as of Aug. 31 was 13,400 units valued at $1.16 billion; based on current production plans, about 2,400 units in backlog were scheduled for delivery in 2010 — 11,500 of which are subject to a long-term contract with GE Railcar Services. In 2008, GE advised Greenbrier of “its desire to substantially reduce, delay or otherwise cancel deliveries under the contract,” the company said, adding that “contract modification” discussions were under way. As of Oct. 31, 328 tank cars and 200 hopper cars had been delivered under the contract.

• Thales and Alcatel-Lucent were selected by Beijing MTR Corp. to provide a train control system, and consulting, design and engineering services for Beijing’s Daxing line metro project. The new trunk metro line is expected to be operational by 2010’s end. The 13.6-mile Daxing line will include 11 stations and connect the Daxing district in south suburban Beijing with the downtown area and Beijing metro line 4. Under the contract, Thales will provide its SelTrac communications-based train control system; Alcatel-Lucent will be responsible for network integration, consulting, design and engineering services.

• Savage Services Corp. recently entered into definitive agreements to acquire the assets, terminals and services business of Safe Handling Inc. Savage provides transloading services and handlings systems to a variety of oil refineries, coal producers, electric power generators and Class Is. Safe Handling provides full-service, bulk product, chemical, toll processing, transportation, warehousing and transloading services. The transaction is expected to close Nov. 30, after which the Safe Handling business will be rebranded as “Savage Safe Handling.”
 
• Axion International Holdings Inc. received a $957,000 contract to construct two railroad bridges from nearly 100 percent recycled plastics. The U.S. Army commissioned the bridges, which will be built at Fort Eustis, Va., replacing two wooden bridges that have been taken out of service. The main structural components will be produced from recycled consumer and industrial plastics using the company’s “proprietary immiscible blending to create recycled structural composites,” according to a prepared statement. The new short span bridges will extend about 40 feet and 80 feet, respectively. Each will be designed to achieve a high-load rating of 130 tons. Centennial Contractors Enterprises Inc. will serve as the project’s general contractor; Parsons Brinckerhoff will provide design and engineering services.



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