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Rail News: Financials

Acquisitions, product mix propel Greenbrier to post record revenue in FY2007

A strong fourth fiscal quarter helped The Greenbrier Cos. post record revenue in fiscal-year 2007.

For the fourth-fiscal quarter, which ended Aug. 31, Greenbrier recorded $350.6 million in revenue, a 32.2 percent boost from the $265.2 million generated in the same period a year earlier. "Acquisition-related growth" in the builder's refurbishment and parts segment helped drive the increase, the company said. About $80 million came from the acquisitions of Rail Car America (four repair shops and one parts location) and Meridian Rail Services (six wheel shops, one repair shop and one parts location), plus the addition of two start-up repair shops.

For FY2007, Greenbrier posted record revenue of $1.2 billion, a 28 percent increase compared with FY2006's total.

Greenbrier didn't reach the revenue achievement by acquisitions alone. The company also boosted capital spending to improve the company's marine operations, closed a Canadian car-building facility and expanded rail-car production capacity in Mexico, Greenbrier President and Chief Executive Officer William Furman said in a prepared statement.

"These initiatives improve our competitive positioning, enhance our integrated business model, and diversify our revenue and earnings base into higher-margin, less-cyclical businesses," he said, citing a recent 11,900-unit, multi-year order for tank and covered hopper cars.

As of Aug. 31, Greenbrier's rail-car manufacturing backlog was 12,100 units valued at $830 million, compared with 14,100 units valued at $970 million as of May 31. Greenbrier plans to produced 6,000 of the backlogged cars this year.

Although the fourth-quarter rail-car deliveries of 2,400 units represented a decline from the 3,200 units delivered during the same period last year, revenue declined by only $4.7 million as a result of a "change in product mix," the company said.

So, Furman & Co. are optimistic about the company's — and the industry's — long-term future. But like most rail-industry observers, they expect rail-car demand to continue "moderating," as Greenbrier puts it, during the near term. Now, prognosticators say rail-car deliveries will be in the 50,000-55,000 range in 2008, compared with 65,000 units in 2007, Furman said.

"We had anticipated these trends and have made changes to our new rail-car production plans and rates," he added. "In addition, we are taking appropriate actions to reduce our costs."

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