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The Greenbrier Companies, Inc.
announced today that it received new orders in January, February, and March for 5,400 railcar units valued at approximately $575 million.
These orders are broad-based across a range of railcar types including
automotive-related rail products, tank cars, double-stack intermodal
platforms, boxcars and various types of covered hopper cars. Continued
strength in energy and industrial chemical markets led to orders for nearly
2,700 of Greenbrier's higher margin tank cars. The Company also received
orders for over 700 automotive-related rail products including 89-foot
flatcars and the Company's proprietary Multi-Max(TM) auto racks in North
America, and for open and closed car carriers in Europe. The remaining
orders are for double-stack intermodal platforms, boxcars, mill gondola cars
and covered hopper cars, including an initial order for the Company's new
plastic pellet car.
The new orders are in addition to the orders for 4,200 railcars valued at
$430 million reported in Greenbrier's press release dated January 7, 2013.
Since September 1, 2012, the beginning of the fiscal year, Greenbrier has
received orders for nearly 9,600 railcars in North America and Europe valued
at over $1 billion, consisting of approximately 4,000 tank cars, 2,100
automotive-related flatcars or racks, and with the balance across a broad
range of other railcar types.
William A. Furman, president and chief executive officer of Greenbrier said,
"Our railcar manufacturing strategy is to diversify our new railcar product
offerings, to reduce reliance on a single commodity or railcar type at any
given time and to benefit from growth in demand for various railcar types,
including tank cars, frac sand cars, and plastic pellet cars for the rapidly
expanding North American energy and chemicals markets. This strategy
continues to bear fruit. As these orders demonstrate, we are able to
flexibly and nimbly respond to emerging trends and to our customers' varied
railcar needs with a flexible and geographically diverse manufacturing
footprint."
TANK CARS
Furman also noted, "The strength in the energy markets continues to produce
strong demand for our higher margin tank cars. Industry forecasts indicate
tank car demand is expected to continue to be robust through 2015, and then
settle back to baseline levels. We continue to ramp up our tank car
production to meet this demand. By the end of calendar year 2013, we expect
to be at an annual production rate of about 3,800 tank cars, nearly four
times our fiscal 2012 production. Industry forecasts also indicate the
rebounding economy and independent growth in certain commodities will
continue to drive increasing demand for non-energy related railcars
including intermodal, forest products, automotive, covered hopper and other
car types where Greenbrier has been historically strong."
AUTOMOTIVE
"Automotive is an especially exciting part of our business today. Railroads
carry approximately 70% of all new vehicles manufactured in North America.
Over the next three years, independent industry forecasts project that
deliveries of automotive-related railcars will exceed 10,000 units in North
America, with an equivalent number of racks being built. This demand is
being driven by growth in automotive traffic by rail as a result of growing
auto sales and a geographic shift in production of autos. Simultaneously,
an aging fleet of automotive carrying railcars with an average age of
approximately 20 years, and a 10% reduction in size of the automotive
carrying railcar fleet in North America since 2009, is driving a railcar
replacement cycle. This fleet of automotive equipment consists of about
50,000 railcars, each equipped with racks, either unitized with the flatcar,
as in the case of Auto-Max(R), or with fully-enclosed, detachable racks.
Most conventional 89' cars for automotive service are owned by TTX, the
national railroad-owned freight car pool operator. Racks are owned
predominantly by railroads, shippers or leasing companies," Furman
continued.
Furman added, "Greenbrier is well-positioned to meet this growing demand.
We have the most comprehensive line of products for transport of finished
vehicles by rail, with three distinct designs in North America: Auto-Max,
an articulated, fully integrated 2-unit railcar with flexible bi-level and
tri-level configurations; Multi-Max, a new proprietary automotive rack with
flexible bi-level and tri-level configurations; and a standard 89' flatcar
for bi-level or tri-level rack service capable of taking either a
conventional rack or Multi-Max. Both Auto-Max and Multi-Max utilize
important features of our innovative double-stack technology that offers
superior versatility, flexibility, and increased load capacity. Both also
feature a proprietary sealed end-door that offers industry-leading cargo
security and enhanced loading door edges for unmatched vehicle safety and
protection in long-distance transit. This is particularly important for
service in Mexico. We are pleased with our position in Europe, as well,
where we are the leading automotive rail manufacturer from our Polish
facility, having produced over 1,800 automotive railcars in the last five
years."
Furman stated, "U.S. light vehicle sales increased by 13% in 2012 from 2011.
For the first time in five years, sales are forecast to exceed 15 million
light vehicles in 2013, with continued sales growth forecast through 2016.
Mexico recently surpassed Japan as the largest exporter of light vehicles to
the United States and is forecast to increase its share of North American
light vehicle production substantially over the next decade. This
demographic shift will further support growth in automotive rail loadings,
with rail as the preferred transportation method of light vehicles
manufactured in Mexico. Greenbrier's automotive line of products is also
manufactured in Mexico, and we are uniquely equipped at our low-cost and
flexible facilities to take advantage of this geographic shift. At the same
time, automotive rail loadings are up 16% from 2011 to 2012 in the United
States and are forecast to increase in each of the next three years, all
helping fuel demand for our automotive products."
ROBUST CAR LOADINGS TO DRIVE DEMAND FOR DIVERSIFIED PRODUCT OFFERINGS
Furman concluded by saying, "North American railroad loadings, excluding
coal and agriculture and including intermodal, are up nearly 6% for the 11
weeks ending March 16, 2013 compared to the same period in 2012. A number
of sectors which Greenbrier serves, beyond automotive, are exhibiting robust
traffic growth. Chemical loadings which drive demand for tank cars and
large covered hoppers increased 13% in the same period. Loadings of
non-metallic minerals and products, transported by small covered hoppers,
were up 6% in the period. Finally, 8% growth in intermodal container
loadings, which drives demand for double-stack intermodal platforms, led to
an order for double-stack wells. Current rail traffic trends are favoring
our strategy to be a supplier of diverse railcar types through an efficient
and flexible manufacturing footprint."
Mark Rittenbaum, chief financial officer noted, "We remain keenly focused on
executing the core aspects of our integrated business model. As management
has previously stated, on April 4, 2013, concurrent with the release of our
second quarter financial results, we expect to outline actions intended to
improve gross margins and capital efficiency, with a view towards improving
Greenbrier's return on invested capital and enhancing shareholder value."
Certain orders referenced in this release are subject to customary
documentation and completion of terms.
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