The Greenbrier Companies FQ3 results fall short of expectations

The Greenbrier Companies (NYSE:GBX) is losing ground in Monday’s premarket trading following the release of disappointing results for the fiscal third quarter, in which the railcar manufacturer missed profit and sales expectations.

Shares were down 5%.

Although the company earned its highest quarterly EBITDA in more than four years, earnings missed expectations by 7 cents, while a 21% decline in revenue to $820.2M was more than $100M less than expected.

“Our outlook is optimistic as we expect revenues to grow based on the pace of our delivery schedule,” said CEO Lorie Tekorius, adding that, “Greenbrier’s leading market position, robust new railcar backlog and a steadily growing recurring revenue stream from the leasing business provide a strong foundation for the future.”

During the most recent quarter, Greenbrier increased its lease fleet by 600 units, realizing a lease fleet utilization of nearly 99%. The company also had “diverse” new railcar orders for 6,300 units valued at $830M and delivered 5,400 units. This results in new railcar backlog of 29,400 units with an estimated value of $3.7B. Gross margin expanded to 15.1% from 14.2% in the previous quarter and from 12.3% in the same quarter last year.

By segment, manufacturing produced $685.1M of revenue with a gross margin of 10.9% and operating margin of 7.9%, versus 10.8% and 8.0% in FQ2 2024, respectively. Maintenance services generated $70M in revenue with a higher gross and operating margin from last quarter. Finally, leasing and management services generated sales of 65.2M and a gross margin of 62.9%, down from 70.8% last year. Operating margin also dropped to 62.1% from 64.2%.

For fiscal 2024, the company expects sales to be between $3.5B to $3.6B, straddling the Street consensus of $3.55B. Consolidated gross margin percentage is expected to increase to the mid-teens, and capital expenditures are likely to reach $150M in manufacturing and $15M in maintenance services.