• Revenue: $876 million, a new first quarter record for Greenbrier.
• EBITDA: $145 million, representing 16.6% of revenue.
• Aggregate Gross Margin: 19.8%, a 160 basis points increase.
• Operating Income: $112 million, or 12.8% of revenue.
• Net Earnings: $55 million, with diluted earnings per share of $1.72.
• Return on Invested Capital (ROIC): 11.2%, a 140 basis point sequential increase.
• Liquidity: $549 million, including $300 million in cash.
• Lease Fleet Growth: 1,200 units, with stable fleet utilization of roughly 99%.
• New Railcar Deliveries: 6,000 units in Q1.
• Global Orders: 3,800 units worth $520 million.
• Backlog: 23,400 units valued at $3 billion.
• Dividend: $0.30 per share, 43rd consecutive quarterly dividend.

• Warning! GuruFocus has detected 7 Warning Signs with GBX.

Release Date: January 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Greenbrier Companies Inc (NYSE:GBX) reported a strong EBITDA of $145 million and an aggregate gross margin of 19.8% for Q1, reflecting a 480 basis points year-over-year improvement.
• The company delivered 6,000 new railcars in Q1, with a strong manufacturing gross margin of 17.1%, benefiting from a profitable product mix and optimized manufacturing processes.
• Greenbrier's lease fleet grew by 1,200 units in the quarter, maintaining a stable fleet utilization of approximately 99%.
• The company secured global orders of 3,800 units worth $520 million in Q1, with lease originations accounting for about 45% of this order activity.
• Greenbrier's backlog remains strong at 23,400 units with an estimated value of $3 billion, providing significant revenue visibility.

Negative Points

• The company's quarterly tax rate was higher at 37.8%, mainly due to the geographic mix of earnings and unfavorable foreign currency exchange rates.
• Greenbrier's cash flow from operations was a use of cash of approximately $65 million, primarily due to leased assets placed on the balance sheet awaiting syndication or capitalization.
• The backlog decreased from previous quarters, indicating potential tentativeness in demand for certain railcar types and markets.
• There is some open production space in the July-August timeframe, which could indicate potential challenges in filling orders at expected rates.
• The company did not raise its fiscal 2025 guidance despite a strong first quarter performance, suggesting caution due to potential uncertainties in the market.

Q & A Highlights

Q: Can you explain the strong margin gains in the first quarter and the factors driving them? A: Lorie Tekorius, CEO, explained that the margin gains were driven by improvements in manufacturing efficiencies, in-sourcing initiatives, and a favorable product mix, particularly in specialized car types. Brian Comstock, EVP, added that it was a combination of product mix and operational efficiencies that contributed to the gains.

Q: There seems to be a discrepancy between the press release and your comments regarding demand. Can you clarify if the slowdown is temporary or if there's potential for a longer-term easing? A: Brian Comstock, EVP, clarified that the slowdown was temporary, largely due to customer apprehension before the elections. However, they are now seeing a pickup in the pipeline and expect demand to strengthen, particularly for traditional car types like covered hoppers and chemical tank cars.

Q: The backlog has decreased from $3.8 billion to $3 billion. Is this a sign of tentativeness in the market, or do you expect it to bounce back? A: Lorie Tekorius, CEO, noted that while the backlog has decreased, they are still pleased with the $3 billion backlog. The decrease is partly due to the focus on utilizing their manufacturing footprint for both new railcars and refurbishment work, which is not included in the backlog but is margin accretive.

Q: How does the production plan look for the second half of the year, and do you need more orders to sustain it? A: Justin Roberts, VP, stated that production will be similar in the second half as in the first, with a shift towards more commoditized car types. Brian Comstock, EVP, added that they have seen an increase in order inquiries, which supports maintaining current production levels.

Q: Given the strong first quarter performance, why hasn't the fiscal 2025 guidance been raised? A: Justin Roberts, VP, explained that while they have seen strong performance, there is still some open space in the production schedule for the second half of the year. They are cautious about committing to higher guidance until they have more certainty about the mix of orders and market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.