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Greenbrier vows additional sell-offs as net income falls

Keywords: Tags  Greenbrier, rail cars, Timken, William A. Furman, earnings results, Frank Haflich

LOS ANGELES — Greenbrier Cos. saw its quarterly net income fall sharply, and the rail car manufacturer has vowed to sell off additional assets in order to "liberate" capital.

The Lake Oswego, Ore.-based company posted net income of $13.84 million for the three months ended Feb. 28, down 21.7 percent from $17.67 million in the same period a year earlier on revenue that fell 7.6 percent to $423.17 million. For the fiscal first half, net income fell 24.6 percent to $24.27 million from $32.19 million a year earlier on revenue that dipped 2.1 percent to $838.54 million.

Greenbrier delivered 2,700 rail cars during its fiscal second quarter, down from 2,900 in the fiscal first quarter ended Nov. 30—the third consecutive quarterly decline—due to lower deliveries in Europe.

Greenbrier, which last year fought off a $597-million takeover attempt by investor Carl Icahn’s American Railcar Industries Inc., said it was taking steps to improve its profitability and has targeted a minimum 2-percent gross "margin enhancement" by its fiscal year ending Aug. 31, 2014.

"We intend to liberate $100 million of capital by no later than the end of fiscal 2014 by selling non-core or underperforming operations," president and chief executive officer William A. Furman said, citing operations in Greenbrier’s "underperforming" wheel services, refurbishment and parts segment as likely for divestiture.

Furman described Greenbrier’s intention to sell its Elizabeth, Ky., wheelset operations as the "first of many steps" in this effort. The sale to Canton, Ohio-based Timken Co. for an undisclosed amount (, March 1)—representing substantially all of the company’s roller bearings parts business—also includes an agreement for Timken to supply Greenbrier with reconditioned and new bearings.

Greenbrier’s rail car backlog on Feb. 28 had grown to 11,700 units with an estimated value of $1.3 billion from 9,700 units valued at $1.11 billion three months earlier. Its marine backlog was $9 million, although the company said it has a letter of intent for 15 barges valued at $60 million.

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