Greenbrier (GBX, Financial) saw a significant drop of 14% following its Q3 earnings report. The supplier of freight railcars and marine barges reported an EPS miss after two consecutive double-digit EPS beats in Q1 and Q2. Revenue fell 21% year-over-year to $820.2 million, missing analyst expectations. The company also trimmed the high end of its FY24 revenue guidance to $3.5-3.6 billion from $3.5-3.7 billion.
- Greenbrier announced new railcar orders for 6,300 units valued at $830 million and delivered 5,400 units. This resulted in a new railcar backlog of 29,400 units valued at $3.7 billion. However, the company slightly lowered the high end of its FY24 railcar delivery guidance to 23,500-24,000 units from 23,500-25,000 units.
- Revenue declined 21% year-over-year and 5% sequentially, primarily due to the timing of new railcar deliveries. Manufacturing segment revenue fell 6.8% sequentially to $685.1 million. Despite this, Greenbrier posted a 9.5% sequential growth in adjusted EBITDA to $104 million.
- Greenbrier's railcar leasing segment grew its lease fleet by 600 units to 15,200 units, achieving nearly 99% utilization. On its Q2 call, management noted that the supply of available railcars was near trough levels, leading to robust lease rate growth, renewals, and term lengths. Q3 results from the leasing segment support this view.
- Gross margin improved to 15.1% from 14.2% a year ago, thanks to better performance in Manufacturing and Maintenance Services and increased syndication activity. The gross margin has been in the mid-teens for three consecutive quarters, reflecting the company's focus on efficiency gains.
Overall, this was a disappointing quarter for Greenbrier, with both EPS and revenue missing expectations. The revenue miss was primarily due to the timing of new railcar deliveries, which, if not indicative of declining demand, could be a positive sign. However, investor concerns remain.
On a positive note, the leasing business is performing well, although it contributes less to overall revenue compared to the manufacturing segment. Long-term, nearshoring trends could support growth, especially in traffic across the southern border.
