Greenbrier Companies Inc. reported Wednesday that it swung to a fiscal second-quarter profit and revenue that more than doubled, as the war in Ukraine provided a boost to the maker of railroad freight cars and equipment.
Executive Chairman William Furman explained that most commodities shipped by rail have experienced upward pricing pressure from supply and demand constraints, due to either sanctions on Russia and reduced production from Russia and in Ukraine, and that has boosted railcar demand.
He added that while war in Ukraine is a “true tragedy,” it also provides opportunities for major shifts in freight corridors and transportation modes that will enhance Greenbrier’s business.
“The commodity markets are traditionally leading indicators for expansion in rail freight,” Furman said, according to a FactSet transcript of Greenbrier’s post-earnings conference call with analysts. “We expect rising global commodity prices and shifting trade patterns to elevate railcar demand in North America and Brazil, and elsewhere in the world.”
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““So there are good things that can come out of war, and we believe that our industry is one that will benefit.””
— CEO Lorie Tekorius
reported before the open net income for the quarter to Feb. 28 of $12.8 million, or 38 cents a share, after a loss of $9.1 million, or 28 cents a share, in the same period a year ago, to beat the FactSet consensus for earnings per share of 19 cents.
Revenue grew 131.0% to $682.8 million, well above the FactSet consensus of $575.8 million, as manufacturing revenue jumped 175.8% to $555.7 million.
New railcar orders were 8,500 units valued at $930 million, more than double last year’s new orders of 3,800 units valued at $440 million.
For fiscal 2022, the company expects deliveries of 17,500 to 19,500 units, compared with deliveries of 13,000 units in fiscal 2021.
Chief Executive Officer Lorie Tekorius said in the post-earnings conference call that “while no one would wish for war,” what’s happening in Ukraine and Russia will create “tremendous opportunities” for transportation by rail of bulk commodities, such as fertilizer, grains, crushed rock and petroleum products.
“So there are good things that can come out of war, and we believe that our industry is one that will benefit,” Tekorius said, according to a FactSet transcript.
Meanwhile, Greenbrier’s stock erased an earlier gain of as much as 1.8% to drop 4.6% to $44.75 on Wednesday, amid a broad and sharp selloff in the transportation sector. The stock suffered a sixth-straight decline, the longest losing streak since the six-day stretch that ended Aug. 19, 2021.
The stock has shed 2.5% year to date through Wednesday, while the Dow Jones Transportation Average
has slumped 11.6% and the Dow Jones Industrial Average
has lost 5.1%.