The Greenbrier panies(US:GBX)2020-10-23 19:05Financial Data and Key Metrics Changes - Revenue for Q4 2020 was $636 million, with net earnings effectively breakeven, but adjusted net earnings were $5.5 million or $0.16 per share [28][30] - Full year revenue was $2.8 billion, with net earnings of $49 million or $1.46 per share, and adjusted net earnings of $70.2 million or $2.10 per diluted share [30][31] - Adjusted EBITDA for Q4 was $65.7 million or 8.7% of revenue, while for the full year it was $310 million or 11.1% of revenue [28][30] Business Line Data and Key Metrics Changes - The company delivered 5,100 units in Q4, including 900 syndicated units, and received orders for 2,800 units valued at $250 million, resulting in a backlog of 24,600 units valued at $2.4 billion [20][28] - The wheels, repair, and parts operations saw a 27% revenue decrease compared to 2019, but profitability increased due to operational improvements [22] - The leasing and services group performed well, generating over $150 million from syndication of 900 units [23] Market Data and Key Metrics Changes - International orders accounted for over 60% of activity in Q4, with North American orders lower compared to Q3 [20][14] - The company maintained a strong backlog with over 90% of North American customers having investment-grade credit ratings, providing stability [15] - The European market showed strength, with border activity accounting for over 50% of orders in the quarter [21] Company Strategy and Development Direction - The company aims to maintain a strong liquidity position, having achieved a liquidity target of $1 billion [12] - Greenbrier is focused on managing cash flow and reducing costs while preparing for a potential market recovery in the second half of 2021 [18][26] - The company is adapting to market conditions by rationalizing manufacturing capacity and maintaining flexibility in operations [13][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a recovery beginning in 2021, despite ongoing uncertainties due to COVID-19 and economic conditions [26][45] - The company is monitoring key metrics such as freight car storage and rail traffic to gauge market recovery [42][45] - Management emphasized the importance of maintaining operational readiness and flexibility to respond to market changes [18][46] Other Important Information - The company announced a dividend of $0.27 per share, marking its 26th consecutive dividend [33] - Greenbrier's liquidity at the end of August was $920 million, with cash of $834 million and available borrowing capacity of $86 million [32][33] - The company incurred approximately $5.2 million in identifiable COVID-19 related costs, which are expected to continue [31] Q&A Session Summary Question: What percentage of backlog is for fiscal 2021 deliveries? - The company did not disclose the percentage, noting that it is a fluid situation with multi-year orders [35] Question: Insights on order and inquiries after quarter end? - The company reported a strong month in orders, maintaining momentum similar to the previous quarter [39] Question: What needs to happen for order activity to pick up? - Key metrics to watch include freight cars in storage and rail traffic velocity, with expectations for a potential snapback in demand [42] Question: Will earnings be down sequentially in the first half of the year? - Management indicated that challenges are expected to continue in Q1 and Q2, but they believe in the long-term health of the rail freight network [45] Question: How is the backlog split between geographies? - Approximately 25% to 30% of the backlog is from Europe and Brazil, with Brazil having orders extending into 2023 [49] Question: Is there incremental demand in Europe beyond replacement orders? - There is significant intermodal interest and policy developments pushing freight transportation onto railroads [51][53] Question: Do you have open capacity to handle potential demand? - The company has considerable extra capacity and flexibility to respond to customer needs [56][57] Question: Is pricing pressure affecting margins? - There has been pressure on pricing in North America, but margins are expected to remain stable [60][67] Question: What is the expected range for deliveries in the first half of 2021? - A reasonable expectation is a range between 4,000 and 2,600 deliveries [71][72]