LAKE OSWEGO, Ore., May 13, 2020 /PRNewswire/ -- The Greenbrier
Companies, Inc. (NYSE: GBX) ("Greenbrier"), a leading international
supplier of equipment and services to global freight transportation
markets, today announced that it has amended its 50/50 joint
venture agreement with Grupo Industrial Monclova, S.A. De C.V.
(GIMSA), its manufacturing partner at Greenbrier GIMSA facilities
in Monclova, Mexico. This and
other measures will help Greenbrier achieve its goal of
$1 billion in total liquidity.
William A. Furman, Chairman &
CEO, commented, "Greenbrier is successfully executing the dual
priorities of protecting the safety and health of employees and
preserving the economic well-being of our enterprise in this
challenging environment. We continue to improve our financial
liquidity, including the temporary restructuring of a key
partnership at our railcar manufacturing joint venture in
Mexico in a manner beneficial to
both partners. Greenbrier has increased borrowing capacity and
liquidity by almost $200 million
since the end of its second quarter on February 29, 2020. We continue to reduce
operating expenses and capital outflows, while reducing selling and
administrative and other non-essential expenses. Operations
continue under national and local government "Essential Business"
designations at all Greenbrier global locations in North America, Europe and South
America."
Greenbrier GIMSA Joint Venture Enhancements
The new agreement with our joint venture partner is beneficial to
both parties and ensures Greenbrier GIMSA continues as a North
American leader in freight railcar manufacturing. Under the
new agreement, both partners will receive additional revenue and
dividends for a 12-month period, based on Greenbrier GIMSA revenue
beginning March 1, 2020 and ending
February 28, 2021. Greenbrier
estimates these changes to be accretive to its earnings by
approximately $0.40 per share, with
$0.25 per share coming in its fiscal
2020 second half.
Liquidity Update and $1 Billion
Target
In its fiscal second quarter earnings release, Greenbrier stated
that it had initiated a range of proactive responses to address
conditions in the rail equipment industry and the impact of the
COVID-19 pandemic in order to, among other things, increase the
company's financial liquidity, comprised of cash and borrowing
availability, from $620 million to
$1 billion. As part of this effort,
Greenbrier improved financial liquidity during the first two months
of the fiscal third quarter by generating $170 million in cash flow.
Greenbrier's stronger financial liquidity has also been achieved
through a combination of expanded borrowing capacity and spending
reductions. Greenbrier has reduced capital expenditures by
$45 million in the second half of
fiscal 2020 and is targeting another $40
million reduction in fiscal 2021. Annualized reductions in
selling & administrative expense of over $30 million are expected. Greenbrier's business
units are targeting $65 million in
annual overhead reductions. Greenbrier has broadened its domestic
borrowing base while also working to increase borrowing
capabilities in Europe and
Mexico. Greenbrier currently has
credit lines globally of $700
million, of which $382 million
is drawn down and is liquid. Finally, a deferral of employer
payroll taxes as permitted under the CARES Act will generate at
least $9 million until the deferment
period culminates at the end of calendar 2020. The
combination of the increase in financial liquidity and spending
reductions as outlined above total approximately $1 billion compared to February 29, 2020 liquidity of $620 million, positioning Greenbrier to
successfully navigate the current crisis and emerge stronger.
About Greenbrier
Greenbrier, headquartered in
Lake Oswego, Oregon, is a leading
international supplier of equipment and services to global freight
transportation markets. Greenbrier designs, builds and markets
freight railcars and marine barges in North America. Greenbrier Europe is an end-to-end freight railcar
manufacturing, engineering and repair business with operations in
Poland, Romania and Turkey that serves customers across
Europe and in the nations of the
Gulf Cooperation Council. Greenbrier builds freight railcars and
rail castings in Brazil through
two separate strategic partnerships. We are a leading provider of
freight railcar wheel services, parts, repair, refurbishment and
retrofitting services in North
America through our wheels, repair & parts business
unit. Greenbrier offers railcar management, regulatory
compliance services and leasing services to railroads and related
transportation industries in North
America. Through unconsolidated joint ventures, we produce
industrial and rail castings, tank heads and other components.
Greenbrier owns a lease fleet of 10,275 railcars and performs
management services for 389,000 railcars. Learn more about
Greenbrier at www.gbrx.com.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995: This press release may contain
forward-looking statements, including any statements that are not
purely statements of historical fact. Greenbrier uses words, and
variations of words, such as "aim", "believe,"
"potential," "plans," "estimates," "should,"
"typically", "will," "may," "can," and similar expressions to
identify forward-looking statements. These forward-looking
statements include, without limitation, the information under the
heading "Greenbrier GIMSA Joint Venture Enhancements" and
"Liquidity Update and $1 Billion
Target" and any other information regarding future performance and
strategies. These forward-looking statements are not guarantees of
future performance and are subject to certain risks and
uncertainties that could cause actual results to differ materially
from the results contemplated by the forward-looking
statements. Factors that might cause such a difference
include, but are not limited to, the COVID-19 coronavirus pandemic
and the governmental reaction to COVID-19 having a materially
negative impact on our business, liquidity and financial position,
results of operations, stock price, and our ability to convert
backlog to revenue as more fully described in Part II Item 1A "Risk
Factors" of our most recently Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission, the cyclical nature of
our business, economic downturns and a rising interest rate
environment; changes in our product mix due to shifts in demand or
fluctuations in commodity and energy prices; a decline in
performance or demand of the rail freight industry; an oversupply
or increase in efficiency in the rail freight industry; difficulty
integrating acquired businesses or joint ventures; inability to
convert backlog to future revenues; risks related to our operations
outside of the U.S., including anti-bribery violations;
governmental policy changes impacting international trade and
corporate tax; the loss of or reduction of business from one
or more of our limited number of customers; inability to lease
railcars at satisfactory rates, or realize expected residual values
on sale of railcars at the end of a lease; shortages of skilled
labor, increased labor costs, or failure to maintain good relations
with our workforce; equipment failures, technological failures,
costs and inefficiencies associated with changing of production
lines, or transfer of production between facilities; inability to
compete successfully; suitable joint ventures, acquisition
opportunities and new business endeavors may not be identified or
concluded; inability to complete capital expenditure projects
efficiently, or to cause capital expenditure projects to operate as
anticipated; inability to design or manufacture products or
technologies, or to achieve timely certification or market
acceptance of new products or technologies; unsuccessful
relationships with our joint venture partners; environmental
liabilities, including the Portland Harbor Superfund Site; the
timing of our asset sales and related revenue recognition may
result in comparisons between fiscal periods not being accurate
indicators of future performance; attrition within our management
team or unsuccessful succession planning for members of our senior
management team and other key employees who are at or nearing
retirement age; changes in the credit markets and the financial
services industry; volatility in the global financial markets; our
actual results differing from our announced expectations;
fluctuations in the availability and price of energy, freight
transportation, steel and other raw materials; inability to procure
specialty components or services on commercially reasonable terms
or on a timely basis from a limited number of suppliers; our
existing indebtedness may limit our ability to borrow additional
amounts in the future, may expose us to increasing interest rates,
and may expose us to a material adverse effect on our business if
we are unable to service our debt or obtain additional financing;
train derailments or other accidents or claims; changes in or
failure to comply with legal and regulatory requirements; an
adverse outcome in any pending or future litigation or
investigation; potential misconduct by employees; labor strikes or
work stoppages; the volatility of our stock price; dilution to
investors resulting from raising additional capital or due to other
reasons; product and service warranty claims; misuse of our
products by third parties; write-downs of goodwill or intangibles
in future periods; conversion at our option of our outstanding
convertible notes resulting in dilution to our then-current
stockholders; as a holding company with no operations, our reliance
on our subsidiaries and joint ventures and their ability to make
distributions to us; our governing documents, the terms of our
convertible notes, and Oregon law
could make a change of control or acquisition of our business by a
third party difficult; the discretion of our Board of Directors to
pay or not pay dividends on our common stock; fluctuations in
foreign currency exchange rates; inability to raise additional
capital to operate our business and achieve our business
objectives; shareholder activism could cause us to incur
significance expense, impact our stock price, and hinder execution
of our business strategy; cybersecurity risks; updates or changes
to our information technology systems resulting in problems;
inability to protect our intellectual property and prevent its
improper use by third parties; claims by third parties that our
products or services infringe their intellectual property rights;
liability for physical damage, business interruption or product
liability claims that exceed our insurance coverage; inability to
procure adequate insurance on a cost-effective basis; changes in
accounting standards or inaccurate estimates or assumptions in the
application of accounting policies; fires, natural disasters,
severe weather conditions or public health crises; unusual weather
conditions which reduce demand for our wheel-related parts and
repair services; business, regulatory, and legal developments
regarding climate change which may affect the demand for our
products or the ability of our critical suppliers to meet our
needs; repercussions from terrorist activities or armed conflict;
unanticipated changes in our tax provisions or exposure to
additional income tax liabilities; the inability of certain of our
customers to utilize tax benefits or tax credits; and suspension or
termination of our share repurchase program. More information on
these risks and other potential factors that could cause our
results to differ from our forward-looking statements is included
in the Company's filings with the SEC, including in the "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections of the Company's most
recently filed periodic reports on Form 10-K and subsequent Form
10-Q filing. Except as otherwise required by law, the Company
assumes no obligation to update any forward-looking statements or
information, which speak as of their respective dates. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinions only as of the date
hereof.
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SOURCE The Greenbrier Companies, Inc.