© Reuters.
In a recent earnings call, The Greenbrier (NYSE:) Companies, Inc. (NYSE:GBX) showcased a solid start to fiscal 2024, posting over $800M in revenue and a gross margin of 15%. The railcar manufacturer and lessor reported a substantial backlog of orders and a strategic emphasis on the expansion of its leasing and services sector, with the intent to double recurring revenue. The company also announced a quarterly dividend of $0.30 per share, reflecting confidence in its long-term financial health and market position.
Key Takeaways
- Greenbrier’s Q1 fiscal 2024 revenue exceeded $800M with a 15% gross margin.
- New railcar orders amounted to nearly $710M for 5,100 units.
- The global backlog stands at 29,700 units, valued at $3.8B.
- The company aims to double leasing and management services revenue.
- Greenbrier declared a quarterly dividend of $0.30 per share.
- Fiscal year 2024 guidance projects revenues between $3.4B and $3.7B, with unit deliveries ranging from 22,500 to 25,000.
- The company expects to save $19-20M from the Marine and Foundry sale and tens of millions from rebuild and refurbishment activities.
Company Outlook
- Greenbrier is confident in its long-term strategy, expecting stable demand across various railcar types in North America and Europe.
- The company affirms its 2024 revenue and delivery guidance, with expected revenues between $3.4B to $3.7B.
- Savings from the Marine and Foundry sale and rebuild and refurbishment activities are anticipated to contribute significantly to future revenue.
Bearish Highlights
- No multi-year orders are currently in the backlog, indicating a need for continuous market engagement to secure new contracts.
- The secondary market for railcars is considered overvalued, prompting selective participation by the company.
Bullish Highlights
- The leasing platform in Europe is fully operational, supporting the company’s expansion strategy.
- Strong post-quarter order activity and an increase in the average selling price of orders reflect a healthy demand for Greenbrier’s products.
- The syndication market remains robust, which is expected to sustain stable activity throughout the year.
Misses
- Specific details regarding open capacity in the company’s business units were not provided.
Q&A Highlights
- The company is focused on reducing recourse debt and is evaluating options for future funding.
- Investments in manufacturing are yielding annual savings of $50-55M.
- Greenbrier uses a cost of capital of around 9-10% when evaluating leasing deals.
Greenbrier’s first quarter of fiscal 2024 demonstrates a strong financial performance and a strategic focus on growth and efficiency. With a substantial order backlog and a clear path to increased revenue through leasing and services, the company is well-positioned for continued success in the railcar industry. Despite the absence of multi-year orders and the overvaluation in the secondary market, Greenbrier’s diverse order book and disciplined investment approach signal a robust outlook. Investors and stakeholders can anticipate further developments at the upcoming Annual Shareholder Meeting.
InvestingPro Insights
In light of Greenbrier’s recent earnings call and strategic updates, real-time data and InvestingPro Tips can provide investors with additional context on the company’s performance and outlook. With a market capitalization of $1.45B and a Price to Book ratio of 1.14 as of the last twelve months ending in Q1 2024, the company presents a tangible book value relative to its market value. This could be appealing for value-oriented investors.
InvestingPro Tips suggest that while Greenbrier operates with a significant debt burden, management has been actively buying back shares, which may indicate their confidence in the company’s value. Additionally, the company’s net income is expected to grow this year, which aligns with their strategic emphasis on expanding leasing and services revenue.
The company’s revenue growth of 24.83% over the last twelve months as of Q1 2024, along with a gross profit margin of 12.36%, reflects the strength of its core manufacturing operations, despite the challenges posed by a competitive railcar market. Moreover, with a dividend yield of 2.58% and a record of maintaining dividend payments for 11 consecutive years, Greenbrier demonstrates its commitment to delivering shareholder value.
Investors seeking deeper analysis will find a wealth of additional insights on Greenbrier with an InvestingPro subscription, now available at a special New Year sale with discounts of up to 50%. For those looking to leverage these insights over a longer term, use coupon code sfy24 to get an additional 15% off a 2-year InvestingPro+ subscription. In total, there are 17 more InvestingPro Tips listed in InvestingPro for Greenbrier, offering a comprehensive understanding of the company’s financial health and market potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Source link
