GE reneging on railcar orders????
I started reading this article for insights on transportation - which conforms a gloomy outlook. Sales of new rolling stock are way down. At the bottom we see that GE is trying to weasel out of a deal to buy rolling stock. No big deal - a difference of $35 million. But still, it doesn't reflect a lot of confidence on GE's part. Lots of belt tightening. Screwing suppliers. Tsk, Tsk, Tsk.
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Greenbrier Posts Loss as Freight Transportation Demand Remains Low
By TESS STYNES
Greenbrier Cos. swung to a fiscal third-quarter loss on $55.7 million in goodwill write-downs and lower demand, though the railcar company said operating results improved from prior quarters.
President and Chief Executive William A. Furman said rail loadings in North America are down about 20% and an estimated 20% to 25% of the region's rail car fleet remains idle.
Greenbrier continues to trim operations and paid down $19 million in debt in the quarter, he said. The company will furlough an additional 550 workers and remains cautious about its outlook citing poor visibility.
It is the third straight quarterly loss for Greenbrier, which like other freight transportation companies has seen demand sink. Earlier this year Greenbrier suspended its dividend and unveiled cost-cutting plans. The company recently calmed concerns about its debt, receiving a $75 million loan from distressed-asset investor WL Ross & Co., and lowering its credit line by two-thirds while easing its terms.
For the quarter ended May 31, the company reported a loss of $50.5 million, or $3 a share, compared with year-earlier earnings of $8.1 million, or 49 cents a share. Excluding the write-downs, Greenbrier said it would have had a 3-cent profit. Revenue tumbled 36% to $244 million.
Analysts polled by Thomson Reuters most recently were looking for a loss of 5 cents on revenue of $269 million.
Gross margin fell to 10.9% from 12.7% amid lower volume and scrap metal prices.
Railcar deliveries tumbled 60% to 800 units while backlog dropped to 14,100 units during the quarter valued at $1.25 billion, from 15,100 units at $1.31 billion. About 84% of the backlog is part of a disputed 2007 contract with one of its biggest customers, a General Electric Co. unit. GE Capital is trying to reduce, delay or otherwise cancel rail-car deliveries under the contract.
Greenbrier said Tuesday it considers GE in breach of contract and that it expects the difference between what GE says it will accept for delivery and the amount required under the contract is 414 cars valued at about $35 million.
The company has diversified into less cyclical businesses such as refurbishment and parts, leasing and services and marine manufacturing. |
