Greenbrier posts $146 million of cash, borrowing capacity; reduces net debt in third quarter

By Jennifer Lanning Drey

Portland, Ore., July 7 - Greenbrier Cos. had $50 million of cash and $96 million of additional borrowing capacity at July 6, after reducing net debt by $19 million during the quarter ended May 31, William Furman, chief executive officer of Greenbrier, said during the company's third-quarter earnings conference call held Tuesday.

The company believes its liquidity provides a safe cushion of cash and a strong balance sheet, and Greenbrier will look to continue to reduce net debt in the fourth quarter.

"We continue to manage the company for cash and liquidity. This was a focus of ours during the quarter," Mark Rittenbaum, chief financial officer of Greenbrier, said during the call.

With its improving liquidity, potential bond repurchases remain an intriguing possibility for Greenbrier, the CFO said during the question-and-answer portion of the call.

"When we look at opportunities and returns on invested capital, we're definitely evaluating our bonds," he said.

As previously reported, during the third quarter Greenbrier closed on a new $75 million three-year non-amortizing secured term loan from WL Ross & Co. LLC and amended its existing North American revolving credit facility to make the covenants more accommodating to Greenbrier.

The WL Ross investment provides Greenbrier a platform in its core businesses where the company may be able to work with Ross to invest in industry assets, particularly as asset prices in the sector drop, Furman said.

However, Greenbrier does not expect to tap its domestic lines of credit until market conditions improve and the right opportunity presents itself, Rittenbaum said.

Revenues, EBITDA down

For the third quarter, Greenbrier posted revenue of $244 million, down 36%, from revenue of $382 million in the comparable prior-year period. EBITDA before special charges for the quarter was $20.3 million, down from $34.5 million in the third quarter of 2008.

The company said performance in its manufacturing and refurbishment and parts business segments showed improvement over the first two quarters of the year, although markets remain challenging.

As a result, Greenbrier continues to scale back capital spending and look to reduce costs.

Additionally, Greenbrier remains in discussions with General Electric Railcar Services regarding GE's request to reduce or delay deliveries of new railcars under a long-term contract.

Greenbrier believes GE is in breach of its obligation under the contract and intends to deliver the number of tank cars and covered hopper cars ordered under the contract.

Greenbrier is a Lake Oswego, Ore.-based supplier of transportation equipment and services to the railroad industry.

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