Greenbrier enters into multi-year railcar maintenance agreement with CIT Rail ~Agreement advances strategy to enhance margins
LAKE OSWEGO, Ore., Aug. 12, 2013 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) announced today it has signed a multi-year maintenance supply agreement to provide CIT Rail with dedicated access to repair capacity at Greenbrier's railcar repair & parts shop in Atchison, Kansas, with opportunities to expand to additional repair facilities in its nationwide network. Throughout the term of the agreement, the parties will collaborate to match CIT Rail's railcar maintenance requirements with available shop capacity, thereby maximizing shop utilization and reducing out of service time for CIT railcars. Greenbrier expects the repair work it performs under the agreement will enhance revenue and gross margins for its Wheels, Repair & Parts segment starting in its 2014 fiscal year.
CIT Rail is one of the largest freight car owners in North America with a fleet of approximately 104,000 railcars and 400 locomotives. CIT aims to provide its customers with high quality and dependable railcar assets and this agreement will serve to secure shop space for preventative railcar maintenance, regulatory certifications, lining and paint work and other standard service needs. The arrangement will primarily focus on expanding service offerings for CIT's tank car customers, but will also offer mechanical services for other car types in CIT's fleet. Greenbrier is certifying several of its existing maintenance shops to add tank car maintenance capacity to service emerging demand.
"Our network strategy is designed to provide large fleet owners with consistent, high quality and responsive maintenance services that reduce fleet downtime. This agreement pairs two industry leaders. CIT Rail will have access to the repair capacity they need, offering their customers a superior level of service, while Greenbrier gains a sustained flow of repair work," said William G. Glenn, Senior Vice President responsible for Greenbrier's repair & parts operations.
"Our fleet maintenance agreement gives CIT Rail the opportunity to make a significant commitment to meet the future repair needs of our growing base of tank and general freight car customers," said Jeff Lytle, Senior Vice President, Sales for CIT Rail. "We are pleased to be working with Greenbrier and to have preferred access to high quality, dependable repair support for our tank car fleet."
Greenbrier has also recently entered into multi-year maintenance agreements with two separate Class I railroads to perform preventative maintenance programs on parts of their fleets.
These three multi-year supply agreements are elements of the Company's previously announced plan to enhance margins and improve capital efficiency in its Wheels, Repair & Parts segment.
Greenbrier is also proceeding to sell or close eight Wheels, Repair & Parts facilities that are either non-core or otherwise underperforming and implement initiatives to improve profitability and reduce capital employed at another six facilities currently underperforming. Greenbrier expects these actions to result in a minimum return of capital of $25 million by December 31, 2013.
Greenbrier (www.gbrx.com), headquartered in Lake Oswego, Oregon, is a leading supplier of transportation equipment and services to the railroad industry. Greenbrier builds new railroad freight cars in its four manufacturing facilities in the U.S. and Mexico and marine barges at its U.S. facility. It also repairs and refurbishes freight cars and provides wheels and railcar parts at 36 locations across North America. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through both its operations in Poland and various subcontractor facilities throughout Europe. Greenbrier owns approximately 9,400 railcars, and performs management services for approximately 228,000 railcars.
CIT Rail maintains a fleet of approximately 104,000 railcars and 400 locomotives leased to approximately 500 customers and provides financial solutions to the bulk freight transportation marketplace. It supports the North American transportation system by working with freight shippers, receivers and carriers to customize financial solutions for each customer's individual needs. As a full service lessor and owner of one of the youngest, most diversified fleets of rail assets in North America, CIT Rail brings unparalleled asset management expertise and commitment to the transportation sector. www.citrail.com
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This press release may contain forward-looking statements. Greenbrier uses words such as "anticipates," "believes," "forecast," "potential," "goal," "contemplates," "expects," "intends," "initiatives," "targets," "plans," "projects," "hopes," "seeks," "estimates," "could," "would," "will," "may," "can," "designed to," "foreseeable future" and similar expressions to identify forward-looking statements. 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 in the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog is not indicative of our financial results; turmoil in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of our indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, changing technologies, production of new railcar types, or non-performance of subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; difficulties associated with governmental regulation, including environmental liabilities; integration of current or future acquisitions; succession planning; all as may be discussed in more detail under the headings "Risk Factors" and "Forward Looking Statements" in our Annual Report on Form 10-K for the fiscal year ended August 31, 2012, and our other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. Except as required by law, we do not assume any obligation to update any forward-looking statements.
SOURCE The Greenbrier Companies, Inc. (GBX)