Greenbrier Companies, Inc. (The) (GBX)

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Greenbrier Companies Inc (GBX)

F1Q2013 Earnings Call

January 9, 2012 11:00 am ET

Executives

Lorie Leeson - Vice President, Corporate Finance and Treasurer

William Furman - President, Chief Executive Officer, Director

Mark Rittenbaum - Chief Financial Officer, Executive Vice President

Analysts

J.B. Groh - D.A. Davidson

Brad Delco - Stephens

Allison Poliniak - Wells Fargo

Tom Albrecht - BB&T

Peter Nesvold - Jefferies & Company

Art Hatfield - Raymond James

Salvatore Vitale - Sterne Agee

Matt Brooklier - Longbow Research

Presentation

Operator

Hello and welcome to The Greenbrier Companies' first quarter of fiscal year 2013 earnings conference call. Following today's presentation, we will conduct a question-and-answer session. Until that time, all lines will be in a listen-only mode. At the request of The Greenbrier Companies, this conference call is being recorded for instant replay purposes.

At this time, I would like to turn the conference over to Ms. Lorie Leeson, Senior Vice President and Treasurer. Ms. Leeson, you may begin.

Lorie Leeson

Thank you, and good morning, and everyone welcome to our fiscal 2013 first quarter conference call. With me on today's call is Greenbrier's Chief Executive Office, Bill Furman and Mark Rittenbaum, our Chief Financial Officer. Please note, that we have included on the IR section of our corporate website, www.gbrx.com, some additional financial information to our earnings press release as well as some slides that contains supplemental financial information that we encourage everyone to take a look at.

Also note, that we will no longer be discussing quarterly results and relevant comparisons to prior period. That information as well as key factors for the changes in the figures have been captures in the financial slides of our earnings presentation. Lastly, as always, matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2013 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier.

With that, I would now like to turn the call over to Bill Furman, our CEO. Bill?

William Furman

Thank you, Lorie and welcome everyone to today's call. This morning, I would like to take a few minutes to walk all of you through some recent events of our company, talk a bit about Greenbrier's stock valuation, our outlook for 2013 and beyond. This is partly in response to questions we received from shareholders and analysts community following the dialog with Carl Icahn and other matters.

As most of you are aware, Greenbrier's board of directors recently turned down a conditional proposal from Carl Icahn regarding an acquisition of Greenbrier by American Railcar Industries for $22 per share. We believe that proposal undervalued the company and was not in the best interest of our stockholders. While a combination of Greenbrier and American Railcar might be beneficial to both companies and the respective shareholders, our board decided it cannot support a transaction that undervalues our company and the potential benefits to American Railcar over that matter one which might overvalue American Railcar if there were ever were a merger transaction involving an exchange of stock irrespective of which company might be the acquirer.

Our response to Mr. Icahn's conditional proposal is already accessible on our corporate website. To provide more color and what we meant by undervaluing Greenbrier, we believe that Mr. Icahn's proposal did not reflect the significant value inherent in our unique and aggregate business model, diversified product portfolio and outstanding position in the railway supply industry, all of which enables Greenbrier to deliver customized solutions to customers and to enhance shareholder value.

Neither does the proposal reflect the sizeable synergies of possible combination nor the complexities of putting together two competitors with a conditional proposal with such a low cash price. Further beyond failing to share synergies, the proposal overlooked an appropriate premium that would be implied by the serious strategic nature of such a possible combination, the scarcity of possible combinations in railroad supply space as well as deferring strategic as opposed to tactical positions of the two companies today and their respective long-term prospects.

We believe that Greenbrier's integrated business model together with our diversified product offerings will enhance financial performance across the business cycle. Our model creates powerful cross selling opportunities and captures value for Greenbrier, its shareholders and its customers throughout the life of the railcar.

Importantly, our diverse product offerings will serve a broad array of commodities. As a result, we are able to adapt to demand as market dynamic shift away from one commodity or one car type to another. For example, over the past three years in response to increases in demand resulting from the strong energy markets, we have built 11,000 tank cars and hopper cars for the transportation of oil by rail and for the frac sand markets.

We are dramatically ramping our participation in a high margin tank business and have successfully secured and will secure major orders across the entire range of freight cars accept coal matching the capabilities of our new manufacturing and engineering footprint and capabilities. We do not want to be tied to a single car type as we used to be with intermodal and for its products.

We've greatly expanded our available market by increasing capacity and diversifying our entire product portfolio. This strategy is working. Monday evening, we announced that we received orders for 4,200 rail car units valued at $430 million across the broad range of car types lead by tank cars and automotive.

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