The aggressive consolidation of the Greenbrier Cos. continues.
CEO Bill Furman on Tuesday announced that the company will close or sell eight of its wheels, repair and parts facilities, eliminating a drag on the segment's gross margin of about 100 basis points and freeing up $25 million in capital for the segment.
In addition, another six"underperforming" facilities from the same unit are targeted for operational improvements to boost profitability and reduce capital deployment. Those facilities could eventually be closed or sold as well if performance benchmarks are not met.
Lake Oswego-based Greenbrier (NYSE: GBX) operates 38 wheels, repair and parts facilities in the U.S. and Mexico. In a news release, the company said the 14 plants that are targeted for sale, closure or improvements employ 600 people and generate annual revenue of about $105 million. The company did not identify where the targeted plants are located or the exact number of job losses that will result.
The news was released in conjunction with Greenbrier's third-quarter results. The company reported revenue of $433.7 million, compared to $423.2 million for the previous quarter, and earnings of $15.7 million, or 50 cents a share, compared to $13.8 million in the second quarter.
This is the latest round of cuts in Greenbrier's previously announced strategy to enhance return on investment and increase shareholder value. In April, Furman announced plans to lay off more than 200 workers at the company's Gunderson LLC plant.
Greenbrier expects to incur pre-tax restructuring charges related to the wheels, repair and parts initiatives of about $3 million to $5 million over the next two to three quarters.
The company also announced that two new executives will co-lead the unit. William Glenn, who joined Greenbrier in 2007, will oversee the repair and parts operation, while Rick Turner, who previously led the business, will oversee the wheels operation.
They replace Timothy Stuckey, who retired on June 30 as president of Greenbrier Rail Services.
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