Re: Trinity and GBX

Orders for new railway tank cars plunges amid declining oil output • 12:59 PM
Carl Surran, SA News Editor

Declining output from shale oil fields has in turn cut demand for key types of railroad cars, according to new industry figures, in the latest sign of the fallout from lower crude oil prices.

Buyers ordered 4,470 new railway tank cars during Q1, down 6% Y/Y and ~70% below the nearly 15K tank cars ordered during Q4, according to the Railway Supply Institute trade group.

Q1 orders for covered “hopper” cars, used mostly to deliver fracking sand to drill sites, also fell to 131 cars from 11.5K a year ago and 8,627 cars during Q4.

Tank car orders had surged with shale oil output, generally transported to refineries by rail, but output from North Dakota’s Bakken Shale field dropped in both January and February, and the U.S. Energy Department predicts continued declines in output there for April and May.

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Sheesh Saul.

I really hate this kind of half-a$$ clips by a Seeking Alpha news editor, who failed to cite the original source that he copied only portions of verbatim, i.e., a WSJ article by Bob Tita, who also wrote:…

Railcar manufacturers still have bulging backlogs of orders for cube and tank cars. The industrywide backlog of 52,381 tank cars is enough for at least 18 months of production based on last year’s volume, while the backlog of 33,986 cube-car orders equates to 2.5 times last year’s output.

Analysts expect manufacturers to be steadfast about not allowing customers to cancel car orders.

“The manufacturers are going to be very adamant that if you ordered a car, they’ll deliver it and you’ve got to pay for it,” said Mr. Starks [Eric Starks, president of logistics consulting firm FTR Associates].

Last year’s flood of orders from the energy industry squeezed some other car users, such as chemical companies and food processors, out of the tank-car and hopper markets. Trinity Industries Inc., which makes and leases railcars, on Friday said that some of them have become buyers again.

“We see a broadening demand for our railcars,” Stephen Menzies, vice president in charge Trinity’s railcar business, said during a call with analysts. “We have received a fair number of tank car orders beyond those serving the crude-oil markets.”

Trinity’s first-quarter results easily topped expectations and the company raised its profit guidance for the year. Nevertheless, investors Friday dumped its shares, driving the stock down 14% to $28.70.

I see the TRN price drop as a buying opportunity here.

And BTW, TRN reported in their 1Q 2015 results that the Rail Group delivered a record 8,710 railcars and received orders for 4,865 new railcars during the first quarter resulting in a backlog of 57,190 units with a value of $6.81 billion.


Sheesh Saul. I really hate this kind of half-a$$ clips by a Seeking Alpha news editor, who failed to cite the original source that he copied only portions of verbatim, i.e., a WSJ article by Bob Tita,

Hi Ray, I received the article as an email because of its linkage with all railroad stocks, and I am on their alert list for WAB. I take news stories more seriously than opinion pieces, and this was a news article. I posted it on our board because I knew people on this board were interested in those two companies that especially made railroad cars, and might not have seen the article. I posted it without comment, because I don’t know Trinity and GBX and had no idea, myself, how they’d be affected.


Hi Saul,

I’ve been lurking here for a while and I appreciate all the invaluable lessons you’ve been giving out free. Thanks for your generosity.

I’ve been following TRN and GBX closely after the posting that compares WAB, TRN, and GBX. I can provide some updates regarding the current situations.

I believe you’re aware of TRN’s lawsuit case regarding their guardrails. They initially lost the case and they’re going through appeal process. They were asked to test safety of guardrails through third party and the government agency approved TRN passed all the tests.

And then just ONE DAY BEFORE THE EARNINGS, Bloomberg posted an article saying that Department of Justice is opening an criminal investigation over TRN to see if there was any collusion/bribery going on between TRN and the government agency, which is confirmed by ‘a person familiar with the matter.’ TRN said they weren’t approached by DoJ yet. Despite the impressive earnings, TRN crashed 20+% over two days, which also brought GBX down at the same time.

I also agree that both TRN and GBX are good buying opportunities when the regulation of upgrading old railcars are coming soon in early May. Interestingly, WAB wasn’t really affected by the situation. I recently started a small position in TRN but I find GBX a better buy considering TRN’s lawsuit situation and GBX’s new offerings of railcars.



Thanks Hex for the interesting tidbits. Feel free to change from lurking to posting.