Written by: William C. Vantuono, Editor-in-Chief The Railway Supply Institute on Jan. 28, 2016 published its railcar industry order, delivery and backlog statistics for fourth-quarter 2015, and overall, the sector looks solid, according to Steve Barger, Managing Director and Equity Research Analyst with KeyBanc Capital Markets Inc. Orders in the quarter increased to 9,169 cars from 7,374 cars in third-quarter 2015. Deliveries of 20,296 railcars in the quarter, compared to the previous quarter’s “strong” delivery figure of 20,476 railcars. The backlog now stands at 111,019 railcars, down 9.4% from prior quarter’s level of 122,591 cars, “though still at historical highs,” notes Barger. Industry orders for tank cars totaled 1,176 vs. 3Q15 orders for 1,463 tanks. “While the order number is modest, we think it could be better than concerns warranted, and likely represents demand trends for non-energy tank cars,” says Barger. Non-tank-car orders totaled 7,993 in the quarter, vs. 5,911 non-tank cars in 3Q15. Covered hoppers, which showed the largest concentration in orders, totaled 5,453 railcars, about 60% of the total and well above the 3Q15’s 51% with small-cube covered hoppers representing the majority of the orders at 2,850 cars, vs. zero small-cubes cars ordered in 3Q15. Orders for mid-cube and large-cube covered hoppers were 1,138 and 1,465 cars in the quarter, respectively, vs. 672 and 3,113, respectively, in 3Q15. Together, tank and covered hoppers accounted for more than 72% of total orders in the quarter, about even with 71% in 3Q15 “Industry book-to-bill came in at 0.5x, slightly better than l3Q15’s figure of 0.4x,” notes Barger. “In the quarter, respective book-to-bill for tank and non-tank activity was 0.1x and 0.7x, respectively. We think the weak book-to-bill for tanks is primarily attributable to customers delaying orders as they continue to assess their fleet for DOT compliance in the midst of volatile oil prices.” Deliveries came in at 20,296 in the quarter (8,341 tank cars and 11,995 non-tank cars). 4Q15 tank deliveries were down 6% sequentially, “implying an annual capacity of 33,000-35,000 cars,” says Barger. “If that capacity range is correct, it implies the industry enjoys approximately 3.5 quarters of tank backlog visibility. Industry backlog stands at 111,019 railcars, down modestly from 3Q15’s level of 135,805 railcars. “On current deliveries, we think the backlog implies approximately 5.5 quarters of theoretical production visibility,” notes Barger. “Tank backlog decreased approximately 20% sequentially to 30,789 cars, or 28% of total backlog, vs. 31% in 3Q15. The non-tank backlog moderated to 80,230 railcars, down from the prior quarter’s 84,137 railcars.” Continue reading...
