“We made solid progress during the quarter leveraging our manufacturing flexibility to reposition a portion of our production capacity to meet growing demand in these industries,” Mr. Wallace continued. “During the short term, repositioning requires up-front investment and causes operating inefficiencies that will impact results through the end of this year. In the long term, our repositioning enhances our ability to better serve our customers. Our outlook for 2013 remains optimistic. We are anticipating long production runs, resulting in additional operating leverage in our businesses that support the oil, gas, and chemical industries.”
The Company's earnings guidance for the fourth quarter is between $0.78 and $0.85 per common diluted share, including approximately $0.04 to $0.05 per common diluted share of costs expected to be incurred as the Company repositions a portion of its production capacity. This results in full-year 2012 earnings guidance of between $3.08 and $3.15 per common diluted share. The full-year 2012 earnings guidance represents an increase of between 87% and 91% over 2011 earnings after adjusting 2011 for $0.12 per common diluted share of non-recurring flood-related net gains.
Results for the fourth quarter of 2012 could be impacted by a number of factors, including, among others: the operating leverage that can be achieved by the rail business; the costs associated with repositioning a portion of the production capacity; the level of sales of railcars from the leasing portfolio; the amount of profit eliminations due to railcar additions to the Leasing Group; and the impact of weather conditions on businesses within the Construction Products Group.
Business Group Results
In the third quarter of 2012, the Rail Group reported revenues of $457.9 million and an operating profit of $35.2 million. This compares to revenues of $320.9 million and an operating profit of $18.2 million in the third quarter of 2011. Results for the third quarter of 2012 included approximately $0.05 per common diluted share of after-tax costs associated with the repositioning of a portion of the Company's production capacity. The Rail Group shipped 4,145 railcars and received orders for 4,865 railcars during the third quarter. As a result, the Rail Group backlog grew to approximately $3.3 billion at September 30, 2012, representing 31,330 railcars, compared to a backlog of approximately $3.2 billion as of June 30, 2012, representing 30,610 railcars.