Greenbrier Reports Second Quarter Results

Q2 FY23

Q1 FY23

Sequential Comparison – Main Drivers

Revenue

$1.1B

$766.5M

60% increase in deliveries; Each segment achieved higher revenue

Gross margin

$116.8M

$69.5M

Driven by higher volumes in Manufacturing, robust syndication activity in Leasing & Management Services and improved operating efficiency in all segments

Gross margin %

10.4 %

9.1 %

Selling and administrative

$59.0M

$53.4M

Increased employee related costs due to higher incentive compensation expense as a result of timing of financial performance

Net gain on disposition of

equipment

$9.6M

$3.3M

Timing of gains from ongoing fleet optimization

Adjusted EBITDA

$97.9M

$48.7M

Increased operating earnings reflecting higher volume across all business units; See reconciliation on page 11

Net (earnings) loss attributable to noncontrolling interest

($3.7M)

$0.6M

Partners' share of consolidated JV's operating results including timing of syndication activity

Adjusted Net earnings attributable to Greenbrier

$33.8M⁽¹⁾

$1.6M⁽²⁾

Improved operating earnings

Adjusted diluted EPS

$0.99⁽¹⁾

$0.05⁽²⁾

(1)

Excludes $0.7 million ($0.02 per share), net of tax, of Gunderson exit related costs. Reconciliations for Adjusted metrics can be found on page 11.

(2)

Excludes $18.3 million ($0.56 per share), net of tax, of non-cash asset impairment. Reconciliations for Adjusted metrics can be found on page 11.

Q2 FY23

Q1 FY23

Sequential Comparison – Main Drivers

Manufacturing

  Revenue

$968.6M

$646.5M

Increased deliveries including timing of syndication activity

  Gross margin

$67.4M

$42.0M

Higher deliveries and improved operating efficiencies

  Gross margin %

7.0 %

6.5 %

  Operating margin %⁽¹⁾

4.8 %

(0.5 %)

Improved operating efficiencies; Prior quarter included $24 million non-cash asset impairment; Excluding the impairment, operating margin in Q1 was 3.2%

  Deliveries ⁽²⁾

7,200

4,500

Increased production and timing of syndication activity

Maintenance Services

  Revenue

$98.0M

$85.5M

Increased volumes due to winter seasonality

  Gross margin %

8.6 %

6.9 %

  Operating margin % ^{(1) (3)}

6.9 %

6.4 %

Leasing & Management Services

  Revenue

$55.4M

$34.5M

Primarily increased syndication activity and lease fleet income

  Gross margin %

74.0 %

62.6 %

  Operating margin% ^{(1) (3)}

73.5 %

45.2 %

Timing of gains from fleet optimization 

  Fleet utilization

98.7 %

97.9 %

⁽¹⁾

See supplemental segment information on page 10 for additional information.

⁽²⁾

Excludes Brazil deliveries which are not consolidated into Manufacturing revenue and margins.

⁽³⁾

Includes Net gain on disposition of equipment, which is excluded from gross margin. 

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, unaudited)

February 28,

2023

November 30,
2022

August 31,

2022

May 31,

2022

February 28,

2022

Assets

   Cash and cash equivalents

$               379.9

$               263.3

$               543.0

$               449.7

$               586.8

   Restricted cash

19.7

17.2

16.1

16.1

15.7

   Accounts receivable, net 

571.5

495.6

501.2

464.8

399.0

   Income tax receivable   

22.4

28.9

39.8

129.4

106.0

   Inventories

910.6

874.9

815.3

781.7

728.5

   Leased railcars for syndication

102.5

272.5

111.1

142.9

80.0

   Equipment on operating leases, net

891.8

836.2

770.9

676.1

650.4

   Property, plant and equipment, net

618.4

617.6

645.2

642.7

646.5

   Investment in unconsolidated affiliates

83.4

94.2

92.5

96.2

90.2

   Intangibles and other assets, net

224.0

189.0

189.1

177.8

179.6

   Goodwill

128.3

127.7

127.3

128.7

130.0

$           3,952.5

$           3,817.1

$           3,851.5

$           3,706.1

$           3,612.7

Liabilities and Equity

   Revolving notes

$               310.3

$               290.5

$               296.6

$               303.3

$               292.2

   Accounts payable and accrued liabilities

722.6

676.5

725.1

639.0

581.2

   Deferred income taxes

70.2

49.8

68.6

72.9

51.9

   Deferred revenue

73.0

53.2

35.3

33.3

43.0

   Notes payable, net

1,327.0

1,301.5

1,269.1

1,202.6

1,209.2

Contingently redeemable noncontrolling interest

27.5

27.7

27.7

27.8

28.5

   Total equity – Greenbrier

1,277.3

1,265.8

1,276.9

1,270.4

1,252.6

   Noncontrolling interest

144.6

152.1

152.2

156.8

154.1

   Total equity

1,421.9

1,417.9

1,429.1

1,427.2

1,406.7

$           3,952.5

$           3,817.1

$           3,851.5

$           3,706.1

$           3,612.7

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except number of shares which are reflected in thousands and per share amounts, unaudited)

Three Months Ended

February 28,

          Six Months Ended

February 28,

2023

2022

2023

2022

Revenue

Manufacturing

$                   968.6

$              555.7

$               1,615.1

$             1,008.2

Maintenance Services

98.0

86.6

183.5

159.0

Leasing & Management Services

55.4

40.5

89.9

66.3

1,122.0

682.8

1,888.5

1,233.5

Cost of revenue

Manufacturing

901.2

535.0

1,505.7

956.6

Maintenance Services

89.6

81.7

169.2

152.9

Leasing & Management Services

14.4

11.3

27.3

21.6

1,005.2

628.0

1,702.2

1,131.1

Margin

116.8

54.8

186.3

102.4

Selling and administrative expense

59.0

54.7

112.4

99.0

Net gain on disposition of equipment

(9.6)

(25.1)

(12.9)

(33.6)

Impairment of long-lived assets

-

-

24.2

-

Earnings from operations

67.4

25.2

62.6

37.0

Other costs

Interest and foreign exchange

21.6

11.8

41.2

24.4

Earnings before income taxes and earnings from unconsolidated affiliates

45.8

13.4

21.4

12.6

Income tax expense

(11.9)

(3.2)

(8.1)

(1.8)

Earnings before earnings from unconsolidated affiliates

33.9

10.2

13.3

10.8

Earnings from unconsolidated affiliates

2.9

1.0

6.2

6.0

Net earnings

36.8

11.2

19.5

16.8

Net (earnings) loss attributable to noncontrolling interest

(3.7)

1.6

(3.1)

6.8

Net earnings attributable to Greenbrier

$                     33.1

$                12.8

$                    16.4

$                   23.6

Basic earnings per common share:

$                     1.01

$                0.39

$                    0.50

$                   0.72

Diluted earnings per common share:

$                     0.97

$                0.38

$                    0.49

$                   0.70

Weighted average common shares:

Basic

32,588

32,582

32,654

32,546

Diluted

34,400

34,463

33,654

33,609

Dividends declared per common share

$                     0.27

$                0.27

$                    0.54

$                   0.54

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, unaudited) 

Six Months Ended
February 28,

2023

2022

Cash flows from operating activities

    Net earnings

$               19.5

$               16.8

    Adjustments to reconcile net earnings to net cash used in operating activities:

    Deferred income taxes

(33.9)

(4.3)

    Depreciation and amortization

52.9

50.9

   Net gain on disposition of equipment

(12.9)

(33.6)

   Stock based compensation expense

5.9

5.9

    Impairment of long-lived assets

24.2

-

    Noncontrolling interest adjustments

2.3

(0.6)

    Other

1.9

2.4

    Decrease (increase) in assets:

          Accounts receivable, net

(57.8)

(93.5)

          Income tax receivable

17.4

6.2

          Inventories

(90.4)

(166.5)

          Leased railcars for syndication

(40.1)

(12.2)

          Other assets

(12.8)

(8.5)

   Increase (decrease) in liabilities:

          Accounts payable and accrued liabilities

(9.7)

15.2

          Deferred revenue

37.1

1.5

    Net cash used in operating activities

(96.4)

(220.3)

Cash flows from investing activities

    Proceeds from sales of assets

62.1

148.6

    Capital expenditures

(169.7)

(198.0)

    Investments in and advances to / repayments from unconsolidated affiliates

(3.5)

(4.2)

    Cash distribution from unconsolidated affiliates and other

5.9

1.2

    Net cash used in investing activities

(105.2)

(52.4)

Cash flows from financing activities

    Net change in revolving notes with maturities of 90 days or less

(64.4)

(75.6)

    Proceeds from revolving notes with maturities longer than 90 days

220.0

-

    Repayments of revolving notes with maturities longer than 90 days

(145.0)

-

    Proceeds from issuance of notes payable

75.0

323.3

    Repayments of notes payable

(18.2)

(7.6)

    Debt issuance costs

(0.2)

(5.2)

    Repurchase of stock

(16.7)

-

    Dividends

(18.1)

(18.1)

    Cash distribution to joint venture partner

(6.4)

(8.5)

    Tax payments for net share settlement of restricted stock

(2.3)

(3.5)

    Net cash provided by financing activities

23.7

204.8

    Effect of exchange rate changes

18.4

(1.0)

    Decrease in cash and cash equivalents and restricted cash

(159.5.5)

(68.9)

Cash and cash equivalents and restricted cash

    Beginning of period

559.1

671.4

    End of period

$             399.6

$             602.5

Balance Sheet Reconciliation:

    Cash and cash equivalents

$             379.9

$             586.8

    Restricted cash 

19.7

15.7

    Total cash and cash equivalents and restricted cash

$             399.6

$             602.5

Key information for the consolidated Leasing & Management Services segment:

(In Units)

February 28,

2023

November 30,

2022

Owned fleet⁽¹⁾

12,300

14,100

Managed fleet

408,000

408,000

Owned fleet utilization⁽¹⁾

99 %

98 %

Three Months Ended

Greenbrier Lease Fleet (Units)

February 28,

2023

November 30,
2022

Beginning balance

14,100

12,200

   Railcars added

1,400

2,300

   Railcars sold / scrapped

(3,200)

(400)

Ending balance

12,300

14,100

February 28,

2023

November 30,

2022

Equipment on operating lease⁽²⁾

$                  891.8

$                   836.2

Non-recourse warehouse

$                    65.6

$                          -

ABS non-recourse notes

312.9

315.7

Non-recourse term loan

338.2

306.6

Total Leasing non-recourse debt

$                  716.7

$                   622.3

80 %

Fleet leverage %⁽³⁾

74 %

(1)

Owned fleet includes Leased railcars for syndication

(2)

Equipment on operating lease assets not securing Leasing non-recourse term loan support the $600 million U.S. revolver

(3)

Total Leasing non-recourse debt / Equipment on operating lease

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

 (In millions, except number of shares which are reflected in thousands and per share amounts, unaudited)

Operating Results by Quarter for 2023 are as follows:

First

Second

Total

Revenue

   Manufacturing

$         646.5

$         968.6

$      1,615.1

   Maintenance Services

85.5

98.0

183.5

   Leasing & Management Services

34.5

55.4

89.9

766.5

1,122.0

1,888.5

Cost of revenue

   Manufacturing

604.5

901.2

1,505.7

   Maintenance Services

79.6

89.6

169.2

   Leasing & Management Services

12.9

14.4

27.3

697.0

1,005.2

1,702.2

Margin

69.5

116.8

186.3

Selling and administrative expense

53.4

59.0

112.4

Net gain on disposition of equipment

(3.3)

(9.6)

(12.9)

Impairment of long-lived assets

24.2

-

24.2

Earnings (loss) from operations

(4.8)

67.4

62.6

Other costs

Interest and foreign exchange

19.6

21.6

41.2

Earnings (loss) before income tax and earnings from unconsolidated affiliates

(24.4)

45.8

21.4

Income tax (expense) benefit

3.8

(11.9)

(8.1)

Earnings (loss) before earnings from unconsolidated affiliates

(20.6)

33.9

13.3

Earnings from unconsolidated affiliates

3.3

2.9

6.2

Net earnings (loss)

(17.3)

36.8

19.5

Net (earnings) loss attributable to noncontrolling interest

0.6

(3.7)

(3.1)

Net earnings (loss) attributable to Greenbrier

$          (16.7)

$           33.1

$           16.4

Basic earnings (loss) per common share ⁽¹⁾

$          (0.51)

$           1.01

$           0.50

Diluted earnings (loss) per common share ⁽¹⁾

$          (0.51)

$           0.97

$           0.49

Dividends per common share

$           0.27

$           0.27

$           0.54

⁽¹⁾

Quarterly amounts may not total to the year-to-date amount as each period is calculated discretely.

SUPPLEMENTAL INFORMATION

 (In millions, except number of shares which are reflected in thousands and per share amounts, unaudited)

Operating Results by Quarter for 2022 are as follows:

First

Second

Third

Fourth

Total

Revenue

   Manufacturing

$         452.5

$         555.7

$        650.9

$      817.5

$ 2,476.6

   Maintenance Services

72.4

86.6

101.5

87.2

347.7

   Leasing & Management Services

25.8

40.5

41.1

46.0

153.4

550.7

682.8

793.5

950.7

2,977.7

Cost of revenue

   Manufacturing

421.6

535.0

611.3

733.0

2,300.9

   Maintenance Services

71.2

81.7

91.1

78.0

322.0

   Leasing & Management Services

10.3

11.3

14.8

12.4

48.8

503.1

628.0

717.2

823.4

2,671.7

Margin

47.6

54.8

76.3

127.3

306.0

Selling and administrative expense

44.3

54.7

57.4

68.8

225.2

Net gain on disposition of equipment

(8.5)

(25.1)

(0.7)

(2.9)

(37.2)

Earnings from operations

11.8

25.2

19.6

61.4

118.0

Other costs

Interest and foreign exchange

12.6

11.8

14.9

18.1

57.4

Earnings (loss) before income tax and earnings from unconsolidated affiliates

(0.8)

13.4

4.7

43.3

60.6

Income tax (expense) benefit

1.4

(3.2)

(1.1)

(15.2)

(18.1)

Earnings before earnings from unconsolidated affiliates

0.6

10.2

3.6

28.1

42.5

Earnings from unconsolidated affiliates

5.0

1.0

4.0

1.3

11.3

Net earnings

5.6

11.2

7.6

29.4

53.8

Net (earnings) loss attributable to   noncontrolling interest

5.2

1.6

(4.5)

(9.2)

(6.9)

Net earnings attributable to Greenbrier

$           10.8

$           12.8

$              3.1

$           20.2

$           46.9

Basic earnings per common share ⁽¹⁾

$           0.33

$           0.39

$           0.10

$           0.62

$           1.44

Diluted earnings per common share ⁽¹⁾

$           0.32

$           0.38

$           0.09

$           0.60

$           1.40

Dividends per common share

$           0.27

$           0.27

$           0.27

$          0.27

$           1.08

⁽¹⁾

Quarterly amounts may not total to the year-to-date amount as each period is calculated discretely.

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

 (In millions, unaudited)

Segment Information

Three months ended February 28, 2023:

Revenue

Earnings (loss) from operations

External

Intersegment

  Total

External

Intersegment

Total

Manufacturing

$        968.6

$                96.8

$       1,065.4

$            46.6

$                  8.8

$             55.4

Maintenance Services

98.0

6.2

104.2

6.8

-

6.8

Leasing & Management Services

55.4

0.5

55.9

40.7

0.1

40.8

Eliminations

-

(103.5)

(103.5)

-

(8.9)

(8.9)

Corporate

-

-

-

(26.7)

-

(26.7)

$     1,122.0

$                      -

$       1,122.0

$            67.4

$                      -

$             67.4

Three months ended November 30, 2022:

Revenue

Earnings (loss) from operations

External

Intersegment

  Total

External

Intersegment

Total

Manufacturing

$                 646.5

$                 44.5

$         691.0

$           (3.4)

$                      4.0

$                 0.6

Maintenance Services

85.5

8.5

94.0

5.5

-

5.5

Leasing & Management Services

34.5

0.2

34.7

15.6

-

15.6

Eliminations

-

(53.2)

(53.2)

-

(4.0)

(4.0)

Corporate

-

-

-

(22.5)

-

(22.5)

$                 766.5

$                      -

$         766.5

$           (4.8)

$                       -

$               (4.8)

Total assets

February 28,

2023

  November 30,
2022

Manufacturing

$               1,923.0

$                1,861.7

Maintenance Services

313.9

294.6

Leasing & Management Services

1,267.2

1,378.9

Unallocated, including cash

448.4

281.9

$               3,952.5

$                3,817.1

SUPPLEMENTAL BACKLOG AND DELIVERY INFORMATION

(Unaudited)

Three Months
Ended

February 28, 2023

Backlog Activity (units)⁽¹⁾

Beginning backlog

28,300

Orders received

4,500

Production held on the Balance Sheet

(1,500)

Production sold directly to third parties

(5,400)

Ending backlog

25,900

Delivery Information (units)⁽¹⁾

Production sold directly to third parties

5,400

Sales of Leased railcars for syndication

2,200

Total deliveries

7,600

(1)

Includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In millions, except number of shares which are reflected in thousands and per share amounts, unaudited)

Reconciliation of Net earnings (loss) to Adjusted EBITDA

Three Months Ended

February 28,

2023

November 30,

2022

Net earnings (loss)

$                   36.8

$                     (17.3)

Interest and foreign exchange

21.6

19.6

Income tax (benefit) expense

11.9

(3.8)

Depreciation and amortization

26.9

26.0

Impairment of long-lived assets and other exit related costs

0.7

24.2

Adjusted EBITDA

$                   97.9

$                  48.7

Reconciliation of Net earnings (loss) attributable to Greenbrier to Adjusted net earnings attributable to Greenbrier

Three Months Ended

February 28,

2023

November 30,

2022

Net earnings (loss) attributable to Greenbrier

$                   33.1

$                   (16.7)

Impairment of long-lived assets and other exit related costs

0.77

⁽¹⁾

18.33

⁽²⁾

Adjusted net earnings attributable to Greenbrier

$                   33.8

$                    1.6

⁽¹⁾

Net of tax of $0.2 million

⁽²⁾

Net of tax of $5.9 million

Reconciliation of Diluted earnings (loss) per share to Adjusted diluted earnings per share

Three Months Ended

February 28,

2023

November 30,

2022

Diluted earnings (loss) per share

$                   0.97

$                   (0.51)

Impairment of long-lived assets and other exit related costs

0.02

0.56

Adjusted diluted earnings per share

$                   0.99

$                    0.05

Diluted weighted average shares outstanding

34,400

33,727

Share Calculations for Adjusted diluted earnings per share (in thousands)

Three Months Ended

February 28,

2023

November 30,

2022

Basic Shares

32,588

32,719

Dilutive effect of performance awards

991

1,008

Dilutive effect of convertible notes due 2024

821

-

Diluted weighted average shares outstanding

34,400

33,727