Hello, and welcome to The Greenbrier Companies Second Quarter 2026 Earnings Conference Call. At the request of the Greenbrier Companies, this conference call is being recorded for instant replay purposes. At this time, I would like to turn the conference over to Mr. Travis Williams, Head of Investor Relations. Mr. Williams, you may begin.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter fiscal 2026 earnings call. Today, I'm joined by Lorie Tekorius, Greenbrier's CEO and President; Brian Comstock, Executive Vice President and President of the Americas; and Michael Donfris, Senior Vice President and CFO. Following our update on Greenbrier's Q2 performance and outlook for fiscal 2026, we'll open the call for questions. Our earnings release and supplemental slide presentation can be found on the IR section of our website. Matters discussed on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion, we will describe some of the important factors that could cause Greenbrier's actual results in 2026 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. We will refer to recurring revenue throughout our comments today. Recurring revenue is defined as leasing and management services revenue, excluding the impact of syndication transactions. And with that, I'll turn the call over to Lorie.

Thank you, Travis, and good afternoon, everyone. We appreciate you joining us today. Greenbrier delivered resilient second quarter results. Steady execution across our integrated business model and disciplined pricing supported our performance as our customers' needs continue to evolve and the expected production ramp-up shifts beyond the current fiscal year. Consistent with our expectations and production schedules as we exited Q1, deliveries and revenues were lower sequentially. Notably, though, aggregate gross margin and earnings exceeded prior periods with similar delivery levels. The structural improvements we've executed over the last several years drive our ability to deliver better financial performance on lower volumes and achieve what we like to call higher lows. Current FTR forecasts indicate approximately 24,000 new railcar deliveries for the North American market in calendar 2026. The last time the freight railcar industry generated annual deliveries at these levels, Greenbrier was a much different company. Our cost structure was higher, our capital planning was less targeted, our market position was narrower and our earnings profile was materially less dependable. That context matters because Greenbrier is fundamentally stronger today. We have structurally and systematically improved our operations and grown our market presence, resulting in a more balanced and durable business model. As a result, even in a more moderate railcar investment climate, we're generating solid profitability and positive cash flow while maintaining a high level of liquidity. Market conditions can be dynamic. Customers are deliberate with capital investments amid evolving freight conditions, changing trade policies, geopolitical developments and a mixed macroeconomic backdrop. However, as we entered March, customer commitments increased, reinforcing our view that underlying demand remains intact over the long term. In North America and Europe, we're experiencing longer customer decision-making times, which has shifted the timing of production. However, we remain confident in market fundamentals. We expect the constraints on order activity to begin to loosen in the near term. You'll hear more about the market from Brian in just a few minutes. In more limited order environments, execution and customer alignment are critical, and our commercial team remains closely engaged with customers as their timing requirements and other needs take shape. We continue to align our manufacturing footprint with current demand levels. Production rates moderated during the quarter, and we took targeted actions to rightsize our workforce while ensuring the flexibility to respond to evolving market conditions. These are thoughtful, proactive steps that protect profitability and preserve operational agility. In Europe, the operating environment is driving our footprint rationalization initiatives in Poland and Romania and includes a full exit from Turkey. Our Leasing & Fleet Management business continues to perform at a high level and remains a vital source of stability and growth, supported by high railcar utilization and retention and strong renewal rates. We are optimizing the composition of Greenbrier's own railcar fleet and expanding it through thoughtful investments, including pursuing opportunities in the secondary railcar market. Our balance sheet remains strong. We ended the quarter with over $1 billion of available liquidity, providing us with the flexibility to continue investing in the business, pursue opportunities in the secondary market and return capital to shareholders, including this quarter's 6% dividend increase to $0.34 a share. Looking ahead, our updated outlook for this fiscal year accounts for the near-term demand environment and a shift of some deliveries from the second half of fiscal 2026 to fiscal 2027. Our attention is focused on the elements within our control, driving operational efficiency, maintaining commercial discipline, aligning capacity with demand and allocating capital to the highest return opportunities. In closing, I want to thank our employees for their continued focus and commitment. Their execution in a dynamic market environment demonstrates the strength of our culture and operating model. We have an experienced team, a robust platform and the agility to navigate changing market conditions as we remain focused on delivering long-term shareholder value. And with that, I'll turn the call over to Brian to discuss our operations in more detail.

Thanks, Lorie, and good afternoon, everyone. I'll cover our second quarter operational performance, including commercial activity, manufacturing, Leasing & Fleet Management. Starting with commercial activity, we received broad-based orders for approximately 2,900 new railcars globally, with demand concentrated in North America and supported by leasing activity. As you know, our programmatic railcar restoration activity is not reported as part of our new railcar orders, deliveries or backlog. Turning to backlog. We ended the quarter with approximately 15,200 railcars valued at $2.1 billion, providing solid visibility into production as we move through the year. Our backlog continues to provide a meaningful base of production support, and our commercial team is focused on continuing to convert market opportunities into orders. Importantly, more than half of our orders in the quarter were driven by lease originations, underscoring our strong lease origination capabilities, key for our lease fleet growth and manufacturing stability. Leasing & Fleet Management delivered another strong quarter. Fleet utilization remained above 98%, retention was strong and renewal rates continue to be robust. These dynamics reflect both the quality of our fleet and the value of our customer relationships. The strength of our leasing platform was demonstrated by our recent $300 million ABS financing in February that saw incredibly strong demand from investors, resulting in favorable terms. We continue to optimize the portfolio through disciplined asset sales. The strong secondary market for railcar equipment has enabled us to refine the composition of our owned portfolio and allows us to recycle capital where we are seeing the strongest returns. While our lease fleet was modestly lower compared to the first quarter, this reflects timing related to asset sales and new additions. As we move through the second half of the fiscal year, fleet growth will benefit from our recurring revenue profile and continue to strengthen the earnings contribution of the leasing platform. With asset purchases recently completed and a pipeline of additional near-term opportunities, we expect to finish fiscal 2026 with a lease fleet of over 20,000 railcars. As we deploy capital, we remain disciplined. We are focused on opportunities that meet our return thresholds and support long-term value creation. In addition, our asset management capabilities continue to scale. We expanded relationships with key partners and now manage a significantly larger railcar fleet on behalf of third parties, further reinforcing our position as a leading provider of fleet management services. Moving to manufacturing. Our results were influenced by a planned 2-week shutdown for maintenance over the holidays. We will continue to scale our flexible manufacturing footprint as we have many times in the past to align with production expectations. In Europe, we are continuing to execute footprint optimization actions designed to improve the competitiveness and profitability of our European operations over time. When completed, these actions are expected to generate about $20 million in annualized savings. Our actions are focused on maintaining efficiency, protecting profitability and preserving the flexibility to respond as conditions evolve. At the same time, we continue to advance our manufacturing excellence initiatives. We are driving improvements in our cost structure, productivity and process efficiency. These initiatives are structural and enhance through-cycle margin performance. Finally, our syndication team delivered solid execution in the quarter, supported by strong investor demand. These activities generate attractive recurring fee income, significant liquidity and risk management and remain an important component of our integrated model. In summary, we continue to align production with demand, maintain operational discipline and advance key initiatives across the platform. These actions support margin resilience today and position us to respond to changing market conditions with flexibility. And with that, I'll turn the call over to Michael to review our financial results.

Thanks, Brian. Revenue for the quarter came in at $588 million, reflecting the timing of deliveries in North America and Europe. Aggregate gross margin for the quarter was 11.8%. This performance demonstrates the resilience of our integrated business model as leasing and fleet management and syndication activity partially offset lower fixed overhead absorption and less favorable product mix in manufacturing. Earnings from operations were $25 million or 4.3% of revenue. Results reflect the revenue timing dynamics I just mentioned, partially offset by resilient margin performance and disciplined execution across the business. Our effective tax rate for the quarter was 14.9%, driven primarily by discrete items related to foreign exchange impacts, particularly the strengthening of the Mexican peso. Diluted earnings per share were $0.47 and EBITDA for the quarter was $61 million or 10.3% of revenue. Turning to the balance sheet. Greenbrier ended Q2 with total liquidity of over $1 billion, the highest level in Greenbrier history, consisting of approximately $520 million in cash and $560 million in available borrowing capacity. We generated approximately $159 million of operating cash flow during the quarter, supported by earnings and disciplined working capital management. Liquidity remains robust and reflects both the strength of our capital base and our disciplined approach to capital recycling in a healthy secondary market. In addition to investing in our lease fleet, we remain committed to returning capital to our shareholders through a combination of dividends and share repurchases. Greenbrier's Board of Directors declared a dividend of $0.34 per share. This represents our 48th consecutive quarterly dividend. The 6% increase reflects confidence in our business model, cash generation capability and ability to deliver through-cycle performance. Through the first half of fiscal 2026, we repurchased $13 million of common stock under existing authorization. As of quarter end, approximately $65 million remain available for repurchases. We will continue to access this capacity opportunistically, consistent with market conditions and our broader capital allocation framework. Now turning to guidance. We are updating our fiscal 2026 outlook to reflect a more gradual production ramp-up resulting from a shift of deliveries into early fiscal 2027. This is driven by order timing rather than changes in underlying demand. Our focus remains on driving profitability through operational efficiency, growth of our recurring revenue from Leasing & Fleet Management and disciplined capital use. Importantly, aggregate gross margin performance remains aligned with our long-term targets. Our guidance for fiscal 2026 is as follows: new railcar deliveries of 15,350 to 16,350 units, including approximately 1,500 units from Greenbrier-Maxion Brazil. Total revenue of $2.4 billion to $2.5 billion, aggregate gross margin between 14.8% and 15.2%, and operating margin between 7% and 7.8%. We continue to anticipate a reduction in SG&A of about $30 million versus prior year. We are now forecasting EPS between $3 and $3.50 per share. From a cadence perspective, we expect Q3 to be similar to Q2 in terms of deliveries with modest sequential improvement in aggregate gross margin. We anticipate Q4 to see further sequential improvement in both deliveries and aggregate gross margin. Greenbrier's capital expenditures and manufacturing are unchanged at $80 million. I noted on our previous earnings call that we were opportunistically pursuing leased railcars in the secondary market and could end up with a higher level of investment in the lease fleet. To that point, gross investment in Leasing & Fleet Management is now projected to be roughly $300 million, up from $205 million. Proceeds from equipment sales are forecast to be $175 million as we take advantage of the strong secondary market to optimize our lease fleet. As Brian mentioned earlier, we will end fiscal 2026 with more than 20,000 railcars in our lease fleet. In summary, Greenbrier delivered solid financial performance in the second quarter, particularly in light of the current market backdrop. Our integrated business model, disciplined capital allocation and focus on execution position us to deliver through-cycle profitability and continue creating long-term shareholder value. With that, we'll open it up for questions.

And the first question will come from Harrison Bauer with Susquehanna.

I just want to start off on maybe the large increase in your planned gross capital expenditures for the lease fleet. Can you provide a sense of how much you are building into the fleet from your own manufacturing capabilities versus your utilization of the active secondary market?

Yes. Harrison, this is Brian. So to give you an idea, I'd say it's a pretty even mix. We continue to have a strong lease origination profile in the back half of the year. So we'll see a number of new units go in. But we've also been very active in the secondary market in acquiring assets as well.

Great. As a follow-up on the secondary market, your equipment gains were significantly lower this quarter compared to last. I understand that last quarter you were a bit more opportunistic. Can you provide some insights on where you expect gains to be for the year? How is the secondary market performing? Additionally, can you share more details about that aspect of the leasing business?

Sure, Harrison. This is Lorie. What I would say is while we don't give quarterly guidance, we do expect the second half to be more of an investment in our lease fleet as opposed to secondary market sales. So while we do expect to continue to have gains on sale because it's just a normal part of having a lease fleet, we do expect it to probably be less than in the first half.

The next question will come from Ken Hoexter with Bank of America Merrill Lynch.

So Lorie, we were both at the Rail Equipment Finance Conference, and the industry discussed a manufacturing decline of 27% last year and 23% this year. At the midpoint, it seems like your number reflects a 26% decrease in production year-over-year compared to the market. Are you currently underperforming or losing market share? Additionally, if there are elements being pushed to next year, could you elaborate on that? Perhaps it’s related to mix or something else? I'm interested in understanding what’s influencing the numbers that are being deferred.

Sure. I'll begin, and Brian may want to add some insights on the market. It was great to see you in Palm Springs as always. Recently, due to economic uncertainty, our customers are taking a bit more of a pause. While we are pleased with the activity we've seen in March and are continuing to focus on demand, this has led us to moderate our ramp-up expectations for the latter part of this fiscal year. We're still engaged in the same discussions and haven't observed any decline in the underlying demand for railcars or significant changes to our market share. The only change we are witnessing is a shift in timing from the latter half of fiscal 2026 into 2027.

Yes. I would like to add a bit more. This is Brian, Ken. I agree with what Lorie mentioned. Ultimately, we are not experiencing any decline in our market share. The situation is that there was a conflict that emerged recently, which has affected some of our projects, causing delays of about 4 to 6 weeks. We were expecting these projects to ramp up soon—they are projects we are confident in—but they've been pushed back by approximately 1.5 to 2 months. As a result, we now anticipate that they will be more aligned with late August to early September.

I don't know how to phrase the next comment, but the last time we saw the backlog this low was in the second quarter of 2014. My model goes back quite a while, so the last time we were at 15,200 was over a decade ago. How should we think about that in terms of a normal cycle? Considering the timing of 40-year rail assets, it appears we could experience a few years of relatively weak carload orders. However, at the conference, someone suggested we might see a rebound in '27 for some cars. Is this just a typical low point in the cycle, or how do you view the backlog? Additionally, I'm surprised about Turkey. I don't recall you ever discussing it. I know from the quarterly report that you have assets in Turkey, Poland, and Romania, but I'm surprised to see it closing. I would appreciate your thoughts on the timing of the cost savings.

So maybe I'll start with the end of yours first, and then we can go back around. So I think we've been talking about some of our footprint optimization that we've had going on in Europe. And I guess we've just been remiss in calling out Turkey, but specifically, that's one of the things. As we looked at what our capabilities are in our existing footprint, that was just an area that was not necessary, and the logistics transportation distance just made it not be feasible anymore in support of our operations in Romania and Poland. So I think that's kind of the gist of it there. And I'll turn the other over to Brian because I can't remember the question...

I think you're referring to the backlog and order flow and our position in the cycle. If you examine the orders from the past few quarters, they've been quite steady, ranging between the high 2,000s to mid-3,000s. We expect this consistency to continue, maintaining a nearly 1:1 ratio with our current build rate. We experienced a notable increase in March, and we're set to significantly reduce backlog in the next quarter with just a bit of assistance. We're off to a solid start and beginning to see some expected orders come in earlier than anticipated. Some delays have been influenced by current global situations and the added uncertainty. As companies reassess their supply chains during the planting season for crops, we’re witnessing various developments. Storage has decreased by 36,000 cars since January, making the fleet tighter. We're beginning to see progress. I agree with the perspective that a contact in Palm Springs mentioned 2027 will be a stronger year, and I am confident it will be. Key buyers are already engaging with us. It's important to note that the 15,200 cars figure does not account for multiyear opportunities, which can distort the view of our actual buildable backlog since some will be built over several years. Overall, I believe we are in a strong position. We're currently at a 1:1 book-to-bill ratio and anticipate growth this quarter.

We have a highly experienced team at Greenbrier. Our previous experiences have taught us to take careful actions regarding production rates, ensuring we maintain a steady pace that benefits both our workforce and financial performance. Additionally, we've been expanding our operations in North America beyond just producing new railcars. We're engaging in significant program work that our commercial team has been actively adjusting to meet the evolving needs of our customers, addressing their broader business requirements. This approach is reflected in our financial results and is not directly related to deliveries, orders, or backlog.

The next question will come from Andrzej Tomczyk with Goldman Sachs.

I wanted to follow up on the manufacturing aspect. Specifically, this quarter's gross profit margin decreased by 600 basis points compared to last year. I'm interested in your perspective on how much this margin decline would have been if you hadn't implemented the cost reduction measures from last year. Additionally, could you elaborate on your level of confidence that the second quarter marks the lowest point for margins and how that confidence carries into the latter half of the year?

I'll start by mentioning that there are significant differences between this year and last year, although I won't go into specifics. One notable change is the shift in the types of vehicles we are currently manufacturing. We're focusing more on general purpose vehicles instead of the specialized types we produced last year. However, it's important to note that those specialized vehicles may return in the future. Based on our operating group's performance, I feel optimistic about the direction of our margins in the near term. While I believe this might be the lowest point, we all understand that it’s impossible to predict every potential outcome in the coming days or weeks.

Yes, I can start, and then Michael can add his thoughts. One of the questions you asked, Andrzej, was about the efficiencies we've managed over the years that have improved the higher end of the low cycles. When we examine our in-sourcing and efficiency projects, I estimate we've added 2 or 3 basis points to the bottom line through manufacturing efficiencies and focus. Yes, 200, 300, sorry.

Yes, I agree with that. If you compare this quarter to last year, you'll see a higher volume from that time. We have fixed cost absorption affecting this quarter, as mentioned earlier. Considering where we are in the cycle, we are quite pleased with the current situation. We believe we may be at an inflection point, and we anticipate an improved third and fourth quarter in terms of margin percentage as we progress.

I just want to add that if I'm looking at my numbers correctly, the last time we had deliveries in this area, our gross margin was approximately 8.6%. With the changes we've implemented over the past few years, we have significantly improved our ability to turn activity into gross margin and net profit.

Understood. Very helpful color there. I did want to switch over just to the leasing and focus really on the back half. The gains on sale, you mentioned, I think, could come down a little bit. Is there any way to think on a full year basis, how you would look to manage gains into 2027 as an early look? And then separately, just as a clarification point, you had the leasing gross margins more recently close to the low to mid-60% range. I'm wondering if that should persist in the near term. I think last year it was closer to the 71% range. That might be a function of mix, et cetera. Just could you just talk about what's driving that gross margin within leasing and if we should use that as a sort of run rate into the back half?

And I'll take this one. I think the margins in leasing will continue in that low to low 60% range. So I think you can think about that as you kind of go forward. In terms of how we think about secondary market activity and gains on sale, that's just part of our business model. And so we did see, as Lorie mentioned, a little bit of it benefiting the first half of the year, and it's really more of a build in the back half of the year. We'll continue to look at our lease fleet and determine from a concentration perspective, what makes sense for us and how the market is reacting to secondary market activity to determine what 2027 looks like. It's a little bit early for us to look at that.

And I'll just say and maybe this can come up on your follow-up calls. But if I heard you correctly saying that maybe last year, Leasing & Fleet Management was in the 70% range, I think we should probably provide you some updated information because we adjusted where some of our syndication activity is now flowing through manufacturing. So when I look back at history with that adjustment, our Leasing & Fleet Management gross margins are in that low 60% range. So I think maybe we just have some cleanup we can help with.

Understood. And then last one for me on a more sort of a medium-term basis. Any updates to your thinking on the pending Class 1 rail merger or any comments you want to make regarding how your customers are thinking about the merger? Appreciate the time today.

Sure. Thank you. I have been at Mars, and prior to that, the application was turned back, but I believe they are resubmitting it this month. The key point for shippers and freight rail users to consider is whether a merger would be beneficial for them and if the promised efficiencies will actually materialize. I maintain that anything enhancing our customers' experiences, including those of Greenbrier and other railroads, should encourage a greater shift of transportation to rail, as it is a more fuel-efficient method for moving materials. An increase in modal share should lead to a larger market for everyone. Even if our market share remains the same, growing modal share in the North American market will ultimately benefit us all.

Showing no further questions, this will conclude our question-and-answer session. Pardon me, it looks like Harrison Bauer with Susquehanna has a follow-up.

You guys had a comment earlier in the call regarding that a lot of your maybe more recent orders or demand activity was actually lessor driven. Can you just talk about a little bit of what's driving that? Is that more speculative? Is that underlying expectation for carload growth to resume? Just curious if you could dive a little bit more into that comment.

Sure. I'll set it up for Brian, who will probably understand better what's driving people choosing to purchase versus choosing to lease and just give a shout out to our commercial teams who are always right there next to our customers and willing to help them with whatever makes sense for their capital structure, right, if they need to commit spending dollars or they just want to lease depending on what activities are going on. But I will also emphasize that our team thinks about every single deal that we originate, whether it's a direct sale or a lease with the expectation that those cars will stay active and not doing something that is speculative or short term in nature to come back home or to go into storage.

Yes. I think it's accurate to say that operating lessors are becoming more active in the market. We are indeed witnessing increased activity from operating lessors. This is happening because they are noticing the same trends and sentiments as we are, particularly the optimism following the planting season. There has been a decrease in covered hopper cars, particularly in the 4750 fleet, and the fleets are currently tight. As a result, many are anticipating a continued increase in demand for next year. We are now seeing several operating lessors who have previously been on the sidelines start to cautiously enter the market. I wouldn't categorize these as speculative purchases; instead, they are strategic buys focused on specific opportunities.

This concludes our question-and-answer session. I would like to turn the conference back over to Lorie Tekorius for any closing remarks.

Thank you very much. I appreciate everyone's time and attention. Happy to take any follow-up calls. Travis is happy to take any follow-up calls later today if you'd like. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.