8-K
GREENBRIER COMPANIES INC (GBX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 9, 2021
THE GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
| Oregon | 001-13146 | 93-0816972 |
|---|---|---|
| (State of Incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) |
| One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035 | ||
| --- | ||
| (Address of principal executive offices) (Zip Code) |
(503) 684-7000
Registrant’s telephone number, including area code
Former name or former address, if changed since last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br>on which registered |
|---|---|---|
| Common Stock without par value | GBX | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On July 9, 2021, The Greenbrier Companies, Inc. (“Greenbrier” or the “Company”) issued a press release reporting the Company’s results of operations for the three and nine months ended May 31, 2021. A copy of such release is attached as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| 99.1 | Press Release dated July 9, 2021 of The Greenbrier Companies, Inc. related to results of operations |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE GREENBRIER COMPANIES, INC. | ||
|---|---|---|
| Date: July 9, 2021 | By: | /s/ Adrian J. Downes |
| Adrian J. Downes | ||
| Senior Vice President, Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) |
3
EX-99.1
| Exhibit 99.1 | ||
|---|---|---|
| News Release |  |
|
| One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035 503-684-7000 | www.gbrx.com | |
| For release: July 9, 2021 6:00 a.m. EDT | Contact: | Lorie Tekorius, Investor Relations |
| Justin Roberts, Investor Relations<br> <br>Ph: 503-684-7000 |
Greenbrier Reports Third Quarter Results
~ GAAP diluted EPS of $0.59; Adjusted diluted EPS of $0.69 ~
~ Orders for 3,800 new railcars valued at $400 million -book-to-bill of 1.2x in the quarter ~
~Formation and funding of GBX Leasing finalized in the quarter ~
~ Robust liquidity supports increasing operating momentum ~
Lake Oswego, Oregon, July 9, 2021 – The Greenbrier Companies, Inc. (NYSE: GBX) (“Greenbrier”), a leading international supplier of equipment and services to global freight transportation markets, today reported financial results for its third fiscal quarter ended May 31, 2021.
Third Quarter Highlights
| • | New railcar orders for 3,800 units valued at $400 million and deliveries of 3,300 units, resulted in a 1.2x book-to-bill. This is the second consecutive quarter that book-to-bill exceeded 1.0x. Orders<br>included intermodal units, tank cars, boxcars and covered hoppers. |
|---|---|
| • | Diversified new railcar backlog as of May 31, 2021 was 24,800 units with an estimated value of<br>$2.6 billion. |
| --- | --- |
| • | Liquidity of approximately $850 million, including $628 million in cash and $221 million of<br>available borrowing capacity. Liquidity and $149 million of initiatives in progress total nearly $1 billion. |
| --- | --- |
| • | COVID-19 related expenses for the quarter were $1.9 million (pre-tax) and $8.3 million (pre-tax) for the nine months ended May 31, 2021. |
| --- | --- |
| • | Net earnings attributable to Greenbrier for the quarter were $19.7 million, or $0.59 per diluted share, on<br>revenue of $450 million. Net earnings included $3.6 million ($0.10 per share), of loss on extinguishment of debt, net of tax. |
| --- | --- |
| • | Adjusted net earnings attributable to Greenbrier for the quarter were $23.3 million or $0.69 per diluted<br>share and adjusted EBITDA for the quarter was $53 million. |
| --- | --- |
| • | GBX Leasing was formed in the quarter to create stable, tax-advantaged<br>cash flows with initial railcar funding of nearly $100 million, under a $300 million non-recourse warehouse credit facility. GBX Leasing is consolidated in Greenbrier’s financial statements, see<br>supplemental information in this release. |
| --- | --- |
| • | Debt maturities were extended in the quarter with the issuance of $374 million of senior convertible notes<br>due in 2028 and retirement of $257 million of 2024 senior convertible notes. |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 2 |
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| • | Repurchased $20 million of common stock in connection with the convertible note issuance. $100 million<br>remains authorized under the share repurchase plan. |
| --- | --- |
| • | Board declares a quarterly dividend of $0.27 per share, payable on August 18, 2021 to shareholders of record<br>as of July 28, 2021 representing Greenbrier’s 29^th^ consecutive quarterly dividend. |
| --- | --- |
William A. Furman, Chairman & CEO commented, “Greenbrier’s financial results for the third fiscal quarter reflect the steady recovery in our markets that we forecasted would occur in the second half of our fiscal year. Our COVID strategy launched in March 2020 has been very successful. We are executing well on plans to maintain a liquidity base and strong balance sheet as well as safely operate each of our facilities. All of this has been necessary to prepare for the now emerging recovery. As positive momentum continues, we are seizing opportunities to resume the pursuit of scale we began during the two years prior to the pandemic. In the third fiscal quarter this included the formation of GBX Leasing and completion of a strategic debt refinancing that extended maturities on convertible notes by four years.”
Furman added, “We are benefiting from the economic recovery in railcar manufacturing and leasing as expected. This is playing out through sequential monthly increases in manufacturing revenues and a meaningful increase in new order activity in our core North American markets. The ability to ramp production capacity is integral to protecting Greenbrier’s leadership position in the market. New orders will not increase linearly, but we expect commercial activity to remain strong as our $2.6 billion backlog provides a baseload of orders to support the expanded operation of production lines and our leasing business.”
Business Update & Outlook
Greenbrier’s adherence to its core COVID strategy during the third fiscal quarter produced the best quarterly performance to date in fiscal 2021. Since March 2020, Greenbrier has practiced disciplined management to meet the realities of this once in 100 years pandemic. Operating and commercial momentum is building. In our domestic and international markets, Greenbrier’s core COVID strategy was and continues to be:
| 1. | Maintain a strong liquidity base and balance sheet |
|---|---|
| 2. | Navigate the COVID-19 pandemic and the related economic crisis by<br>safely operating our factories while generating cash flow |
| --- | --- |
| 3. | Prepare for emerging economic recovery and forward momentum in our markets. Greenbrier is currently operating<br>in this phase. Greenbrier is well-positioned to navigate the immediate challenges of increasing production rates safely amidst the emerging COVID variants, while ensuring labor and supply chain continuity. |
| --- | --- |
Looking ahead, Greenbrier expects the fourth quarter to be the strongest performance of the year. A full quarter of increased production rates and business activity creates positive momentum into fiscal 2022.
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 3 |
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Financial Summary
| Q3 FY21 | Q2 FY21 | |
|---|---|---|
| Revenue | $450.1M | 295.6M |
| Gross margin | 16.7% | 6.0% |
| Selling and administrative | $49.2M | 43.4M |
| Adjusted EBITDA | $52.9M | (1.3M) |
| Net (earnings) loss attributable to noncontrolling interest | ($0.3M) | 4.9M |
| Adjusted net earnings (loss) attributable to Greenbrier | $23.3M^(1)^ | (9.1M) |
| Adjusted diluted EPS | $0.69^(1)^ | (0.28) |
All values are in US Dollars.
| ^(1)^ | Excludes $3.6 million ($0.10 per share), net of tax, of loss on debt extinguishment.<br> |
|---|
Segment Summary
| Q3 FY21 | Q2 FY21 | Sequential Comparison – Main Drivers | |
|---|---|---|---|
| Manufacturing | |||
| Revenue | $341.9M | $202.1M | Higher deliveries reflecting improving demand levels |
| Gross margin | 14.5% | 0.2% | Higher production & delivery and favorable resolution of warranty and other contingencies; Excluding these items, gross margin would be in the low double digits |
| Operating margin ^(1)^ | 9.2% | (8.5%) | |
| Deliveries ^(2)^ | 2,800 | 1,700 | Higher production rates |
| Wheels, Repair & Parts | |||
| Revenue | $80.9M | $71.6M | Increased demand levels across the network |
| Gross margin | 8.9% | 6.9% | Higher volumes driving improved performance |
| Operating margin^(1)^ | 5.2% | 3.4% | |
| Leasing & Services (including GBX Leasing) | |||
| Revenue | $27.3M | $21.9M | Revenue and margin include enhanced syndication financing activity |
| Gross margin | 67.6% | 56.6% | |
| Operating margin^(1) (3)^ | 44.9% | 29.3% | |
| Fleet utilization | 93.8% | 94.8% | |
| ^(1)^ | See supplemental segment information on page 11 for additional information. | ||
| --- | --- | ||
| ^(2)^ | Excludes Brazil deliveries which are not consolidated into Manufacturing revenue and margins.<br> | ||
| --- | --- | ||
| ^(3)^ | Includes Net loss (gain) on disposition of equipment, which is excluded from gross margin.^^ | ||
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 4 |
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Conference Call
Greenbrier will host a teleconference to discuss its third quarter 2021 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:
| • | July 9, 2021 |
|---|---|
| • | 8:00 a.m. Pacific Daylight Time |
| --- | --- |
| • | Phone:<br>1-888-317-6003 (Toll Free)<br>1-412-317-6061 (International), Entry Number “2776228” |
| --- | --- |
| • | Real-time Audio Access: (“Newsroom” at http://www.gbrx.com) |
| --- | --- |
Please access the site 10-15 minutes prior to the start time.
About Greenbrier
Greenbrier, headquartered in Lake Oswego, Oregon, is a leading international supplier of equipment and services to global freight transportation markets. Through its wholly-owned subsidiaries and joint ventures, Greenbrier designs, builds and markets freight railcars and marine barges in North America, Europe and Brazil. We are a leading provider of freight railcar wheel services, parts, repair, refurbishment and retrofitting services in North America through our wheels, repair & parts business unit. Greenbrier manages 445,000 railcars and offers railcar management, regulatory compliance services and leasing services to railroads and other railcars owners in North America. GBX Leasing (GBXL) is a special purpose subsidiary that owns and manages a portfolio of leased railcars that originate primarily from Greenbrier’s manufacturing operations. Together, GBXL and Greenbrier own a lease fleet of 8,700 railcars. Learn more about Greenbrier at www.gbrx.com.
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 5 |
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THE GREENBRIER COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
| May 31,<br>2021 | February 28,2021 | November 30,2020 | August 31,<br>2020 | May 31,<br>2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||
| Cash and cash equivalents | $ | 628,200 | $ | 593,499 | $ | 724,547 | $ | 833,745 | $ | 735,258 |
| Restricted cash | 8,689 | 8,614 | 8,547 | 8,342 | 8,704 | |||||
| Accounts receivable, net | 274,792 | 236,171 | 216,220 | 230,488 | 261,629 | |||||
| Income tax receivable | 75,135 | 62,103 | 24,448 | 9,109 | — | |||||
| Inventories | 553,137 | 522,984 | 490,282 | 529,529 | 675,442 | |||||
| Leased railcars for syndication | 154,017 | 109,287 | 51,087 | 107,671 | 136,144 | |||||
| Equipment on operating leases, net | 446,888 | 445,451 | 445,542 | 350,442 | 355,841 | |||||
| Property, plant and equipment, net | 676,010 | 687,468 | 696,333 | 711,524 | 719,155 | |||||
| Investment in unconsolidated affiliates | 79,420 | 70,820 | 72,254 | 72,354 | 75,508 | |||||
| Intangibles and other assets, net | 180,829 | 190,283 | 186,509 | 190,322 | 181,315 | |||||
| Goodwill | 133,050 | 132,685 | 130,315 | 130,308 | 130,035 | |||||
| $ | 3,210,167 | $ | 3,059,365 | $ | 3,046,084 | $ | 3,173,834 | $ | 3,279,031 | |
| Liabilities and Equity | ||||||||||
| Revolving notes | $ | 325,150 | $ | 275,839 | $ | 276,248 | $ | 351,526 | $ | 416,535 |
| Accounts payable and accrued liabilities | 480,373 | 448,571 | 434,138 | 463,880 | 488,969 | |||||
| Deferred income taxes | 44,900 | 24,798 | 10,120 | 7,701 | 4,354 | |||||
| Deferred revenue | 43,676 | 42,572 | 36,916 | 42,467 | 63,536 | |||||
| Notes payable, net | 835,027 | 793,189 | 797,089 | 804,088 | 806,919 | |||||
| Contingently redeemable noncontrolling interest | 30,323 | 30,037 | 30,711 | 31,117 | 30,611 | |||||
| Total equity – Greenbrier | 1,286,763 | 1,268,502 | 1,280,407 | 1,293,043 | 1,291,221 | |||||
| Noncontrolling interest | 163,955 | 175,857 | 180,455 | 180,012 | 176,886 | |||||
| Total equity | 1,450,718 | 1,444,359 | 1,460,862 | 1,473,055 | 1,468,107 | |||||
| $ | 3,210,167 | $ | 3,059,365 | $ | 3,046,084 | $ | 3,173,834 | $ | 3,279,031 |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 6 |
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THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts, unaudited)
| Three Months Ended<br>May 31, | Nine Months Ended<br>May 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Revenue | ||||||||||||
| Manufacturing | $ | 341,939 | $ | 653,007 | $ | 852,755 | $ | 1,800,317 | ||||
| Wheels, Repair & Parts | 80,871 | 82,024 | 218,050 | 259,857 | ||||||||
| Leasing & Services | 27,333 | 27,526 | 77,949 | 95,590 | ||||||||
| 450,143 | 762,557 | 1,148,754 | 2,155,764 | |||||||||
| Cost of revenue | ||||||||||||
| Manufacturing | 292,464 | 562,793 | 775,125 | 1,567,014 | ||||||||
| Wheels, Repair & Parts | 73,690 | 75,001 | 203,341 | 241,266 | ||||||||
| Leasing & Services | 8,857 | 17,232 | 36,814 | 61,428 | ||||||||
| 375,011 | 655,026 | 1,015,280 | 1,869,708 | |||||||||
| Margin | 75,132 | 107,531 | 133,474 | 286,056 | ||||||||
| Selling and administrative expense | 49,239 | 49,494 | 136,371 | 158,455 | ||||||||
| Net (gain) loss on disposition of equipment | 184 | (8,775 | ) | (765 | ) | (19,431 | ) | |||||
| Earnings (loss) from operations | 25,709 | 66,812 | (2,132 | ) | 147,032 | |||||||
| Other costs | ||||||||||||
| Interest and foreign exchange | 10,204 | 7,562 | 30,875 | 33,023 | ||||||||
| Net loss on extinguishment of debt | 4,763 | — | 4,763 | — | ||||||||
| Earnings (loss) before income tax and earnings from unconsolidated affiliates | 10,742 | 59,250 | (37,770 | ) | 114,009 | |||||||
| Income tax benefit (expense) | 6,914 | (24,421 | ) | 35,998 | (37,878 | ) | ||||||
| Earnings (loss) before earnings from unconsolidated affiliates | 17,656 | 34,829 | (1,772 | ) | 76,131 | |||||||
| Earnings from unconsolidated affiliates | 2,379 | 1,040 | 1,257 | 3,764 | ||||||||
| Net earnings (loss) | 20,035 | 35,869 | (515 | ) | 79,895 | |||||||
| Net (earnings) loss attributable to noncontrolling interest | (298 | ) | (8,097 | ) | 1,215 | (30,825 | ) | |||||
| Net earnings attributable to Greenbrier | $ | 19,737 | $ | 27,772 | $ | 700 | $ | 49,070 | ||||
| Basic earnings per common share: | $ | 0.61 | $ | 0.85 | $ | 0.02 | $ | 1.50 | ||||
| Diluted earnings per common share: | $ | 0.59 | $ | 0.83 | $ | 0.02 | $ | 1.47 | ||||
| Weighted average common shares: | ||||||||||||
| Basic | 32,573 | 32,690 | 32,726 | 32,660 | ||||||||
| Diluted | 33,605 | 33,478 | 33,747 | 33,414 | ||||||||
| Dividends per common share | $ | 0.27 | $ | 0.27 | $ | 0.81 | $ | 0.79 |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 7 |
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THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Nine Months Ended<br>May 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities | ||||||
| Net earnings (loss) | $ | (515 | ) | $ | 79,895 | |
| Adjustments to reconcile net earnings (loss) provided by (used in) operating activities: | ||||||
| Deferred income taxes | 20,197 | (11,450 | ) | |||
| Depreciation and amortization | 75,637 | 82,452 | ||||
| Net gain on disposition of equipment | (765 | ) | (19,431 | ) | ||
| Accretion of debt discount | 4,639 | 4,102 | ||||
| Stock based compensation expense | 12,468 | 8,265 | ||||
| Net loss on extinguishment of debt | 4,763 | — | ||||
| Noncontrolling interest adjustments | 343 | 2,826 | ||||
| Other | 1,729 | 568 | ||||
| Decrease (increase) in assets: | ||||||
| Accounts receivable, net | (49,160 | ) | 110,431 | |||
| Income tax receivable | (66,026 | ) | — | |||
| Inventories | (92,294 | ) | 12,555 | |||
| Leased railcars for syndication | (55,532 | ) | (38,826 | ) | ||
| Other assets | 863 | (59,212 | ) | |||
| Increase (decrease) in liabilities: | ||||||
| Accounts payable and accrued liabilities | 18,626 | (77,243 | ) | |||
| Deferred revenue | 1,189 | (5,900 | ) | |||
| Net cash provided by (used in) operating activities | (123,838 | ) | 89,032 | |||
| Cash flows from investing activities | ||||||
| Proceeds from sales of assets | 12,156 | 78,521 | ||||
| Capital expenditures | (62,774 | ) | (55,326 | ) | ||
| Investments in and advances to/repayments from unconsolidated affiliates | 674 | (1,500 | ) | |||
| Cash distribution from unconsolidated affiliates and other | 652 | 11,273 | ||||
| Net cash provided by (used in) investing activities | (49,292 | ) | 32,968 | |||
| Cash flows from financing activities | ||||||
| Net change in revolving notes with maturities of 90 days or less | 147,571 | 214,932 | ||||
| Proceeds from revolving notes with maturities longer than 90 days | 112,000 | 175,000 | ||||
| Repayments of revolving notes with maturities longer than 90 days | (286,000 | ) | — | |||
| Proceeds from issuance of notes payable | 373,750 | — | ||||
| Repayments of notes payable | (308,468 | ) | (24,002 | ) | ||
| Debt issuance costs | (14,067 | ) | — | |||
| Repurchase of stock | (20,000 | ) | — | |||
| Dividends | (26,882 | ) | (26,344 | ) | ||
| Investment by joint venture partner | 7,000 | — | ||||
| Cash distribution to joint venture partner | (24,055 | ) | (36,152 | ) | ||
| Tax payments for net share settlement of restricted stock | (2,802 | ) | (2,266 | ) | ||
| Net cash provided by (used in) financing activities | (41,953 | ) | 301,168 | |||
| Effect of exchange rate changes | 9,885 | (17,693 | ) | |||
| Increase (decrease) in cash, cash equivalents and restricted cash | (205,198 | ) | 405,475 | |||
| Cash and cash equivalents and restricted cash | ||||||
| Beginning of period | 842,087 | 338,487 | ||||
| End of period | $ | 636,889 | $ | 743,962 | ||
| Balance Sheet Reconciliation | ||||||
| Cash and cash equivalents | $ | 628,200 | $ | 735,258 | ||
| Restricted cash | 8,689 | 8,704 | ||||
| Total cash and cash equivalents and restricted cash as presented above | $ | 636,889 | $ | 743,962 |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 8 |
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THE GREENBRIER COMPANIES, INC.
SUPPLEMENTAL BACKLOG AND DELIVERY INFORMATION
| Three Months Ended | |||
|---|---|---|---|
| May 31, 2021 | |||
| Backlog Activity (units) ^(1)^ | |||
| Beginning backlog | 24,900 | ||
| Orders received | 3,800 | ||
| Production held as Leased railcars for syndication | (800 | ) | |
| Production sold directly to third parties | (3,100 | ) | |
| Ending backlog | 24,800 | ||
| Delivery Information (units) ^(1)^ | |||
| Production sold directly to third parties | 3,100 | ||
| Sales of Leased railcars for syndication | 200 | ||
| Total deliveries | 3,300 | ||
| (1) | Includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method<br> | ||
| --- | --- |
SUPPLEMENTAL LEASING INFORMATION
(In thousands, except owned and managed fleet, unaudited)
GBX Leasing (GBXL) was formed in April 2021 as a joint venture with The Longwood Group to own and manage a portfolio of leased railcars primarily built by Greenbrier. Greenbrier owns approximately 90% of GBXL and consolidates it in Greenbrier’s financial statements in the Leasing & Services segment. Longwood was formed in 2018 by D. Stephen Menzies to pursue a range of commercial investments in equipment transportation markets following his successful growth of Trinity Rail’s leasing business over many years. GBXL adds an additional “go to market” element to Greenbrier’s Commercial strategy of direct sales, partnerships with operating leasing companies, origination of leases for syndication partners as well as providing a platform for further growth at scale. GBXL will produce strong tax-advantaged cash flows. The goal is to add at least $200 million in railcar assets annually at about 3:1 debt to equity (or 75%) based on the fair market value of assets. During the quarter, an initial $300 million non-recourse warehouse credit facility was secured, and $129 million in fair market value of assets were acquired from Greenbrier’s transaction flow. Over time the entity is expected to grow by at least $200 million in assets annually with a five year target of $1 billion of assets. The intent is to use the asset-backed securities market to refinance the warehouse facility and to convert to permanent financing before 2025 as scale and portfolio balance are achieved. Considerable tax benefits are generated from these investments, which are included in the consolidated financial results this year.
Key information for the consolidated Leasing & Services segment
| (In Units) | May 31,<br>2021 | February 28,<br>2021 | ||||
|---|---|---|---|---|---|---|
| Owned fleet | 8,700 | 8,700 | ||||
| Managed fleet | 445,000 | 445,000 | ||||
| Owned fleet utilization | 94 | % | 95 | % | ||
| May 31,<br>2021 | February 28,<br>2021 | |||||
| Equipment on operating lease | $ | 446,888 | $ | 445,451 | ||
| GBX Leasing non-recourse warehouse | $ | 96,576 | $ | — | ||
| Leasing non-recourse debt | 202,815 | 204,722 | ||||
| Total Leasing non-recourse debt | $ | 299,391 | $ | 204,722 | ||
| Fleet leverage %^(1)^ | **** | 67 | % | **** | 46 | % |
| (1) | Total Leasing non-recourse debt / Equipment on operating lease<br> | |||||
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 9 |
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THE GREENBRIER COMPANIES, INC.
SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts, unaudited)
Operating Results by Quarter for 2021 are as follows:
| First | Second | Third | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | ||||||||||||
| Manufacturing | $ | 308,722 | $ | 202,094 | $ | 341,939 | $ | 852,755 | ||||
| Wheels, Repair & Parts | 65,556 | 71,623 | 80,871 | 218,050 | ||||||||
| Leasing & Services | 28,711 | 21,905 | 27,333 | 77,949 | ||||||||
| 402,989 | 295,622 | 450,143 | 1,148,754 | |||||||||
| Cost of revenue | ||||||||||||
| Manufacturing | 280,890 | 201,771 | 292,464 | 775,125 | ||||||||
| Wheels, Repair & Parts | 62,984 | 66,667 | 73,690 | 203,341 | ||||||||
| Leasing & Services | 18,444 | 9,513 | 8,857 | 36,814 | ||||||||
| 362,318 | 277,951 | 375,011 | 1,015,280 | |||||||||
| Margin | 40,671 | 17,671 | 75,132 | 133,474 | ||||||||
| Selling and administrative expense | 43,707 | 43,425 | 49,239 | 136,371 | ||||||||
| Net (gain) loss on disposition of equipment | (922 | ) | (27 | ) | 184 | (765 | ) | |||||
| Earnings (loss) from operations | (2,114 | ) | (25,727 | ) | 25,709 | (2,132 | ) | |||||
| Other costs | ||||||||||||
| Interest and foreign exchange | 11,103 | 9,568 | 10,204 | 30,875 | ||||||||
| Net loss on extinguishment of debt | — | — | 4,763 | 4,763 | ||||||||
| Earnings (loss) before income tax and earnings (loss) from unconsolidated affiliates | (13,217 | ) | (35,295 | ) | 10,742 | (37,770 | ) | |||||
| Income tax benefit | 7,332 | 21,752 | 6,914 | 35,998 | ||||||||
| Earnings (loss) before earnings (loss) from unconsolidated affiliates | (5,885 | ) | (13,543 | ) | 17,656 | (1,772 | ) | |||||
| Earnings (loss) from unconsolidated affiliates | (744 | ) | (378 | ) | 2,379 | 1,257 | ||||||
| Net earnings (loss) | (6,629 | ) | (13,921 | ) | 20,035 | (515 | ) | |||||
| Net (earnings) loss attributable to noncontrolling interest | (3,343 | ) | 4,856 | (298 | ) | 1,215 | ||||||
| Net earnings (loss) attributable to Greenbrier | $ | (9,972 | ) | $ | (9,065 | ) | $ | 19,737 | $ | 700 | ||
| Basic earnings (loss) per common share^(1)^ | $ | (0.30 | ) | $ | (0.28 | ) | $ | 0.61 | $ | 0.02 | ||
| Diluted earnings (loss) per common share^(1)^ | $ | (0.30 | ) | $ | (0.28 | ) | $ | 0.59 | $ | 0.02 | ||
| Dividends per common share | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.81 | ||||
| ^(1)^ | Quarterly amounts may not total to the year to date amount as each period is calculated discretely.<br> | |||||||||||
| --- | --- |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 10 |
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THE GREENBRIER COMPANIES, INC.
SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts, unaudited)
Operating Results by Quarter for 2020 are as follows:
| First | Second | Third | Fourth | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | |||||||||||||||
| Manufacturing | $ | 657,367 | $ | 489,943 | $ | 653,007 | $ | 549,654 | $ | 2,349,971 | |||||
| Wheels, Repair & Parts | 86,608 | 91,225 | 82,024 | 64,813 | 324,670 | ||||||||||
| Leasing & Services | 25,384 | 42,680 | 27,526 | 21,958 | 117,548 | ||||||||||
| 769,359 | 623,848 | 762,557 | 636,425 | 2,792,189 | |||||||||||
| Cost of revenue | |||||||||||||||
| Manufacturing | 581,912 | 422,309 | 562,793 | 498,155 | 2,065,169 | ||||||||||
| Wheels, Repair & Parts | 81,892 | 84,373 | 75,001 | 60,923 | 302,189 | ||||||||||
| Leasing & Services | 13,366 | 30,830 | 17,232 | 10,272 | 71,700 | ||||||||||
| 677,170 | 537,512 | 655,026 | 569,350 | 2,439,058 | |||||||||||
| Margin | 92,189 | 86,336 | 107,531 | 67,075 | 353,131 | ||||||||||
| Selling and administrative expense | 54,364 | 54,597 | 49,494 | 46,251 | 204,706 | ||||||||||
| Net gain on disposition of equipment | (3,959 | ) | (6,697 | ) | (8,775 | ) | (573 | ) | (20,004 | ) | |||||
| Earnings from operations | 41,784 | 38,436 | 66,812 | 21,397 | 168,429 | ||||||||||
| Other costs | |||||||||||||||
| Interest and foreign exchange | 12,852 | 12,609 | 7,562 | 10,596 | 43,619 | ||||||||||
| Earnings before income tax and earnings (loss) from unconsolidated affiliates | 28,932 | 25,827 | 59,250 | 10,801 | 124,810 | ||||||||||
| Income tax expense | (5,994 | ) | (7,463 | ) | (24,421 | ) | (2,306 | ) | (40,184 | ) | |||||
| Earnings before earnings (loss) from unconsolidated affiliates | 22,938 | 18,364 | 34,829 | 8,495 | 84,626 | ||||||||||
| Earnings (loss) from unconsolidated affiliates | 1,073 | 1,651 | 1,040 | (804 | ) | 2,960 | |||||||||
| Net earnings | 24,011 | 20,015 | 35,869 | 7,691 | 87,586 | ||||||||||
| Net earnings attributable to noncontrolling interest | (16,342 | ) | (6,386 | ) | (8,097 | ) | (7,794 | ) | (38,619 | ) | |||||
| Net earnings (loss) attributable to Greenbrier | $ | 7,669 | $ | 13,629 | $ | 27,772 | $ | (103 | ) | $ | 48,967 | ||||
| Basic earnings (loss) per common share^(1)^ | $ | 0.24 | $ | 0.42 | $ | 0.85 | $ | (0.00 | ) | $ | 1.50 | ||||
| Diluted earnings (loss) per common share^(1)^ | $ | 0.23 | $ | 0.41 | $ | 0.83 | $ | (0.00 | ) | $ | 1.46 | ||||
| Dividends per common share | $ | 0.25 | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 1.06 | |||||
| (1) | Quarterly amounts may not total to the year to date amount as each period is calculated discretely.<br> | ||||||||||||||
| --- | --- |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 11 |
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THE GREENBRIER COMPANIES, INC.
SUPPLEMENTAL INFORMATION
(In thousands, unaudited)
Segment Information
| Three months ended May 31, 2021: | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | Earnings (loss) from operations | ||||||||||||||||
| External | Intersegment | Total | External | Intersegment | Total | ||||||||||||
| Manufacturing | $ | 341,939 | $ | 7,451 | $ | 349,390 | $ | 31,341 | $ | 492 | $ | 31,833 | |||||
| Wheels, Repair & Parts | 80,871 | 2,292 | 83,163 | 4,173 | 75 | 4,248 | |||||||||||
| Leasing & Services | 27,333 | 2,286 | 29,619 | 12,280 | 2,272 | 14,552 | |||||||||||
| Eliminations | — | (12,029 | ) | (12,029 | ) | — | (2,839 | ) | (2,839 | ) | |||||||
| Corporate | — | — | — | (22,085 | ) | — | (22,085 | ) | |||||||||
| $ | 450,143 | $ | — | $ | 450,143 | $ | 25,709 | $ | — | $ | 25,709 | ||||||
| Three months ended February 28, 2021: | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | Earnings (loss) from operations | ||||||||||||||||
| External | Intersegment | Total | External | Intersegment | Total | ||||||||||||
| Manufacturing | $ | 202,094 | $ | 2,425 | $ | 204,519 | $ | (17,216 | ) | $ | 100 | $ | (17,116 | ) | |||
| Wheels, Repair & Parts | 71,623 | 1,603 | 73,226 | 2,433 | (14 | ) | 2,419 | ||||||||||
| Leasing & Services | 21,905 | 1,113 | 23,018 | 6,420 | 634 | 7,054 | |||||||||||
| Eliminations | — | (5,141 | ) | (5,141 | ) | — | (720 | ) | (720 | ) | |||||||
| Corporate | — | — | — | (17,364 | ) | — | (17,364 | ) | |||||||||
| $ | 295,622 | $ | — | $ | 295,622 | $ | (25,727 | ) | $ | — | $ | (25,727 | ) | ||||
| Total assets | |||||||||||||||||
| --- | --- | --- | --- | --- | |||||||||||||
| May 31,<br>2021 | February 28,<br>2021 | ||||||||||||||||
| Manufacturing | $ | 1,413,590 | $ | 1,313,819 | |||||||||||||
| Wheels, Repair & Parts | 265,847 | 277,788 | |||||||||||||||
| Leasing & Services | 878,743 | 851,546 | |||||||||||||||
| Unallocated, including cash | 651,987 | 616,212 | |||||||||||||||
| $ | 3,210,167 | $ | 3,059,365 |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 12 |
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THE GREENBRIER COMPANIES, INC.
SUPPLEMENTAL INFORMATION
(In thousands, excluding backlog and delivery units, unaudited)
Reconciliation of Net earnings (loss) to Adjusted EBITDA
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| May 31,<br>2021 | February 28,<br>2021 | |||||
| Net earnings (loss) | $ | 20,035 | $ | (13,921 | ) | |
| Interest and foreign exchange | 10,204 | 9,568 | ||||
| Income tax benefit | (6,914 | ) | (21,752 | ) | ||
| Depreciation and amortization | 24,769 | 24,822 | ||||
| Net loss on extinguishment of debt | 4,763 | — | ||||
| Adjusted EBITDA | $ | 52,857 | $ | (1,283 | ) |
Reconciliation of Net earnings (loss) attributable to Greenbrier to Adjusted net earnings (loss) attributable to Greenbrier
| Three Months Ended | |||||
|---|---|---|---|---|---|
| May 31,<br>2021 | February 28,<br>2021 | ||||
| Net earnings (loss) attributable to Greenbrier | $ | 19,737 | $ | (9,065 | ) |
| Net loss on extinguishment of debt, net of tax ^(1)^ | 3,596 | — | |||
| Adjusted net earnings (loss) attributable to Greenbrier | $ | 23,333 | $ | (9,065 | ) |
| ^(1)^ | Net of tax of $1,167 | ||||
| --- | --- |
Reconciliation of Diluted earnings (loss) per share to Adjusted diluted earnings (loss) per share
| Three Months Ended | |||||
|---|---|---|---|---|---|
| May 31,<br>2021 | February 28,<br>2021 | ||||
| Diluted earnings (loss) per share | $ | 0.59 | $ | (0.28 | ) |
| Net loss on extinguishment of debt, net of tax | 0.10 | — | |||
| Adjusted diluted earnings (loss) per share | $ | 0.69 | $ | (0.28 | ) |
| Weighted average shares outstanding | 33,605 | 32,810 |
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| Greenbrier Reports Third Quarter Results (Cont.) | Page 13 |
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“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This press release may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words, and variations of words, such as “adjust,” “allow,” “anticipate,” “continue,” “estimate” “expect,” “goal,” “maintain,” “outlook,” “position,” “prepare,” “reduce,” “will,” and similar expressions to identify forward-looking statements. These forward-looking statements include, without limitation, statements about backlog, leasing performance, financing, and future liquidity and cash flow as well as other information regarding future performance and strategies and appear throughout this press release including in the headlines and the sections titled “Third Quarter Highlights,” “Business Update & Outlook” and “Supplemental Leasing Information.” These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following. (1) We are unable to predict when, how, or with what magnitude COVID-19, variants thereof, and governmental reaction thereto, and related economic disruptions will negatively impact our business: we may be prevented from operating our facilities; the operations of our customers may be disrupted increasing the likelihood that our customers may attempt to delay, defer or cancel orders, or cease to operate as going concerns; the operations of our suppliers may be disrupted; our indebtedness may increase; we may breach the covenants in our credit agreement; the market price of our common stock may drop or remain volatile; we may incur significant employee health care costs under our self-insurance programs. We may not be able to effectively participate in the economic recovery following the pandemic, if any. The longer the pandemic continues, the more likely that negative impacts on our business will occur, some of which we cannot now foresee. (2) Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation which may not occur. Customers may attempt to cancel or modify orders or refuse to accept and pay for products. The likelihood of cancellations, modifications, rejection and non-payment for our products generally increases during periods of market weakness. The timing of converting backlog to revenue is also materially impacted by our decision whether to lease railcars, sell railcars, or syndicate railcars with a lease attached to an investor. (3) Our joint ventures, including our leasing joint venture, may not perform as anticipated or expected. More information on potential factors that could cause our results to differ from our forward-looking statements is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic report on Form 10-K and subsequent reports on 10-Q. Except as otherwise required by law, the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof.
Adjusted Financial Metric Definitions
Adjusted EBITDA, Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS are not financial measures under generally accepted accounting principles (GAAP). These metrics are performance measurement tools used by rail supply companies and Greenbrier. You should not consider these metrics in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because these metrics are not a measure of financial performance under GAAP and are susceptible to varying calculations, the measures presented may differ from and may not be comparable to similarly titled measures used by other companies.
We define Adjusted EBITDA as Net earnings (loss) before Interest and foreign exchange, Income tax benefit (expense), Depreciation and amortization and excluding the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe the presentation of Adjusted EBITDA provides useful information as it excludes the impact of financing, foreign exchange, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company’s core business. We believe this assists in comparing our performance across reporting periods.
Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS excludes the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe this assists in comparing our performance across reporting periods.