LAKE OSWEGO, Ore., July 10, 2020 /PRNewswire/ -- 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, 2020.
Third Quarter Highlights
- Achieved $1 billion liquidity target through combination of cash, borrowing capacity, and spending reductions. Liquidity consists of $735.3 million in cash and available borrowing capacity of $136.8 million; lower capital expenditures of $50.0 million, reduced annualized selling and administrative expense of $30.0 million and reduced annualized overhead expense of $65.0 million.
- Generated operating cash flow in excess of $220.0 million in the quarter from decreases in working capital and robust syndication activity. This offset a working capital increase in the first six months of the year, resulting in nine months year-to-date operating cash flow of $89.0 million.
- Diversified new railcar backlog as of May 31, 2020 was 26,700 units with an estimated value of $2.7 billion, including orders for 800 railcars valued at approximately $65.0 million received during the quarter.
- Net earnings attributable to Greenbrier for the quarter were $27.8 million, or $0.83 per diluted share, on revenue of $762.6 million. Net earnings include a $2.5 million, net of tax, ($0.08 per share) of integration related expenses from the American Railcar Industries (ARI) acquisition and $4.8 million, net of tax, ($0.14 per share) of severance expenses.
- Adjusted net earnings attributable to Greenbrier for the quarter were $35.1 million, or $1.05 per diluted share, excluding $7.3 million, net of tax, ($0.22 per share) of integration and severance expenses.
- Effective tax rate of 41.2% in the quarter reflects unfavorable discrete items impacted by exchange rate volatility.
- Adjusted EBITDA for the quarter was $99.9 million, or 13.1% of revenue.
- Board declares a quarterly dividend of $0.27 per share, payable on August 19, 2020 to shareholders as of July 29, 2020.
William A. Furman, Chairman & CEO commented, "Greenbrier delivered strong operational results in the quarter while maintaining a constant focus on the safety and health of our employees through the pandemic and its related economic shocks. Third quarter performance reflects our near-term priorities of keeping our factories operating under essential industry status, significantly increasing liquidity and adjusting our capacity to align with our evolving demand expectations. Entering the fiscal fourth quarter Greenbrier's cash position was $735.3 million. As we increased cash, our net debt decreased by over $190 million, the lowest level in four quarters. We have taken difficult measures required to achieve our liquidity and cost reduction targets. Greenbrier is exceptionally well-positioned to compete and succeed during this weaker period in the economy and our core markets."
Business Update & Outlook
The COVID-19 pandemic has crystalized Greenbrier's strategy for the balance of fiscal 2020 and into fiscal 2021. Most importantly, we are protecting our employees from its spread within the work environment. Since forming an incident response team to address the then-emerging crisis in late February, we have worked diligently to protect employees from the spread of COVID-19 while working in Greenbrier facilities. To date, a small fraction of our total workforce of over 13,000 employees have tested positive. We are very pleased that all affected employees have or are expected to recover. Community spread of COVID-19 has increased in recent weeks in many areas where we operate, requiring additional vigilance and employee communications. We are working toward maintaining a low incident rate of COVID-19 among our employees by remaining focused on their health and enhancing the preventative and remedial actions of the rapid response teams across the company.
We are also preserving the near-term and longer-term financial health of Greenbrier in response to the economic consequences of the pandemic. Maintaining cash flow and liquidity are essential components of Greenbrier's current operating strategy. We have addressed our cost structure by reducing operating expenses and capital expenditures. Selling and administrative expenses for the quarter were $49 million and we expect further reductions in the fourth fiscal quarter. We have also executed a temporary restructuring of the GIMSA joint venture to improve profitability and cash flow for the partners. Depending on production scheduling, this restructuring alone could provide over $40 million of cash to Greenbrier through the first half of fiscal 2021 with an accompanying boost to earnings.
Greenbrier continues its manufacturing rationalization programs across our North American production network in response to current levels of demand. In the first three quarters of the year, we closed 11 rail productions lines and continue adjusting capacity to align with the demand outlook. As a result of these actions, total employment in North America has been reduced by about 40%, or about 5,300 employees, including both staff and production employees at the end of the third quarter. Despite these pressures, Greenbrier's Manufacturing business delivered a total of 5,900 units in the quarter. Based on current backlog, we are left with minimal open production capacity for the remainder of both the fiscal and the calendar year.
Over the past 18 months, Greenbrier has accomplished many strategic objectives, including the acquisition of the manufacturing business of ARI, the largest in our history. These initiatives have produced a strong franchise, highlighted by industry leadership, product and geographic diversity. While the rail sector globally has been weaker recently than normal, it is an important and vitally strategic industry to all economies worldwide. We expect its recovery will be a leading indicator of the broader economic recovery, post-pandemic. Greenbrier is focused on the safety of our employees, generating strong cash flow to maintain liquidity, and sizing our business to fit the lower demand environment. Achieving these priorities will ensure Greenbrier emerges strongly from today's challenges.
Financial Summary
| Q3 FY20 | Q2 FY20 | Sequential Comparison – Main Drivers |
Revenue | $762.6M | $623.8M | Higher deliveries reflecting increased syndication activity |
Gross margin | 14.1% | 13.8% | Higher Leasing & Services gross margin % and strong Manufacturing gross margin dollars due to increased syndication activity |
Selling and administrative | $49.5M | $54.6M | Reduced employee-related and travel & entertainment expenses from cost reduction initiatives partially offset by $1.8 million of severance expense |
Interest and foreign exchange | $7.6M | $12.6M | Higher foreign exchange gain partially offset by higher interest expense due to precautionary borrowing on revolving facility |
Adjusted EBITDA | $99.9M | $71.6M | Increased operating earnings |
Effective tax rate | 41.2% | 28.9% | Higher quarterly rate reflects foreign currency discrete items |
Net earnings attributable to noncontrolling interest | $8.1M | $6.4M | Increased deliveries from GIMSA JV partially offset by temporarily amended partnership agreement |
Adjusted net earnings attributable to Greenbrier | $35.1M(1) | $15.3M(2) | Increased operating earnings reflecting higher deliveries and lower selling & administrative expense |
Adjusted diluted EPS | $1.05(1) | $0.46(2) |
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(1) Excludes expense of $2.5 million ($0.08 per share), net of tax, associated with ARI integration related expenses, and $4.8 million ($0.14 per share), net of tax, associated with severance expenses. |
(2) Excludes expense of $1.7 million ($0.05 per share), net of tax, associated with ARI integration related expenses. |
Segment Summary
| Q3 FY20 | Q2 FY20 | Sequential Comparison – Main Drivers |
Manufacturing |
Revenue | $653.0M | $489.9M | Higher deliveries primarily from strong syndication activity |
Gross margin | 13.8% | 13.8% | Increased syndication activity generates higher gross margin partially offset by $4.5 million of severance expense |
Operating margin (1) | 10.5% | 9.4% |
|
Deliveries (2) | 5,400 | 3,700 | Increase primarily reflects higher syndication activity |
Wheels, Repair & Parts |
Revenue | $82.0M | $91.2M | Reduced volume of wheelsets and parts |
Gross margin | 8.6% | 7.5% | Improved repair network operating efficiencies |
Operating margin (1) | 4.6% | 3.6% |
|
Leasing & Services |
Revenue | $27.5M | $42.7M | Prior quarter reflected higher volume of externally sourced railcar syndications; Activity is opportunistic and non-linear |
Gross margin | 37.4% | 27.8% | Prior quarter reflected higher volume of externally sourced railcar syndications that are dilutive to gross margin but generate earnings and positive cash flow in short holding periods |
Operating margin (1) (3) | 43.0% | 30.0% |
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(1) See supplemental segment information on page 11 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. |
Conference Call
Greenbrier will host a teleconference to discuss its third quarter 2020 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website.
Teleconference details are as follows:
- July 10, 2020
- 8:00 a.m. Pacific Daylight Time
- Phone: 1-630-395-0143, Password: "Greenbrier"
- Real-time Audio Access: ("Newsroom" at http://www.gbrx.com)
Please access the site 10 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. Greenbrier designs, builds and markets freight railcars and marine barges in North America. Greenbrier Europe is an end-to-end freight railcar manufacturing, engineering and repair business with operations in Poland, Romania and Turkey that serves customers across Europe and in the nations of the Gulf Cooperation Council. Greenbrier builds freight railcars and rail castings in Brazil through two separate strategic partnerships. 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 offers railcar management, regulatory compliance services and leasing services to railroads and related transportation industries in North America. Through unconsolidated joint ventures, we produce industrial and rail castings, and other components. Greenbrier owns a lease fleet of 8,800 railcars and performs management services for 391,000 railcars. Learn more about Greenbrier at www.gbrx.com.
THE GREENBRIER COMPANIES, INC. |
Consolidated Balance Sheets |
(In thousands, unaudited) |
|
| May 31, 2020 | February 29, 2020 | November 30, 2019 | August 31, 2019 | May 31, 2019 |
Assets |
|
|
|
|
|
Cash and cash equivalents | $ 735,258 | $ 169,899 | $ 253,602 | $ 329,684 | $ 359,625 |
Restricted cash | 8,704 | 8,569 | 8,648 | 8,803 | 21,471 |
Accounts receivable, net | 261,629 | 326,229 | 313,786 | 373,383 | 330,385 |
Inventories | 675,442 | 709,115 | 733,806 | 664,693 | 592,099 |
Leased railcars for syndication | 136,144 | 255,073 | 135,319 | 182,269 | 130,489 |
Equipment on operating leases, net | 355,841 | 385,974 | 396,187 | 366,688 | 376,241 |
Property, plant and equipment, net | 719,155 | 723,326 | 730,730 | 717,973 | 478,502 |
Investment in unconsolidated affiliates | 75,508 | 79,082 | 85,141 | 91,818 | 53,036 |
Intangibles and other assets, net | 181,315 | 160,709 | 162,089 | 125,379 | 97,022 |
Goodwill | 130,035 | 129,684 | 129,468 | 129,947 | 74,318 |
| $ 3,279,031 | $ 2,974,660 | $ 2,948,776 | $ 2,990,637 | $ 2,513,188 |
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Liabilities and Equity |
|
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|
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|
Revolving notes | $ 416,535 | $ 37,196 | $ 29,502 | $ 27,115 | $ 25,952 |
Accounts payable and accrued liabilities | 488,969 | 499,898 | 527,789 | 568,360 | 473,106 |
Deferred income taxes | 4,354 | 9,173 | 9,417 | 13,946 | 12,089 |
Deferred revenue | 63,536 | 70,869 | 59,657 | 85,070 | 76,170 |
Notes payable, net | 806,919 | 811,860 | 817,830 | 822,885 | 483,918 |
|
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|
|
|
|
Contingently redeemable noncontrolling interest | 30,611 | 30,782 | 31,723 | 31,564 | 24,722 |
|
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|
|
Total equity - Greenbrier | 1,291,221 | 1,286,472 | 1,281,808 | 1,276,730 | 1,262,315 |
Noncontrolling interest | 176,886 | 201,410 | 191,050 | 164,967 | 154,916 |
Total equity | 1,468,107 | 1,487,882 | 1,472,858 | 1,441,697 | 1,417,231 |
| $ 3,279,031 | $ 2,947,660 | $ 2,948,776 | $ 2,990,637 | $ 2,513,188 |
THE GREENBRIER COMPANIES, INC. |
Consolidated Statements of Income |
(In thousands, except per share amounts, unaudited) |
|
| Three Months Ended May 31, | Nine Months Ended May 31, |
| 2020 |
| 2019 |
| 2020 |
| 2019 |
Revenue |
|
|
|
|
|
|
|
|
Manufacturing | $ 653,007 |
| $ 681,588 |
| $ 1,800,317 |
| $ 1,629,396 |
|
Wheels, Repair & Parts | 82,024 |
| 124,980 |
| 259,857 |
| 358,801 |
|
Leasing & Services | 27,526 |
| 49,584 |
| 95,590 |
| 131,149 |
|
| 762,557 |
| 856,152 |
| 2,155,764 |
| 2,119,346 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
Manufacturing | 562,793 |
| 590,788 |
| 1,567,014 |
| 1,451,589 |
|
Wheels, Repair & Parts | 75,001 |
| 119,821 |
| 241,266 |
| 339,254 |
|
Leasing & Services | 17,232 |
| 38,971 |
| 61,428 |
| 95,554 |
|
| 655,026 |
| 749,580 |
| 1,869,708 |
| 1,886,397 |
|
|
|
|
|
|
|
|
|
|
Margin | 107,531 |
| 106,572 |
| 286,056 |
| 232,949 |
|
|
|
|
|
|
|
|
|
|
Selling and administrative expense | 49,494 |
| 54,377 |
| 158,455 |
| 152,701 |
|
Goodwill impairment | - |
| 10,025 |
| - |
| 10,025 |
|
Net gain on disposition of equipment | (8,775) |
| (11,019) |
| (19,431) |
| (37,474) |
|
Earnings from operations | 66,812 |
| 53,189 |
| 147,032 |
| 107,697 |
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
Interest and foreign exchange | 7,562 |
| 9,770 |
| 33,023 |
| 23,411 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates | 59,250 |
| 43,419 |
| 114,009 |
| 84,286 |
|
Income tax expense | (24,421) |
| (13,008) |
| (37,878) |
| (24,391) |
|
Earnings before earnings (loss) from unconsolidated affiliates | 34,829 |
| 30,411 |
| 76,131 |
| 59,895 |
|
Earnings (loss) from unconsolidated affiliates | 1,040 |
| (4,564) |
| 3,764 |
| (4,883) |
|
Net earnings | 35,869 |
| 25,847 |
| 79,895 |
| 55,012 |
|
Net earnings attributable to noncontrolling interest | (8,097) |
| (10,599) |
| (30,825) |
| (19,043) |
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Greenbrier | $ 27,772 |
| $ 15,248 |
| $ 49,070 |
| $ 35,969 |
|
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|
|
|
|
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|
Basic earnings per common share: | $ 0.85 |
| $ 0.47 |
| $ 1.50 |
| $ 1.10 |
|
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|
Diluted earnings per common share: | $ 0.83 |
| $ 0.46 |
| $ 1.47 |
| $ 1.08 |
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|
|
|
|
|
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|
Weighted average common shares: |
|
|
|
|
|
|
|
|
Basic | 32,690 |
| 32,603 |
| 32,660 |
| 32,623 |
|
Diluted | 33,478 |
| 33,183 |
| 33,414 |
| 33,161 |
|
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|
|
|
|
|
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|
Dividends declared per common share | $ 0.27 |
| $ 0.25 |
| $ 0.79 |
| $ 0.75 |
|
THE GREENBRIER COMPANIES, INC. |
Consolidated Statements of Cash Flows |
(In thousands, unaudited) |
|
|
| Nine Months Ended
May 31, |
|
|
| 2020 |
| 2019 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Net earnings |
| $ | 79,895 |
| $ | 55,012 |
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
Deferred income taxes |
|
| (11,450) |
|
| (20,478) |
|
Depreciation and amortization |
|
| 82,452 |
|
| 60,833 |
|
Net gain on disposition of equipment |
|
| (19,431) |
|
| (37,474) |
|
Accretion of debt discount |
|
| 4,102 |
|
| 3,268 |
|
Stock based compensation expense |
|
| 8,265 |
|
| 10,792 |
|
Goodwill impairment |
|
| - |
|
| 10,025 |
|
Noncontrolling interest adjustments |
|
| 2,826 |
|
| 7,322 |
|
Other |
|
| 568 |
|
| 1,916 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
Accounts receivable, net |
|
| 110,431 |
|
| 27,926 |
|
Inventories |
|
| 12,555 |
|
| (169,813) |
|
Leased railcars for syndication |
|
| (38,826) |
|
| (43,796) |
|
Other assets |
|
| (59,212) |
|
| (2,525) |
|
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| (77,243) |
|
| 30,581 |
|
Deferred revenue |
|
| (5,900) |
|
| (27,712) |
|
Net cash provided by (used in) operating activities |
|
| 89,032 |
|
| (94,123) |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
| 78,521 |
|
| 100,730 |
|
Capital expenditures |
|
| (55,326) |
|
| (149,945) |
|
Investment in and advances to unconsolidated affiliates |
|
| (1,500) |
|
| (11,393) |
|
Cash distribution from unconsolidated affiliates and other |
|
| 11,273 |
|
| 1,986 |
|
Net cash provided by (used in) investing activities |
|
| 32,968 |
|
| (58,622) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
| 214,932 |
|
| (1,882) |
|
Proceeds from revolving notes with maturities longer than 90 days |
|
| 175,000 |
|
| - |
|
Proceeds from issuance of notes payable |
|
| - |
|
| 225,000 |
|
Repayments of notes payable |
|
| (24,002) |
|
| (179,803) |
|
Debt issuance costs |
|
| - |
|
| (2,974) |
|
Dividends |
|
| (26,344) |
|
| (25,072) |
|
Cash distribution to joint venture partner |
|
| (36,152) |
|
| (11,715) |
|
Tax payments for net share settlement of restricted stock |
|
| (2,266) |
|
| (6,321) |
|
Net cash provided by (used in) financing activities |
|
| 301,168 |
|
| (2,767) |
|
Effect of exchange rate changes |
|
| (17,693) |
|
| (2,866) |
|
Increase (decrease) in cash, cash equivalents and restricted cash |
|
| 405,475 |
|
| (158,378) |
|
Cash and cash equivalents and restricted cash |
|
|
|
|
|
|
|
Beginning of period |
|
| 338,487 |
|
| 539,474 |
|
End of period |
| $ | 743,962 |
| $ | 381,096 |
|
Balance Sheet Reconciliation |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 735,258 |
| $ | 359,625 |
|
Restricted cash |
|
| 8,704 |
|
| 21,471 |
|
Total cash and cash equivalents and restricted cash as presented above |
| $ | 743,962 |
| $ | 381,096 |
|
THE GREENBRIER COMPANIES, INC. |
Supplemental Information |
(In thousands, excluding backlog and delivery units, unaudited) |
|
Reconciliation of Net earnings to Adjusted EBITDA |
|
| Three Months Ended |
| May 31, 2020 |
| February 29,
2020 |
Net earnings | $ 35,869 |
| $ 20,015 |
Interest and foreign exchange | 7,562 |
| 12,609 |
Income tax expense | 24,421 |
| 7,463 |
Depreciation and amortization | 23,114 |
| 30,003 |
Severance expense | 6,341 |
| - |
ARI integration related costs | 2,545 |
| 1,535 |
Adjusted EBITDA | $ 99,852 |
| $ 71,625 |
|
|
| Three Months Ended |
May 31, 2020 |
Backlog Activity (units) (1) |
|
|
|
Beginning backlog | 30,800 |
Orders received | 800 |
Production held as Leased railcars for syndication | (600) |
Production sold directly to third parties | (4,300) |
Ending backlog | 26,700 |
|
|
Delivery Information (units) (1) |
|
Production sold directly to third parties | 4,300 |
Sales of Leased railcars for syndication | 1,600 |
Total deliveries | 5,900 |
|
|
(1) Includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method |
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 |
| Total |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Manufacturing | $ 657,367 |
| $ 489,943 |
| $ 653,007 |
| $ 1,800,317 |
|
Wheels, Repair & Parts | 86,608 |
| 91,225 |
| 82,024 |
| 259,857 |
|
Leasing & Services | 25,384 |
| 42,680 |
| 27,526 |
| 95,590 |
|
| 769,359 |
| 623,848 |
| 762,557 |
| 2,155,764 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
Manufacturing | 581,912 |
| 422,309 |
| 562,793 |
| 1,567,014 |
|
Wheels, Repair & Parts | 81,892 |
| 84,373 |
| 75,001 |
| 241,266 |
|
Leasing & Services | 13,366 |
| 30,830 |
| 17,232 |
| 61,428 |
|
| 677,170 |
| 537,512 |
| 655,026 |
| 1,869,708 |
|
|
|
|
|
|
|
|
|
|
Margin | 92,189 |
| 86,336 |
| 107,531 |
| 286,056 |
|
|
|
|
|
|
|
|
|
|
Selling and administrative expense | 54,364 |
| 54,597 |
| 49,494 |
| 158,455 |
|
Net gain on disposition of equipment | (3,959) |
| (6,697) |
| (8,775) |
| (19,431) |
|
Earnings from operations | 41,784 |
| 38,436 |
| 66,812 |
| 147,032 |
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
Interest and foreign exchange | 12,852 |
| 12,609 |
| 7,562 |
| 33,023 |
|
Earnings before income tax and earnings from unconsolidated affiliates | 28,932 |
| 25,827 |
| 59,250 |
| 114,009 |
|
Income tax expense | (5,994) |
| (7,463) |
| (24,421) |
| (37,878) |
|
Earnings before earnings from unconsolidated affiliates | 22,938 |
| 18,364 |
| 34,829 |
| 76,131 |
|
Earnings from unconsolidated affiliates | 1,073 |
| 1,651 |
| 1,040 |
| 3,764 |
|
|
|
|
|
|
|
|
|
|
Net earnings | 24,011 |
| 20,015 |
| 35,869 |
| 79,895 |
|
Net earnings attributable to noncontrolling interest | (16,342) |
| (6,386) |
| (8,097) |
| (30,825) |
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Greenbrier | $ 7,669 |
| $ 13,629 |
| $ 27,772 |
| $ 49,070 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share (1) | $ 0.24 |
| $ 0.42 |
| $ 0.85 |
| $ 1.50 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share (1) | $ 0.23 |
| $ 0.41 |
| $ 0.83 |
| $ 1.47 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share | $ 0.25 |
| $ 0.27 |
| $ 0.27 |
| $ 0.79 |
|
|
|
(1) | Quarterly amounts may not total to the year to date amount as each period is calculated discretely. Diluted EPS is calculated by including the dilutive effect, using the treasury stock method, associated with shares underlying the 2.875% Convertible notes, 2.25% Convertible notes, restricted stock units that are not considered participating securities and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved. |
THE GREENBRIER COMPANIES, INC. |
Supplemental Information |
(In thousands, except per share amounts, unaudited) |
|
Operating Results by Quarter for 2019 are as follows: |
|
| First |
| Second |
| Third |
| Fourth |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
Manufacturing | $ 471,789 |
| $ 476,019 |
| $ 681,588 |
| $ 802,103 |
| $ 2,431,499 |
|
Wheels, Repair & Parts | 108,543 |
| 125,278 |
| 124,980 |
| 85,701 |
| 444,502 |
|
Leasing & Services | 24,191 |
| 57,374 |
| 49,584 |
| 26,441 |
| 157,590 |
|
| 604,523 |
| 658,671 |
| 856,152 |
| 914,245 |
| 3,033,591 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
Manufacturing | 417,805 |
| 442,996 |
| 590,788 |
| 686,036 |
| 2,137,625 |
|
Wheels, Repair & Parts | 100,978 |
| 118,455 |
| 119,821 |
| 81,636 |
| 420,890 |
|
Leasing & Services | 13,207 |
| 43,376 |
| 38,971 |
| 13,036 |
| 108,590 |
|
| 531,990 |
| 604,827 |
| 749,580 |
| 780,708 |
| 2,667,105 |
|
|
|
|
|
|
|
|
|
|
|
|
Margin | 72,533 |
| 53,844 |
| 106,572 |
| 133,537 |
| 366,486 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expense | 50,432 |
| 47,892 |
| 54,377 |
| 60,607 |
| 213,308 |
|
Net gain on disposition of equipment | (14,353) |
| (12,102) |
| (11,019) |
| (3,489) |
| (40,963) |
|
Goodwill impairment | - |
| - |
| 10,025 |
| - |
| 10,025 |
|
Earnings from operations | 36,454 |
| 18,054 |
| 53,189 |
| 76,419 |
| 184,116 |
|
|
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange | 4,404 |
| 9,237 |
| 9,770 |
| 7,501 |
| 30,912 |
|
Earnings before income tax and earnings (loss) from unconsolidated affiliates | 32,050 |
| 8,817 |
| 43,419 |
| 68,918 |
| 153,204 |
|
Income tax expense | (9,135) |
| (2,248) |
| (13,008) |
| (17,197) |
| (41,588) |
|
Earnings before earnings (loss) from unconsolidated affiliates | 22,915 |
| 6,569 |
| 30,411 |
| 51,721 |
| 111,616 |
|
Earnings (loss) from unconsolidated affiliates | 467 |
| (786) |
| (4,564) |
| (922) |
| (5,805) |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings | 23,382 |
| 5,783 |
| 25,847 |
| 50,799 |
| 105,811 |
|
Net earnings attributable to noncontrolling interest | (5,426) |
| (3,018) |
| (10,599) |
| (15,692) |
| (34,735) |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Greenbrier | $ 17,956 |
| $ 2,765 |
| $ 15,248 |
| $ 35,107 |
| $ 71,076 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share (1) | $ 0.55 |
| $ 0.08 |
| $ 0.47 |
| $ 1.08 |
| $ 2.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share (1) | $ 0.54 |
| $ 0.08 |
| $ 0.46 |
| $ 1.06 |
| $ 2.14 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share | $ 0.25 |
| $ 0.25 |
| $ 0.25 |
| $ 0.25 |
| $ 1.00 |
|
|
|
(1) | Quarterly amounts may not total to the year to date amount as each period is calculated discretely. Diluted EPS is calculated by including the dilutive effect, using the treasury stock method, associated with shares underlying the 2.875% Convertible notes, 2.25% Convertible notes, restricted stock units that are not considered participating securities and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved. |
THE GREENBRIER COMPANIES, INC. |
Supplemental Information |
(In thousands, unaudited) |
|
Segment Information |
|
Three months ended May 31, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
| Earnings (loss) from operations |
|
| External |
| Intersegment |
| Total |
| External |
| Intersegment |
| Total |
|
Manufacturing | $ 653,007 |
| $ 1,151 |
| $ 654,158 |
| $ 68,445 |
| $ 95 |
| $ 68,540 |
|
Wheels, Repair & Parts | 82,024 |
| 1,527 |
| 83,551 |
| 3,785 |
| (393) |
| 3,392 |
|
Leasing & Services | 27,526 |
| 14,841 |
| 42,367 |
| 11,837 |
| 14,454 |
| 26,291 |
|
Eliminations | - |
| (17,519) |
| (17,519) |
| - |
| (14,156) |
| (14,156) |
|
Corporate | - |
| - |
| - |
| (17,255) |
| - |
| (17,255) |
|
| $ 762,557 |
| $ - |
| $ 762,557 |
| $ 66,812 |
| $ - |
| $ 66,812 |
|
Three months ended February 29, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
| Earnings (loss) from operations |
|
| External |
| Intersegment |
| Total |
| External |
| Intersegment |
| Total |
|
Manufacturing | $ 489,943 |
| $ 21 |
| $ 489,964 |
| $ 46,105 |
| $ 1 |
| $ 46,106 |
|
Wheels, Repair & Parts | 91,225 |
| 5,133 |
| 96,358 |
| 3,320 |
| (168) |
| 3,152 |
|
Leasing & Services | 42,680 |
| 15,240 |
| 57,920 |
| 12,793 |
| 14,384 |
| 27,177 |
|
Eliminations | - |
| (20,394) |
| (20,394) |
| - |
| (14,217) |
| (14,217) |
|
Corporate | - |
| - |
| - |
| (23,782) |
| - |
| (23,782) |
|
| $ 623,848 |
| $ - |
| $ 623,848 |
| $ 38,436 |
| $ - |
| $ 38,436 |
|
|
|
| Total assets |
|
|
|
| May 31, 2020 |
| February 29,
2020 |
|
Manufacturing | $ 1,441,052 |
| $ 1,535,118 |
|
Wheels, Repair & Parts | 296,888 |
| 314,069 |
|
Leasing & Services | 777,523 |
| 897,745 |
|
Unallocated | 763,568 |
| 200,728 |
|
| $ 3,279,031 |
| $ 2,947,660 |
|
THE GREENBRIER COMPANIES, INC. |
Supplemental Information |
(In thousands, except per share amounts, unaudited) |
|
Reconciliation of common shares outstanding |
|
The shares used in the computation of the Company's basic and diluted earnings per common share are reconciled as follows: |
|
| Three Months Ended |
| May 31, 2020 | February 29, 2020 |
Weighted average basic common shares outstanding (1) | 32,690 | 32,661 |
Dilutive effect of convertible notes (2) | - | - |
Dilutive effect of restricted stock units (3) | 788 | 821 |
Weighted average diluted common shares outstanding | 33,478 | 33,482 |
|
|
|
|
|
|
|
|
|
(1) | Restricted stock grants and restricted stock units that are considered participating securities, including some grants subject to certain performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position. |
(2) | The dilutive effect of the 2.875% Convertible notes issued in February 2017 and the 2.25% Convertible notes issued in July 2019 were excluded for the periods in which they were outstanding as the average stock price was less than the applicable conversion price and therefore was anti-dilutive. |
(3) | Restricted stock units that are not considered participating securities and restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved, are included in weighted average diluted common shares outstanding when the Company is in a net earnings position. |
Reconciliation of Net earnings attributable to Greenbrier to Adjusted net earnings attributable to Greenbrier |
|
| Three Months Ended |
| May 31, 2020 |
| February 29,
2020 |
Net earnings attributable to Greenbrier | $ 27,772 |
| $ 13,629 |
ARI integration related costs, net of tax (1) | 2,539 |
| 1,665 |
Severance expense, net of tax (2) | 4,803 |
| - |
Adjusted net earnings attributable to Greenbrier | $ 35,114 |
| $ 15,294 |
|
|
(1) | Net of tax of $813 and $677, respectively. |
(2) | Net of tax of $1,538. |
Reconciliation of Diluted earnings per share to Adjusted diluted earnings per share |
|
|
| Three Months Ended |
|
| May 31, 2020 |
| February 29,
2020 |
Diluted earnings per share |
| $ 0.83 |
| $ 0.41 |
ARI integration related costs, net of tax |
| 0.08 |
| 0.05 |
Severance expense, net of tax |
| 0.14 |
| - |
Adjusted diluted earnings per share |
| $ 1.05 |
| $ 0.46 |
"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 "achieve," "allow," "believe," "bolster," "continue," "estimates," "exceed," "is," "maintain," "may," "plans," "potential," "should," "succeed," "support," "target," "will," "can," "well-positioned," and similar expressions to identify forward-looking statements. These forward-looking statements include, without limitation, statements about future liquidity; positioning to compete and succeed; targeting available capital; as well as other information regarding future performance and strategies and appear throughout this press release including in the headlines and the sections "Third Quarter Highlights" and "Business Update." 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 COVID-19 coronavirus pandemic and the governmental reaction to COVID-19 and the related significant global decline in general economic activity having a materially negative impact on our business, liquidity and financial position, results of operations, stock price, and our ability to convert backlog to revenue; our inability to increase our liquidity and borrowing base as we anticipate or being delayed in doing so; inability to implement cost savings in the amounts or timelines that we have planned; the cyclical nature of our business, economic downturns and a rising interest rate environment; changes in our product mix due to shifts in demand or fluctuations in commodity and energy prices; a decline in performance or demand of the rail freight industry; an oversupply or increase in efficiency in the rail freight industry; difficulty integrating acquired businesses or joint ventures; inability to convert backlog to future revenues; risks related to our operations outside of the U.S., including anti-bribery violations; governmental policy changes impacting international trade and corporate tax; the loss of or reduction of business from one or more of our limited number of customers; inability to lease railcars at satisfactory rates, or realize expected residual values on sale of railcars at the end of a lease; shortages of skilled labor, increased labor costs, or failure to maintain good relations with our workforce; equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities; inability to compete successfully; suitable joint ventures, acquisition opportunities and new business endeavors may not be identified or concluded; inability to complete capital expenditure projects efficiently, or to cause capital expenditure projects to operate as anticipated; inability to design or manufacture products or technologies, or to achieve timely certification or market acceptance of new products or technologies; unsuccessful relationships with our joint venture partners; environmental liabilities, including the Portland Harbor Superfund Site; the timing of our asset sales and related revenue recognition may result in comparisons between fiscal periods not being accurate indicators of future performance; attrition within our management team or unsuccessful succession planning for members of our senior management team and other key employees who are at or nearing retirement age; changes in the credit markets and the financial services industry; volatility in the global financial markets; our actual results differing from our announced expectations; fluctuations in the availability and price of energy, freight transportation, steel and other raw materials; inability to procure specialty components or services on commercially reasonable terms or on a timely basis from a limited number of suppliers; our existing indebtedness may limit our ability to borrow additional amounts in the future, may expose us to increasing interest rates, and may expose us to a material adverse effect on our business if we are unable to service our debt or obtain additional financing; train derailments or other accidents or claims; changes in or failure to comply with legal and regulatory requirements; an adverse outcome in any pending or future litigation or investigation; potential misconduct by employees; labor strikes or work stoppages; the volatility of our stock price; dilution to investors resulting from raising additional capital or due to other reasons; product and service warranty claims; misuse of our products by third parties; write-downs of goodwill or intangibles in future periods; conversion at our option of our outstanding convertible notes resulting in dilution to our then-current stockholders; as a holding company with no operations, our reliance on our subsidiaries and joint ventures and their ability to make distributions to us; our governing documents, the terms of our convertible notes, and Oregon law could make a change of control or acquisition of our business by a third party difficult; the discretion of our Board of Directors to pay or not pay dividends on our common stock; fluctuations in foreign currency exchange rates; inability to raise additional capital to operate our business and achieve our business objectives; shareholder activism could cause us to incur significance expense, impact our stock price, and hinder execution of our business strategy; cybersecurity risks; updates or changes to our information technology systems resulting in problems; inability to protect our intellectual property and prevent its improper use by third parties; claims by third parties that our products or services infringe their intellectual property rights; liability for physical damage, business interruption or product liability claims that exceed our insurance coverage; inability to procure adequate insurance on a cost-effective basis; changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; fires, natural disasters, severe weather conditions or public health crises; unusual weather conditions which reduce demand for our wheel-related parts and repair services; business, regulatory, and legal developments regarding climate change which may affect the demand for our products or the ability of our critical suppliers to meet our needs; repercussions from terrorist activities or armed conflict; unanticipated changes in our tax provisions or exposure to additional income tax liabilities; the inability of certain of our customers to utilize tax benefits or tax credits; and suspension or termination of our share repurchase program. More information on these risks and other 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 reports on Form 10-K and subsequent Form 10-Q filings. 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 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 before Interest and foreign exchange, Income tax 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 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.
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SOURCE The Greenbrier Companies, Inc.
