The Greenbrier Companies, Inc. (GBX) on Q2 2021 Results - Earnings Call Transcript
Operator: Hello and welcome to The Greenbrier Companies' Second Quarter of Fiscal 2021 Earnings Conference Call. Following today's presentation, we will conduct a question-and-answer session. Each analyst should limit themselves to only two questions. Until that time, all lines will be in a listen-only mode. 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. Justin Roberts, Vice President and Treasurer. Mr. Roberts, you may begin. Justin Roberts: Thank you, Ailie. Good morning everyone and welcome to our second quarter of fiscal 2021 conference call. On today’s call, I am joined by Greenbrier’s Chairman and CEO, Bill Furman; Lorie Tekorius, President and COO; and Adrian Downes, Senior Vice President and CFO. They will provide an update on Greenbrier's performance and our near-term priorities. Following our introductory remarks, we will open up the call for questions. In addition to the press release issued this morning, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website. Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2021 and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of Greenbrier. And with that, I will hand the call over to Bill. Bill Furman: Thank you, Justin and good morning, everyone. Greenbrier adhered to disciplined management program throughout this year of the pandemic. Now, I know we said this in our news release this morning, but it's worth repeating. Our simple core strategy since March 2020 has been; number one, to maintain a strong liquidity base and balance sheet; number two, to safely operate our factories while generating cash, reducing costs and adjusting to reduce demand for our products and services. That reduction in demand was clearly shown in this quarter's results. Number three to prepare for economic recovery and forward momentum in our markets. We believe we're now solidly in this recovery phase. We believe that our Q2 just completed in February will be the most challenging quarter of our fiscal year, particularly affected by very bad weather in North America. There's good reason to be optimistic as vaccines expand in the United States. Vaccinations will bolster already accelerating infection and mortality rates and allow America to turn the corner on the pandemic at last. Globally, we are prepared for the pandemic to take a longer course toward resolution. Sadly, we learned last week that Greenbrier lost two more employees, our sixth and seventh loss to COVID-19. , 58, was assistant to the plant manager at our Severin, Romania facility where she worked for over 32 years. We also lost , age 43. Luis was maintenance manager in our Tlaxcala -- factory in Tlaxcala, State of Mexico -- in the State of Tlaxcala in Mexico. He has been with Greenbrier since December 2017. He was survived by his wife and four children ages 19, 17, 11 and 5. We mourned the loss of and . We're extending support and prayers to their family and to colleagues who worked with them. Lorie Tekorius: Thank you, Bill, and good morning, everyone. I too am proud of how Greenbrier employees responded in our second quarter. We expected it to be a challenging operating quarter, but the extreme winter weather that impacted every location in North America added an additional test. I was impressed with the creativity and commitment shown to ensure operations continued as seamlessly as possible. Over the last several quarters, Greenbrier has balanced right sizing our global footprint and production capacity with maintaining our ability to respond quickly as recovery begins. The first 6 months of the fiscal year were painful. But we're seeing improved demand in each of our markets. And we've recently restarted several production lines in North America that are poised to flex our manufacturing footprint as conditions evolve. As you heard from Bill, we remain focused on executing our COVID-19 protocols by focusing on employee safety and maintaining our liquidity to ensure we're prepared for the emerging economic recovery. Regarding second quarter activity, Greenbrier delivered 2,100 units in the quarter, including 400 units in Brazil. We received orders for 3,800 units in the quarter valued at approximately $440 million. International order activity accounted for nearly half of the orders in the quarter, and the average sales price and backlog increased sequentially, reflecting a more favorable mix of railcars. Our book-to-bill ratio of 1.8x resulted in a grow -- a growing backlog to 24,900 units valued at $2.5 billion. Our global manufacturing performance was not indicative of its true value. While a positive gross margin was achieved, the team's operational execution was tremendous in a challenging environment. Now bear with me while I throw some numbers at you. Compared to Q1 our deliveries in Q2 were down 37%, and that followed a 45% decline from Q4 to Q1. And then further if you were to do a year-over-year comparison, you guys like all these year-over-year comparisons of Q2, manufacturing revenue was down 59% on 54% lower deliveries. Adrian Downes: Thank you, Lorie, and good morning, everyone. Quarterly financial information is available in the press release and supplemental slides on our website. During the quarter, Greenbrier continued managing for near-term stability, while positioning for a strong recovery. Obviously, the pandemic has had a major impact on our revenue and delivery levels, nonetheless, we were able to achieve positive margins in each segment as a result of our flexible manufacturing footprint and aggressive cost reductions. Reduced deliveries and revenue is a power driver of bottom line performance even in the face of dramatic reductions in payroll, overhead and SG&A. Performance did improve each month within the quarter, and we exited the quarter with positive momentum, increasing production rates to build sequential momentum in Q3 and Q4. A few quarterly items I will mention include: revenue of $296 million; book-to-bill of 1.8x; made up of deliveries of 2,100 units, including 400 units from Brazil; and orders of 3,800 new units. Aggregate gross margin of 6%; selling and administrative expense of $43 million flat sequentially and 20% lower than Q2 of fiscal 2020. Net loss attributable to Greenbrier was $9.1 million, or a loss of $0.28 per share. EBITDA was negative $1 million. The effective tax rate in the quarter was a benefit of 62% due to net operating losses and tax benefits from accelerated depreciation associated with capital investment in our leasing assets. These deductions will be carried back to earlier high tax years under the CARES Act, resulting in a $16 million tax benefit in the quarter and cash tax refunds to be received in fiscal 2022. We also incurred $2.5 million of incremental pre-tax costs, specifically related to COVID-19 employee and facility safety. These costs will continue for the foreseeable future. Moving to liquidity, we have continued managing for near-term balance sheet strength and our position for recovery, including borrowing capacity of $115 million, Greenbrier's liquidity remains healthy at $708 million, plus another approximately $100 million of initiatives in process. Cash in the quarter ended at $593 million, reflecting $48 million of inventory purchasing to support higher production levels beginning in Q3 and the $44 million increase in leased railcars for syndication. Historically, tax receivables have been included in the accounts receivable line on our balance sheet. But to improve transparency, we separated this activity in the quarter to provide a more accurate picture of operating receivables as well as the future tax refunds I just mentioned. Capital expenditures, net of equipment sales in the quarter was $9.2 million. Leasing and services capital spending is expected to be about $90 million in 2021, with about 42% of that already occurring in the first half of the year. This capital spending includes GBX leasing, which began operations in Q3, and approximately $130 million of leased railcar assets were transferred into the JV at that point, including some assets which were already on our balance sheet at the beginning of the year. An additional approximately $70 million of assets will be newly built are transferred later this year. Manufacturing and wheels repair and parts capital expenditures are still expected to be about $35 million for the year with spending focused on safety and required maintenance. We continue to have healthy cushions in our debt covenants. And while we have no significant debt maturities on late calendar 2023 and calendar 2024, we are proactively evaluating opportunities to extend maturities and capitalize on the lower interest rate environment. Greenbrier's Board of Directors remains committed to balanced capital deployment. Authorization of share repurchases remains in effect through January 2023 and today we're announcing a dividend of $0.27 per share, our 28th consecutive dividend. Since the start of our program the growth of our dividend represents a compound annual rate of 9.9%. And now we will open it up for questions. Operator: Our first question today will come from Matt Elkott with Cowen. Matt Elkott: Good morning. Thank you very much for taking my question. You guys think the -- net profitability in fiscal '21 is still plausible? Bill Furman: We certainly thought that last quarter when the question was asked, we -- depending on the cadence of the recovery in the last two quarters, we still believe to be true. Would you like to comment further on that? Lorie Tekorius: I agree with you, Bill. I think it's certainly the second quarter was a lot more difficult than we anticipated with COVID continuing longer than I think than anyone had ever hoped as well as the severe weather. So we're doing everything that we can to take advantage of the momentum we see in our markets. Matt Elkott: Okay. And Lorie, can you give us an idea on what kind of a step up in deliveries we can expect in the third and fourth fiscal quarters? Lorie Tekorius: Well, I'd say it's definitely going to be a nice step up from what we saw in this quarter, probably more in line with what you saw in the third quarter and then ramping up further in the fourth quarter. And some of this will be dependent as I stated, we do expect syndication activity to pick up in the fourth quarter or in the second half. But sometimes the timing of our customers ability to close doesn't always perfectly coincide with our fiscal quarter or year-end. So that's where there's a little bit of a play. But yes, we do expect to see a nice step up in third quarter and a further step up in the fourth quarter. Matt Elkott: Okay. And just maybe one more kind of a higher picture question. Based on some of the assumptions, some of the macro and rail traffic assumptions that are pretty consensus, some of which Bill talked about earlier, would we -- could we expect 2022 or 2023 to be your peak earnings year in this cycle? Lorie Tekorius: You had to qualify within this cycle, because certainly we don't expect that to be our peak . Bill Furman: I think that -- I don't want to get into phrase like this is -- these are extraordinary times. But the stimulus and the other economic policy that's going on today is caused, particularly Goldman Sachs to be very bullish on the economy through 2023 and into 2024. Other -- you can look at consensus estimates, but some of the really smart people are looking at the map with the amount of money available, the amount of stimulus coming in, in North America, particularly than in Europe, you've got these extraordinary policies being made, that will create a big boost for a long time. I remind everybody, and I'm not saying that this is going to occur, but the 20 -- 1918 pandemic, if you look at history gave rise to the roaring 20s and part of it was spending, but part of it was relief consumers loosened up. So it's really hard to navigate the future. But I really expect that we'll be looking for 24 months of very strong economic activity in North America, Europe, and South America. Matt Elkott: Got it. And Bill, I mean, you mentioned rail traffic being up, it's true, it's up 3% year-to-date after 2 years of decline. But if you ex out intermodal, it's down 4%. And if you ex out intermodal and grain, its down 7%. Can you talk a bit maybe about what these trends mean for you guys, the fact that it's mainly an intermodal and grain recovery so far? And if it continues to be so, what does that mean for all other car types? Bill Furman: Well, I think that if you look at other isolated car types, there are others who have -- where there's a lot of growth. We're seeing activity, it's a little tricky because there's at least 20 different kinds of car types. And as we've said many, many times a railcar is not a railcar is not a railcar. But there's been growth in certain chemicals, smaller lot sizes in agricultural products, boxcars, and a number of other car types that we track. We make almost all cars made anywhere in the world with the exception of coal cars, which also curiously have seen some recovery in the storage statistics. But I think that it's more broad based than your -- than the traffic -- trailing traffic statistics might suggest. Keep in mind that there has been a damper also on traffic due to the weather conditions and some of the other activities going on. If you look at some other indicators, Cowen and Company just put out a very interesting report on dry van and other truck rates. Those have gone up on the spot market 40%. It's just a booming transportation market somewhat dampened by weather and supply chain congestion. And by the way, getting back to your earlier question, when we have weather delays, we try to recuperate, so we shouldn't have much of the delays from inbound freight that affected us and deliveries will come popping into the third quarter. Lorie Tekorius: And I just like to add one thing. I do think part of what's keeping some of the loadings down or not showing as much growth is the railroads ability to operate in a growing market with PSR. I have no doubt that the railroads will figure out how to decongest some of the ports and get moving, I'm certain that they don't like to see their loading staying flat or down in certain areas because they can't get the equipment there. So I expect that to get worked out in the near-term and to start seeing more of those numbers loadings improve across the commodities. Matt Elkott: Got it. Thanks for the insight, Lorie and Bill. Bill Furman: By the way, on our next conference call, we're going to have one of our Chief Commercial Officer join us to give more insight into our markets. And we'll put a little more depth into that kind of question and do some preparation for that call. It's good for you to meet some of the emerging leaders in the company, I think. Operator: Our next question will come from Justin Long with Stephens. Justin Long: Thanks and good morning. So wanted to start with just a clarification on the first question around full year expectations for EPS to breakeven. Are you assuming a 2Q loss of $0.28 when you make that comment or a loss of $0.77 when you exclude the tax benefit? Lorie Tekorius: So I'll just answer the question. We're using the GAAP EPS of $0.28. Justin Long: Okay. Thanks. Just wanted to clarify that. And then -- sorry, go ahead. Lorie Tekorius: Well, let me -- I've learned a lot from Bill. I can't just answer the question and move on. There's a lot more to that. We are not disregarding that tax benefit, because it is part of the strategy of why we're focused on growing a leasing business and keeping that on our balance sheet because there is tremendous benefit from the tax, the tax regulations that allow us to take these benefits. So we don't see that as extraordinary or one-time, but part of how we will continue to operate going forward. Justin Long: Okay. That makes sense and wanted to ask about manufacturing gross margins. I know you gave and reiterated the consolidated gross margin guidance for the full year. But any color you can provide on your expectations for manufacturing gross margins in the back half of the year? Lorie Tekorius: I think consistent with answering Matt's question about deliveries, we would expect it to step up a bit in the third quarter and then further in the fourth quarter. As you can appreciate, while our manufacturing team is great at operating efficiently, it's a bit easier when you have a little bit more volume going through those facilities to absorb some of the overhead that you can't shed, particularly quickly when you have such a big drop in production. Justin Long: Great. And last just quick one, and then I'll pop back in the queue. But on the orders in March, could you share what the split was between North America and international orders for that 1,700 number you provided? Bill Furman: Most of those were in North America. Justin Long: Okay. Bill Furman: And a little bit of a dribble of that 1,700 came into -- came in the first week of April, but just a small sliver of it. Justin Long: Okay, great. That's helpful. I appreciate the time. Bill Furman: Thank you. Thanks for your coverage. Operator: Our next question comes from Bascome Majors with Susquehanna. Bascome Majors: Thanks for taking … Bill Furman: Hi, Bas. Bascome Majors: Hey, Bill, how you doing? Bill Furman: Good. How are you doing? Bascome Majors: Thanks for taking my questions here. Great. I wanted to go back to kind of maybe extend on Justin's last question there. Can you give us maybe a better flavor of the kind of demand that you're seeing in the marketplace and that's driving these higher inquiry levels and what looks like much better trend at least in the last couple of months on firm orders? I mean, are you seeing leasing companies look to get in hopes that the cycle is turning? Some of this from your JV new car orders, have spot -- have spot steel prices impacted some of the more kind of near-term needs? Just any of these themes, if you could unpack for us and help us understand what your customers are feeling would be really helpful. Thank you. Bill Furman: Okay. I will just try to take that question apart just a little bit on the -- I wouldn't say that the order activity is influenced by our leasing company at all. And I'll let Justin or Lorie, correct me if I'm wrong directionally there. That's not . The -- we had one very interesting word. That is a -- we had quite a number of boxcars in this order cycle counting these 1,700 units that we just talked about. We're running boxcars in Mexico. We received a tack on order, so that we have a very long run now at our Hidalgo factory in Mexico for boxcars and some insulated -- including in that would be insulated boxcars for including mechanical refrigerated services. So there's a good strong base there. There is a big replacement demand in that segment. That is looming ageing boxcar fleet. So we're expecting to see that trend continuing. We haven't received any intermodal orders, which is at this stage in the cycle -- of a rising cycle, because we're not really in the cycle yet. We're in V shaped recovery. We haven't seen any intermodal, that's going to be a big pop when it comes and it's going to have to come at some point and it's usually very sudden, when it happens. Again, some chemicals and other tank cars. And Justin, what else am I missing? Justin Roberts: It's actually some general purpose Gondolas, you do have different sizes and covered hoppers. And, again, tank cars as well. So it is a very broad based and diversified. Bill Furman: Yes, again, the traffic statistics, they're very important to look at them. They've been erratic over the last year. We saw growth from low base doesn't mean a lot. But the momentum -- I'm looking mostly at the momentum from on the demand side from fiscal policy and cheaper money. These tax benefits are really a driver for everybody to invest in rolling stock and high scrap prices are going to continue to erode that storage number down, which is a very meaningful statistic. Justin Roberts: And Bill could I just add two things on to that. I think when we would say that the customer orders that we've experienced over the last 4 months have been customers who have firm needs, and it's not really someone trying to kind of get ahead of a recovery. It's a shipper who's got capacity coming online. It's someone who's got replacement needs in their fleet. And then I would also just want to underline because I have received this question a couple times already. There are -- we are not treating orders or backlog activity differently than how we have in the past. So we only include firm orders for external parties. We are not including any order activity that does not have a third-party lease attached. And since we own 90% of the GBX leasing JV, we consider that as a affiliated or subsidiary company from that perspective. Bill Furman: And everything that goes into that fleet has leases attached and high quality as Lorie mentioned earlier. So that’s -- I hope that gives you some flavor. Bascome Majors: No, no, thanks for that clarification. I think there may be was some confusion about whether speculative orders could show up with this new structure and thank you for firmly clarifying that, that policy has not changed. And you answered my second question, which was about was intermodal included in there. It sounds like that order has not happened yet. But can you comment on the inquiry levels? I mean, that's historically a pretty concentrated customer marketplace. Is that broadening out? Is that something that you think happens this year, just anything you can give us on your expectations for that mark? Bill Furman: Just kind of a general ease of system of anything over 1,000 cars or a certain dollar quantity because cars can cost different amounts. We do a very disciplined white paper review. The market intelligence, the customer need, where other cars are being built competitively, and so on. We've been doing an average of two of those a week over the last month. Some of those have been inquiries that haven't settled down yet into order. Some have been awarded and we received a fair amount of those that have been awarded. So that activity level by itself, we're tracking probably certainly much more than -- many more than 10,000 inquiries for cars -- 1,000 cars or more. That's the highest rate, it's been. It's probably 15 -- closer to 15, as higher than it's been since 2018. Lastly, let me go back to your question on backlog. One of the things that always somebody typically asked, you're curious about what are we doing about steel prices? Well, we're indexing the double in the last number of months. And that's not just spot, there's a -- it's indicative of the kind of incipient demand that's out there. We expect those to fall back a little bit. But we're not speculating in steel. We passed on some big orders in Europe, that required multiyear commitments for fixed steel prices, happy -- very happy we didn't take any of those orders. So we're using indexing and the quality of the margins built in the backlog is good. Bascome Majors: Thank you. I'll pass it on to the next. Operator: Our next question will come from Allison Poliniak with Wells Fargo. Allison Poliniak: Hi, good morning. Bill Furman: Good morning, Allison. Allison Poliniak: Could you just talk a little bit about the margins -- just trying to unpack it. I know under absorption within manufacturing, and as being mostly manufacturing is a huge part of that. But you also mentioned weather and it sounds like there was some production line startup costs. Were the weather and -- any way to quantify what those weather and maybe production line cost startups would have been? Or is that not as meaningful there? Justin Roberts: Hey, Allison, this is Justin. I would say that we aren't really ready to quantify that explicitly. But with regards to the weather, we lost for effectively every facility in North America. So that would be wheels, repair and parts and manufacturing, anywhere from a few days to a week to more than a week of downtime. So you kind of think about what that does to not just a manufacturing facility from a throughput and overhead absorption perspective. But you are talking millions of dollars ultimately. So it's one of those things where this is not -- it is a part of life. And it is a part of running a business. And, again, hats off to our manufacturing and wheels, repair and parts team and all of the employees who are able to execute well in very trying circumstances, but it was definitely a headwind for us. And some of the startup costs definitely occurred towards the end of February. But we'll see some of that more in March and April as we are ramping up activity a little more aggressively. Allison Poliniak: Got it. Bill Furman: The important thing -- it did affect overhead absorption dramatically. It was just -- it was on an outgoing cars, we couldn't ship. We couldn't get inbound freight to add parts were hand to mouth in that regard. So I had multiple number of effects on each of the factories as Justin points out. And we hope to recuperate that in the coming quarters. Allison Poliniak: Got it. And then it sounds like line -- the line startups that will be sort of that near-term headwind as we kind of start to ramp up production. Should we assume that sort of lessons in Q4? Does that start to accelerate based on the expectation that the sort of V shaped recovery behind it, any thoughts there? Lorie Tekorius: I would say that as Justin said, we'll see a little bit of that -- saw a little bit of it at the end of February and see a little bit more in March. But our manufacturing team has done a good job of bringing those lines back up as well as just transitioning from car type to car type. So I wouldn't expect there to be a big spike in inefficiencies of bringing additional lines on. There'll be some headwind but not a big spike. Bill Furman: Let me add some granularity there. In our ARI facilities, we have had the benefit of fairly smooth production. And so we don't have any line startups. They would be the more affected of the factory system as they haven't been fully absorbed in the Greenbrier manufacturing system yet. In Mexico, we have worked for years to have a flexible manufacturing system. And we've used some very innovative techniques that bring the startup costs down dramatically from historical levels. So we believe that if as long as we don't take too many orders, and try to do too much too soon, we will be fine on the startup cost. And we don't expect to have a lot of CapEx involved with that. It would be mostly working capital consumption cash, which would pay off as the revenue comes in. Allison Poliniak: Got it. And then just last question for me. The wheels, repair and parts, how should we think of that through the balance of the year. Should we assume that to sequentially improve with sort of traffic and just activity going on in the rails? Any thoughts there? Lorie Tekorius: I think that's a fair assumption. We are starting to see some pickup of volume in our repair shops as cars are pulled out of storage. And loadings improve and I would expect that to continue as we progress through the year, steady improvements. Bill Furman: Hey, Allison, you know who's in charge of that? Now it's Lorie to . She's running both that unit and our rapidly growing Greenbrier management services business with 445,000 cars under management. She's pushing them together to make new synergies and that unit should really shine in 2022, right, Lorie? Lorie Tekorius: Yes, sir. Allison Poliniak: That's great. Thanks so much. Operator: Our next question will come from Ken Hoexter with Bank of America. Ken Hoexter: Great, thanks. Good morning and great to see the building book-to-bill and also offer my condolences Bill to you and the team on the loss of your employees. Just really highlights the situation we're all dealing with. So can we talk about the -- just on that last question from Allison, talk about the pace of bringing some of the shuttered facilities back and not just the alliance you had talked about closing your facilities in Mexico. What is operating now and what have you brought back online or are working to bring back online? Bill Furman: Principally the facilities in Mexico and North America and to optimize our production in Europe, we're in great shape in Brazil. Lorie Comstock went down there and size that facility. We have a very good backlog now and some momentum although Brazil's economic woes are well-known. This sector we are in should be doing very well. ARI is running well. So it's mainly our Mexican facilities. Our Gunderson facility is running only marine right now. And we're deliberating about what kind of rail footprint we may want to have there. It's a higher cost facility. And I don't see us bringing back rail there very soon. So our Hidalgo plant, the State of Hidalgo, we operate in three states, Tlaxcala, in the city of Tlaxcala -- State of Tlaxcala. We operate in Hidalgo and State of . In Hidalgo, that factory had almost been down to just a bare bones minimum with only one line running and we're having to bring that one back. We're also underutilized at our GIMSA joint venture facility, largely due to the demand in tank cars. So the two areas and Tlaxcala has been fairly consistently maintain. So those two facilities are the ones where the impact will come. In our tank car facilities, we also started a new venture to make over the road trailers, tank containers for the Mexican market out of that facility, and we expect some promise from that. But that's kind of where we see the activity coming back. Ken Hoexter: Thanks. And then Lorie, I guess just a quick clarification on the -- I think Bascome was kind of hitting on the ASP of the backlog, right? So you've got if I take the whole backlog was 115,000, the 1,700, new add on dropped down to 100,000. Can we presume that that's more mix of your car type since you don't -- you never give those details? But is that just a mix of shifting car types? Is there anything that stands out amongst that? Lorie Tekorius: You're spot on. It is mixed. We've looked at that a couple of different ways just to make certain that we're understanding, but it is the value of the cars as Bill mentioned. We had some nice opportunities in box cars, those tend to be higher priced cars because there's just more steel there's more componentry. But -- so I would just say overall it's a mix of cars. And to Bill's point, we do have steel pricing index. So to the extent that steel pricing moves up, down, left or right, our focus is on maintaining our margin dollars. Margin percent is always fantastic. But we really do focus on maintaining those margin dollars when we think about steel pricing and indexing. Bill Furman: Plus contribution to overhead, which is important -- a pricing is maintaining pretty well. And for this part of a recovery from an absolute extraordinary event pandemic, I think that the recoveries looking to us like a V shaped. Ken Hoexter: Perfect. And then, Adrian, really interesting stuff on the new segment. Maybe can you talk about the tax impact of leasing and your thoughts on how we should think about tax rate, effective tax rate, near-term, long-term? Adrian Downes: Yes, I would say we've seen a very nice benefit in the quarter from that investment. And with the CARES Act we're able to take back those tax benefits to earlier years where we were paying taxes at 35% for federal purposes versus 21% today. So that's a nice benefit. On an ongoing basis, the accelerated depreciation you get on investing and leasing is very good, because it reduces the effective net investment that you're making to build that portfolio. So those cash tax benefits are very meaningful in the long-term as well. Ken Hoexter: So is there a rate you're throwing out in terms of your thoughts on where that’s being going forward? Adrian Downes: I would say, we will not see a benefit to the extent we did in Q2, but you will still see your incremental benefit from that CARES Act, and from those tax advantaged investments into Q3 and Q4. So we will have a favorable tax rate in Q3 and Q4, but I'm not trying out a particular rate at this point. Ken Hoexter: Okay. And then on that same , I don’t know maybe Bill or Lorie, there was no EPS guide in this quarter unlike what we've seen from you in the past. Any thoughts on why your thoughts on getting back to that $4 to $5 peak you mentioned, Lorie, it's not the peak yet. So maybe your thoughts on that overall? Bill Furman: We're not even thinking about a peak, are we Lorie? Lorie Tekorius: No. Bill Furman: No. Lorie Tekorius: Peaking is way in the distance. If the question is around guidance, again, this is such a fluid environment, we really want to focus on getting our business back, running more effectively taking advantage and being prepared as the economy improves. And as we see order activity pick up, volumes pick up and the other parts of our business, we will take into consideration what are the metrics that we're looking at and how the pace at which we're looking at that long-term to figure out what is the right sort of guidance to provide in the future. Ken Hoexter: Okay. Appreciate that. Thanks a lot. Bill Furman: From the nature of the times -- and the nature of the times we got a lot of lumpy activities that we want to get through this year. I think once we have a more stable revenue base, I think a big this quarter really was the precipitous decline in revenue. We don't expect that to continue. In fact, we're now moving back up that revenue curve. But as Lorie said, we will -- we hope to restore normalcy and prosperity here. We got great franchise and now the springtime is here, people are past Easter, are more optimistic. I think that we're going to continue to see a really good run for some time in the United States into the future. A lot of things we can't control, but those things we can control, we feel pretty comfortable about them right now. Operator: And our last question today will come from Steve Barger with KeyBanc. Steve Barger: Hey, thanks for getting me in. Great to hear about improving conditions. If I look back at FY '18 through FY '20, Greenbrier averaged about 22,000 deliveries per year. Do you think '22 can get back there or is that more like a '23 thing in your mind? Lorie Tekorius: Well, I think all things are possible. That would be a pretty steep increase as Bill has talked about, we want to make certain that we are mindful of how we accelerate production, focusing on employee safety, making certain that we're making a quality product and keeping our customers happy. So we're not going to amp up deliveries just to try to beat a number. I would say we're going to run our facilities more in line with what we believe what we can do, what satisfies demand and what meets our customers' needs. Steve Barger: Yes, that makes a lot of sense. And just as you look forward to that time, as you're ramping, given the cost and efficiency actions you've taken, what do you think consolidated incremental operating margin looks like for the next up cycle? Adrian Downes: Hey, Steve, it's Adrian. I'll take a shot at that. I think we'll kind of think about gross margins and then we can kind of talk operating margin later. But ultimately, we do see that in some type of a mid cycle, we're going to be upper teens to low 20s is what we're working towards. And then you layer in the reduced G&A costs that we've -- the G&A costs we've taken out of the system. So, I think if you look at our kind of all time peaks, we're in the low 20s for manufacturing, and that effectively influences aggregate margins. We would definitely be working to get there and see on top to potentially exceed that. I think in the near-term, well, maybe not in the next few quarters, but we do see a path to that. Steve Barger: And so as you ramp -- I appreciate that detail. And as you ramp up, do you think this SG&A in $170 million, $175 million range is sustainable? Or is there some variable SG&A that's going to come back with volume increases? Lorie Tekorius: There are probably some variable SG&A that comes back as you know, travel starts again. But I would say that being in this work remote, no travel for a period of now 13 months, I think that has maybe reset the bar as to what sort of meetings and activities will occur again, being very mindful a lot of our customers, they're not meeting yet. They're not going back to their offices. So I think that some of that will allow, there'll be less variable SG&A coming back than I would have thought. Adrian Downes: Yes, in fact, Lorie has been modest, she's initiated several initiatives that will look to reducing our long-term G&A footprint. The use of offices, of office sharing, people can be very productive working off site and working remotely, particularly in the area of needless travel. We're going to be doing some interesting things over the next 18 months as her programs show some real fruit. So I think everyone's think -- rethinking this. Some of our customers actually closed their offices virtually -- going to a virtual footprint. We're not there yet. But we're not -- we're really hard looking at this, and we're going to be watching. We're going to be watching total shareholder return. We're very focused on our new ideal program for diversity and inclusion. We have to make these programs profitable. We're in business for profit. And we want to do so with equity and fairness to everyone associated with the company. So we're really looking hard at the bottom line, capital expenditures, cash and constraining these costs as we go forward. We don't expect to have that -- those costs suddenly just reappear because they're back. Steve Barger: Let's say a really good segue to my last question. You're at the bottom of the cycle, plus or minus balance sheets in good shape. Lorie you said you're focused on an orderly production ramp. If that goes really well, what's next? Could you build the lease fleet faster, or is there any M&A you're looking at? I'm just trying to get a sense for capital deployment priorities over the next, call it, four to six quarters. Bill Furman: I think it's steady as we go. We are looking at leasing, we have other venues where leasing could be applied internationally with a capital light footprint. Our syndication model has worked very, very well. We have some refinements in that. Not an awful lot of new capital projects, however, unless we were to expand leasing. A moment on leasing, it said it would be practically ridiculous of Greenbrier didn't take a stronger step into leasing. We have not leveraged our leasing portfolio in the past, like other companies do. We have, at best a one-to-one debt equity ratio. We haven't leveraged, we use it a lot for syndication model, the leasing fleet, I mean. So, with this new arrangement, we can generate the equity required from tax and other cash benefits to create a very strong portfolio that creates a revenue stream over time. It's actually very cash positive. We'd be foolish not to take advantage of that and expand it judiciously. Again, we want to do it at a pace that doesn't overtax our resources. We're very pleased to have an industry veteran added to the team and Steve Menzies and someone who's run larger manufacturing and leasing operations than ours. So we expect some growth, possibly growth in other foreign jurisdictions, but at a manageable scale. Lorie Tekorius: And I just add in that now that we're managing over 25% of the North American fleet through our Greenbrier management services operation, obviously, that puts us interfacing with a very, very broad base of customers. So how can we with our integrated business model, continue to service those customers. So it may not be any sort of M&A, but there are definitely things that we should be able to leverage, as we have that sort of window to our customers and their needs. How can we serve them differently? How can we serve them better and create value for both our customers and ourselves? Bill Furman: That's a really good point. And you're doing a lot of great work to create these alliances. You don't have to acquire a business to create value for it, and to create value for yourself as if you're like minded, and you have a common goal. So these alliances and this has been something that Greenbrier is built over the years has been a key to some of the opportunities we're looking at in the future. Great, great point. Steve Barger: Thanks for the time. Bill Furman: Thank you for the time. Thanks for the questions everybody. Operator: This will conclude our question-and-answer session. And I would like to turn the call back over to Mr. Justin Roberts for any closing remarks. Justin Roberts: Thank you very much for your time and attention today. We hope you have a great rest of your Tuesday. And if you have any follow-up questions, please reach out to me or through our Investor Relations email address. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
The Greenbrier Companies, Inc. (GBX) Surpasses Fiscal Third Quarter Estimates
- Earnings per share of $1.86, significantly above the estimated $0.86.
- Actual revenue reached approximately $842.7 million, outperforming the forecast of $785.7 million.
- The company's financial ratios, including a price-to-sales ratio of about 0.42 and an earnings yield of about 13.75%, indicate potential undervaluation and attractiveness to investors.
The Greenbrier Companies, Inc. (NYSE:GBX), based in Lake Oswego, Oregon, is a key player in the global freight transportation market. It designs, builds, and markets freight railcars across North America, Europe, and Brazil. Greenbrier also provides freight railcar wheel services, making it a comprehensive supplier in the industry.
On July 1, 2025, GBX reported impressive financial results for its fiscal third quarter. The company achieved earnings per share of $1.86, significantly surpassing the estimated $0.86. This strong performance reflects Greenbrier's effective strategies and market position. The earnings statement will be submitted to the Securities and Exchange Commission on a Form 8-K, as highlighted by the company's investor website.
Greenbrier's actual revenue for the quarter was approximately $842.7 million, exceeding the estimated $785.7 million. This revenue growth underscores the company's robust operations and market demand for its products and services. The company's price-to-sales ratio of about 0.42 suggests that its stock is valued at 42 cents for every dollar of sales, indicating potential undervaluation.
The company's financial health is further supported by its enterprise value to sales ratio of around 0.87, reflecting a balanced valuation relative to its sales. Additionally, the enterprise value to operating cash flow ratio of approximately 10.03 shows the company's ability to cover its enterprise value with operating cash flow.
Greenbrier's debt-to-equity ratio of approximately 1.27 indicates a moderate use of debt in financing its assets. The current ratio of about 1.64 demonstrates the company's capability to meet its short-term liabilities with its short-term assets, ensuring financial stability. The earnings yield of about 13.75% provides insight into the earnings generated from each dollar invested in the stock, highlighting its potential attractiveness to investors.
The Greenbrier Companies: A Pillar in Global Freight Transportation
The Greenbrier Companies (NYSE:GBX), trading on the NYSE under the symbol GBX, is a key player in the global freight transportation market. Headquartered in Lake Oswego, Oregon, Greenbrier designs, builds, and markets freight railcars across North America, Europe, and Brazil. The company also provides essential services like railcar wheel services, parts, maintenance, and retrofitting in North America.
Greenbrier has declared a quarterly cash dividend of $0.32 per share, payable on August 7, 2025, to shareholders on record as of July 17, 2025. This marks the 45th consecutive quarterly dividend, highlighting Greenbrier's commitment to shareholder value. The company offers a dividend yield of 2.63% and a dividend per share of $1.22, with a payout ratio of 18.99%, reflecting a conservative approach to earnings distribution.
The stock is currently priced at approximately $46.46, with a market capitalization of around $1.46 billion. Recent trading saw a volume of 160,258 shares, with the stock reaching a low of $46.14 and a high of $46.78. Analysts from Susquehanna and Stephens have maintained positive and overweight ratings, respectively, with a recommendation to hold the stock.
Greenbrier's forward-looking statements highlight potential risks such as economic downturns, inflation, and geopolitical unrest. These factors could impact future performance, as noted in the company's SEC filings. Despite these uncertainties, Greenbrier's consistent dividend payments and strong market presence underscore its resilience in the freight transportation industry.
The Greenbrier Companies, Inc. (NYSE: GBX) Overview and Analyst Insights
- The average price target for NYSE:GBX has been adjusted to $62, reflecting a more conservative outlook compared to the previous quarter's target of $68.5.
- Despite a 20% stock price decline and challenges in revenue growth, Greenbrier has improved its earnings through better profit margins.
- Positive external factors, such as the evolving global energy landscape and the expansion of European rail transport, could drive long-term demand for Greenbrier's railcars.
The Greenbrier Companies, Inc. (NYSE: GBX) is a prominent player in the railroad freight car equipment industry, providing a range of services including manufacturing, wheels, repair & parts, and leasing & services. Operating across North America, Europe, and South America, Greenbrier serves a diverse clientele, ensuring a steady revenue stream. The company faces competition from other industry players, but its diversified operations give it a competitive edge.
Over the past year, analysts have adjusted their price targets for NYSE:GBX, reflecting changing market conditions and company performance. Last month, the average price target was $62, indicating a more conservative short-term outlook. This is a decrease from the last quarter's target of $68.5, when analysts were more optimistic about the stock's potential. The average price target last year was $67.33, showing relative stability with some fluctuations.
The recent decrease in the average price target could be linked to Greenbrier's 20% stock price decline and challenges in revenue growth and a shrinking order backlog. Despite these challenges, the company has improved its earnings through better profit margins. Analyst Justin Long from Stephens has set a price target of $56, suggesting a cautious yet positive outlook for the stock.
Greenbrier's future growth depends on increasing sales, which are heavily reliant on the order backlog. However, positive external factors, such as the evolving global energy landscape and the expansion of European rail transport, are expected to drive long-term demand for Greenbrier's railcars. These factors could potentially influence analysts' future price targets and the stock's performance.
Investors should monitor upcoming earnings reports and company announcements, as these could impact analysts' assessments and price targets. As highlighted by Zacks, Greenbrier is considered a potential bargain stock due to its impressive EV-to-EBITDA ratio, which provides insight into the company's valuation and earnings potential.
The Greenbrier Companies, Inc. (NYSE: GBX) Overview and Analyst Insights
- The average price target for NYSE:GBX has been adjusted to $62, reflecting a more conservative outlook compared to the previous quarter's target of $68.5.
- Despite a 20% stock price decline and challenges in revenue growth, Greenbrier has improved its earnings through better profit margins.
- Positive external factors, such as the evolving global energy landscape and the expansion of European rail transport, could drive long-term demand for Greenbrier's railcars.
The Greenbrier Companies, Inc. (NYSE: GBX) is a prominent player in the railroad freight car equipment industry, providing a range of services including manufacturing, wheels, repair & parts, and leasing & services. Operating across North America, Europe, and South America, Greenbrier serves a diverse clientele, ensuring a steady revenue stream. The company faces competition from other industry players, but its diversified operations give it a competitive edge.
Over the past year, analysts have adjusted their price targets for NYSE:GBX, reflecting changing market conditions and company performance. Last month, the average price target was $62, indicating a more conservative short-term outlook. This is a decrease from the last quarter's target of $68.5, when analysts were more optimistic about the stock's potential. The average price target last year was $67.33, showing relative stability with some fluctuations.
The recent decrease in the average price target could be linked to Greenbrier's 20% stock price decline and challenges in revenue growth and a shrinking order backlog. Despite these challenges, the company has improved its earnings through better profit margins. Analyst Justin Long from Stephens has set a price target of $56, suggesting a cautious yet positive outlook for the stock.
Greenbrier's future growth depends on increasing sales, which are heavily reliant on the order backlog. However, positive external factors, such as the evolving global energy landscape and the expansion of European rail transport, are expected to drive long-term demand for Greenbrier's railcars. These factors could potentially influence analysts' future price targets and the stock's performance.
Investors should monitor upcoming earnings reports and company announcements, as these could impact analysts' assessments and price targets. As highlighted by Zacks, Greenbrier is considered a potential bargain stock due to its impressive EV-to-EBITDA ratio, which provides insight into the company's valuation and earnings potential.
The Greenbrier Companies, Inc. (NYSE:GBX) Analyst Forecast and Market Performance
- Ken Hoexter from Lake Street set a price target of $62 for NYSE:GBX, indicating a potential increase of 38.89%.
- Greenbrier is expected to report Q2 earnings of $1.78 per share, up from $1.03 per share last year, with quarterly revenue anticipated to be $898.53 million.
- Despite a 7% increase in its quarterly dividend, GBX shares fell 9.4% to $47.10, with the current price at $45.39.
The Greenbrier Companies, Inc. (NYSE:GBX) is a leading supplier of transportation equipment and services to the railroad industry. The company designs, manufactures, and markets railroad freight car equipment in North America, Europe, and South America. Greenbrier also provides wheel services, railcar refurbishment, and leasing services. Its main competitors include Trinity Industries and American Railcar Industries.
On April 4, 2025, Ken Hoexter from Lake Street set a price target of $62 for GBX, while the stock was trading at $44.64. This suggests a potential price increase of 38.89%. As highlighted by Benzinga, the article "Greenbrier Gears Up For Q2 Print; Here Are The Recent Forecast Changes From Wall Street's Most Accurate Analysts" provides more insights into this forecast.
Greenbrier is set to release its second-quarter earnings results on April 7. Analysts expect earnings of $1.78 per share, up from $1.03 per share last year. This indicates strong growth in profitability. The company is also expected to report quarterly revenue of $898.53 million, an increase from $862.7 million a year ago.
Despite announcing a 7% increase in its quarterly dividend, Greenbrier's shares fell 9.4% to $47.10. The current price of GBX is $45.39, reflecting a decrease of 3.63% or $1.71. The stock has fluctuated between $43.24 and $46.51 today, with a market capitalization of approximately $1.42 billion.
Over the past year, GBX has reached a high of $71.06 and a low of $41.40. The trading volume on the NYSE is 496,046 shares. For those interested in analyst perspectives, Benzinga offers access to the latest analyst ratings, allowing readers to sort by stock ticker, company name, analyst firm, and other variables.
The Greenbrier Companies, Inc. (NYSE:GBX) Stock Update and Earnings Forecast
- Stephens updated their rating for NYSE:GBX to "Overweight" with a maintained "hold" action as of April 4, 2025.
- Greenbrier is expected to report earnings of $1.78 per share and quarterly revenue of $898.53 million, indicating significant growth.
- The company announced a 7% increase in its quarterly dividend, reflecting confidence in its financial health despite a recent 6.26% decrease in stock price.
The Greenbrier Companies, Inc. (NYSE:GBX) is a leading manufacturer and supplier of transportation equipment and services, primarily focusing on railcars. The company operates in a competitive industry, with key players like Trinity Industries and American Railcar Industries. Greenbrier's diverse product offerings and strategic market positioning have helped it maintain a strong presence in the railcar manufacturing sector.
On April 4, 2025, Stephens updated their rating for GBX to "Overweight," while maintaining their "hold" action. At that time, the stock price was $44.44. This update comes as Greenbrier prepares to release its second-quarter earnings results on April 7. Analysts expect earnings of $1.78 per share, a notable increase from $1.03 per share in the same period last year.
Greenbrier is also expected to report quarterly revenue of $898.53 million, up from $862.7 million a year ago. This growth reflects the company's ability to adapt and thrive in a competitive market. Additionally, Greenbrier announced a 7% increase in its quarterly dividend, signaling confidence in its financial health and commitment to returning value to shareholders.
Despite these positive forecasts, Greenbrier's shares fell by 9.4%, closing at $47.10 on Thursday. The current price of GBX is $44.15, reflecting a decrease of 6.26% or $2.95. Today, the stock has fluctuated between a low of $43.24 and a high of $45.22. Over the past year, GBX has reached a high of $71.06 and a low of $41.40.
Greenbrier's market capitalization stands at approximately $1.38 billion, with a trading volume of 216,397 shares on the NYSE. As the company gears up for its earnings release, investors will be closely watching for any updates or changes in forecasts that could impact the stock's performance.
The Greenbrier Companies, Inc. (NYSE:GBX) Analyst Forecast and Market Performance
- Ken Hoexter from Lake Street set a price target of $62 for NYSE:GBX, indicating a potential increase of 38.89%.
- Greenbrier is expected to report Q2 earnings of $1.78 per share, up from $1.03 per share last year, with quarterly revenue anticipated to be $898.53 million.
- Despite a 7% increase in its quarterly dividend, GBX shares fell 9.4% to $47.10, with the current price at $45.39.
The Greenbrier Companies, Inc. (NYSE:GBX) is a leading supplier of transportation equipment and services to the railroad industry. The company designs, manufactures, and markets railroad freight car equipment in North America, Europe, and South America. Greenbrier also provides wheel services, railcar refurbishment, and leasing services. Its main competitors include Trinity Industries and American Railcar Industries.
On April 4, 2025, Ken Hoexter from Lake Street set a price target of $62 for GBX, while the stock was trading at $44.64. This suggests a potential price increase of 38.89%. As highlighted by Benzinga, the article "Greenbrier Gears Up For Q2 Print; Here Are The Recent Forecast Changes From Wall Street's Most Accurate Analysts" provides more insights into this forecast.
Greenbrier is set to release its second-quarter earnings results on April 7. Analysts expect earnings of $1.78 per share, up from $1.03 per share last year. This indicates strong growth in profitability. The company is also expected to report quarterly revenue of $898.53 million, an increase from $862.7 million a year ago.
Despite announcing a 7% increase in its quarterly dividend, Greenbrier's shares fell 9.4% to $47.10. The current price of GBX is $45.39, reflecting a decrease of 3.63% or $1.71. The stock has fluctuated between $43.24 and $46.51 today, with a market capitalization of approximately $1.42 billion.
Over the past year, GBX has reached a high of $71.06 and a low of $41.40. The trading volume on the NYSE is 496,046 shares. For those interested in analyst perspectives, Benzinga offers access to the latest analyst ratings, allowing readers to sort by stock ticker, company name, analyst firm, and other variables.
