GREENBRIER COMPANIES INC [GBX] Filings

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10-Q 1 gbx-20220228.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended February 28, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ______ to ______

Commission File No. 1-13146

THE GREENBRIER COMPANIES, INC.

(Exact name of registrant as specified in its charter)


Oregon	93-0816972
(State of Incorporation)	(I.R.S. Employer Identification No.)
One Centerpointe Drive, Suite 200, Lake Oswego, OR	97035
(Address of principal executive offices)	(Zip Code)

(503) 684-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock without par value	GBX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the registrant’s common stock, without par value, outstanding on March 31, 2022 was 32,587,696 shares.

FORM 10-Q

Table of Contents


		Page
	Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION	4
Item 1.	Condensed Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47
PART II.	OTHER INFORMATION	48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
	Signatures	50

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events and include any statement that does not relate to any historical or current fact. We use words such as “anticipates,” “believes,” “can,” “could,” “designed to,” “estimates,” “expects,” “foresee,” “future,” “intends,” “likely,” “may,” “potential,” “seeks,” “should,” “strategy,” “will,” “would,” and similar expressions to identify forward-looking statements. Forward-looking statements are not guarantees of future performance.

Forward-looking statements are based on currently available operating, financial and market information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to:

•

the COVID-19 coronavirus pandemic, the governmental reaction to COVID-19 and the related significant global volatility in general economic activity as more fully described in Part II Item 1A “Risk Factors” of the Quarterly Report on Form 10-Q of the Company for the quarter ended November 30, 2021 and filed with the Commission on January 7, 2022;

•

we may be prevented from operating our manufacturing facilities, maintenance shops, wheel shops or other worksites due to the illness of our employees, “stay-at-home” regulations, and employee reluctance to appear for work for many different reasons including the implementation of any government-imposed vaccination or testing mandates;

•

impacts from any international conflicts or other geopolitical events, including the current conflict between Russia and Ukraine;

•

general inflation, including wage inflation, a rise in energy prices or interest rates, currency volatility as well as monetary, fiscal and policy interventions;

•

mismatch of supply and demand, interruptions of supply lines, inefficient or overloaded logistics platforms, among other factors may cause the markets for the inputs to our business to fail to operate effectively or efficiently (including sectoral price inflation);

•

price volatility for supplies to our business as well as goods and services in our industry;

•

changes in our product mix or revenue due to shifts in demand;

•

the cyclical nature of our business;

•

equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities;

•

changes in demand for our railcar equipment and services;

•

our ability to realize the anticipated benefits of our new leasing strategy;

•

a decline in performance, or increase in efficiency, of the rail freight industry;

•

risks related to our operations outside of the United States (U.S.) including enforcement actions by regulators related to tax, environmental, labor, safety, or other regulations;

•

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; and

•

our inability to lease railcars at satisfactory rates, remarket leased railcars on favorable terms upon lease termination, or realize the expected residual values for end of life railcars due to changes in scrap prices.

The foregoing risks are described in more detail in Part I Item 1A “Risk Factors” in our most recent Annual Report on Form 10-K and our subsequent Quarterly Report on Form 10-Q which are incorporated herein by reference. You are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements. All references to years refer to the fiscal years ended August 31st unless otherwise noted.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Condensed Consolidated Balance Sheets

(In millions, except number of shares which are reflected in thousands, unaudited)


	February 28, 2022			August 31, 2021
Assets
Cash and cash equivalents	$	586.8		$	646.8
Restricted cash		15.7			24.6
Accounts receivable, net		399.0			306.4
Income tax receivable		106.0			112.1
Inventories		728.5			573.6
Leased railcars for syndication		80.0			51.6
Equipment on operating leases, net		650.4			609.8
Property, plant and equipment, net		646.5			670.2
Investment in unconsolidated affiliates		90.2			79.9
Intangibles and other assets, net		179.6			183.6
Goodwill		130.0			132.1
	$	3,612.7		$	3,390.7
Liabilities and Equity
Revolving notes	$	292.2		$	372.2
Accounts payable and accrued liabilities		581.2			569.8
Deferred income taxes		51.9			73.3
Deferred revenue		43.0			42.8
Notes payable, net		1,209.2			826.5

Commitments and contingencies (Note 15)

Contingently redeemable noncontrolling interest		28.5			29.7

Equity:
Greenbrier
Preferred stock - without par value; 25,000 shares authorized; none outstanding		—			—
Common stock - without par value; 50,000 shares authorized; 32,588 and 32,397 shares outstanding at February 28, 2022 and August 31, 2021		—			—
Additional paid-in capital		413.4			469.7
Retained earnings		892.5			881.7
Accumulated other comprehensive loss		(53.3	)		(43.7	)
Total equity – Greenbrier		1,252.6			1,307.7
Noncontrolling interest		154.1			168.7
Total equity		1,406.7			1,476.4
	$	3,612.7		$	3,390.7

The accompanying notes are an integral part of these financial statements

Condensed Consolidated Statements of Operations

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


	Three Months Ended February 28,						Six Months Ended February 28,
	2022			2021			2022			2021
Revenue
Manufacturing	$	555.7		$	201.5		$	1,008.2		$	506.0
Maintenance Services		86.6			71.6			159.0			137.2
Leasing & Management Services		40.5			22.5			66.3			55.4
		682.8			295.6			1,233.5			698.6
Cost of revenue
Manufacturing		535.0			201.8			956.6			482.7
Maintenance Services		81.7			66.7			152.9			129.7
Leasing & Management Services		11.3			9.5			21.6			27.9
		628.0			278.0			1,131.1			640.3
Margin		54.8			17.6			102.4			58.3
Selling and administrative expense		54.7			43.4			99.0			87.1
Net gain on disposition of equipment		(25.1	)		(0.1	)		(33.6	)		(1.0	)
Earnings (loss) from operations		25.2			(25.7	)		37.0			(27.8	)
Other costs
Interest and foreign exchange		11.8			9.6			24.4			20.7
Earnings (loss) before income tax and earnings (loss) from unconsolidated affiliates		13.4			(35.3	)		12.6			(48.5	)
Income tax (expense) benefit		(3.2	)		21.8			(1.8	)		29.1
Earnings (loss) before earnings (loss) from unconsolidated affiliates		10.2			(13.5	)		10.8			(19.4	)
Earnings (loss) from unconsolidated affiliates		1.0			(0.4	)		6.0			(1.2	)
Net earnings (loss)		11.2			(13.9	)		16.8			(20.6	)
Net loss attributable to noncontrolling interest		1.6			4.8			6.8			1.5
Net earnings (loss) attributable to Greenbrier	$	12.8		$	(9.1	)	$	23.6		$	(19.1	)
Basic earnings (loss) per common share	$	0.39		$	(0.28	)	$	0.72		$	(0.58	)
Diluted earnings (loss) per common share	$	0.38		$	(0.28	)	$	0.70		$	(0.58	)
Weighted average common shares:
Basic		32,582			32,810			32,546			32,766
Diluted		34,463			32,810			33,609			32,766

The accompanying notes are an integral part of these financial statements

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions, unaudited)


	Three Months Ended February 28,					Six Months Ended February 28,
	2022		2021			2022			2021
Net earnings (loss)	$	11.2	$	(13.9	)	$	16.8		$	(20.6	)

Other comprehensive income (loss)
Translation adjustment		4.3		0.6			(9.6	)		4.5
Reclassification of derivative financial instruments recognized in net earnings (loss) 1		1.3		1.3			2.3			2.5
Unrealized gain (loss) on derivative financial instruments 2		0.8		(0.1	)		(2.4	)		(0.9	)
Other (net of tax effect)		0.2		—			0.1			—
		6.6		1.8			(9.6	)		6.1
Comprehensive income (loss)		17.8		(12.1	)		7.2			(14.5	)
Comprehensive loss attributable to noncontrolling interest		1.6		4.8			6.8			1.5
Comprehensive income (loss) attributable to Greenbrier	$	19.4	$	(7.3	)	$	14.0		$	(13.0	)

1 Net of tax effect of $(0.2 million) and $(0.4 million) for the three months ended February 28, 2022 and February 28, 2021 and $(0.7 million) and $(0.8 million) for the six months ended February 28, 2022 and February 28, 2021.

2 Net of tax effect of ($0.8 million) and ($0.1 million) for the three months ended February 28, 2022 and February 28, 2021 and $0.2 million and ($0.1 million) for the six months ended February 28, 2022 and February 28, 2021.

The accompanying notes are an integral part of these financial statements

Condensed Consolidated Statements of Equity

(In millions, except per share amounts, unaudited)


	Attributable to Greenbrier
	Common Stock Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity - Greenbrier			Noncontrolling Interest			Total Equity			Contingently Redeemable Noncontrolling Interest
Balance August 31, 2021		32.4	$	469.7		$	881.7		$	(43.7	)	$	1,307.7		$	168.7		$	1,476.4		$	29.7
Cumulative effect adjustment due to adoption of ASU 2020-06 (see Note 1)		—		(58.8	)		4.9			—			(53.9	)		—			(53.9	)		—
Net earnings		—		—			23.6			—			23.6			(5.6	)		18.0			(1.2	)
Other comprehensive income, net		—		—			—			(9.6	)		(9.6	)		—			(9.6	)		—
Noncontrolling interest adjustments		—		—			—			—			—			(0.6	)		(0.6	)		—
Joint venture partner distribution declared		—		—			—			—			—			(8.4	)		(8.4	)		—
Restricted stock awards (net of cancellations)		0.2		11.9			—			—			11.9			—			11.9			—
Unamortized restricted stock		—		(15.3	)		—			—			(15.3	)		—			(15.3	)		—
Restricted stock amortization		—		5.9			—			—			5.9			—			5.9			—
Cash dividends ($0.54 per share)		—		—			(17.7	)		—			(17.7	)		—			(17.7	)
Balance February 28, 2022		32.6	$	413.4		$	892.5		$	(53.3	)	$	1,252.6		$	154.1		$	1,406.7		$	28.5


	Attributable to Greenbrier
	Common Stock Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity - Greenbrier			Noncontrolling Interest			Total Equity			Contingently Redeemable Noncontrolling Interest
Balance November 30, 2021		32.5	$	408.5		$	888.7		$	(59.9	)	$	1,237.3		$	162.7		$	1,400.0		$	29.7
Net earnings		—		—			12.8			—			12.8			(0.4	)		12.4			(1.2	)
Other comprehensive income, net		—		—			—			6.6			6.6			—			6.6			—
Noncontrolling interest adjustments		—		—			—			—			—			(0.4	)		(0.4	)		—
Joint venture partner distribution declared		—		—			—			—			—			(7.8	)		(7.8	)		—
Restricted stock awards (net of cancellations)		0.1		1.4			—			—			1.4			—			1.4			—
Unamortized restricted stock		—		(1.3	)		—			—			(1.3	)		—			(1.3	)		—
Restricted stock amortization		—		4.8			—			—			4.8			—			4.8			—
Cash dividends ($0.27 per share)		—		—			(9.0	)		—			(9.0	)		—			(9.0	)		—
Balance February 28, 2022		32.6	$	413.4		$	892.5		$	(53.3	)	$	1,252.6		$	154.1		$	1,406.7		$	28.5

Attributable to Greenbrier

Common
Stock
Shares

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Equity -
Greenbrier

Noncontrolling
Interest

Total
Equity

Contingently
Redeemable
Noncontrolling
Interest

Balance August 31, 2020

32.7

460.4

885.5