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 November 30, 2019
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the transition period from
Commission File No.
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)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading | Name of each exchange | ||
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule
Yes
The number of shares of the registrant’s common stock, without par value, outstanding on January
FORM 10-Q
Table of Contents
Page | ||
1 | ||
PART I. | 4 | |
Item 1. | 4 | |
4 | ||
5 | ||
6 | ||
7 | ||
9 | ||
10 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 |
Item 3. | 46 | |
Item 4. | 47 | |
PART II. | 48 | |
Item 1. | 48 | |
Item 1A. | 48 | |
Item 2. | 50 | |
Item 6. | 51 | |
52 |
THE GREENBRIER COMPANIES, INC.
Forward-Looking Statements
This Quarterly Report on Form
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 and the governmental reaction to COVID-19 having a materially negativeimpact on our business, liquidity and financial position, results of operations, stock price, and our ability to convert backlog to revenue as more fully described in Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q; |
• | the cyclicalnature of our business, economicdownturns and a risinginterestrateenvironment; |
• | changes in our productmix or decline in revenue due to shifts in demand or fluctuations in commodity and energy prices caused by a number of factors including, among others, COVID-19 and related governmental action, or a significant decline in oil prices; |
• | a decline in performance or demand of the rail freight industry; |
• | an oversupply or increase in efficiency in the rail freight industry; |
• | difficultyintegratingacquired businessesor jointventures; |
• | our inability to convert backlog to futurerevenues; |
• | risks relatedto our operationsoutsideof the U.S., including anti-bribery violations; |
• | governmental policy changes impactinginternationaltradeand corporatetax; |
• | the lossof or reductionof businessfromone or moreof our of our limited number of customers; |
• | inability to leaserailcarsat satisfactoryrates,or realizeexpectedresidualvalues on sale of railcars at the end of a lease; |
• | shortagesof skilledlabor, 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 competesuccessfully; |
• | suitablejointventures, acquisitionopportunitiesand new businessendeavors may not be identified or concluded; |
1
THE GREENBRIER COMPANIES, INC.
• | inabilityto complete capital expenditure projects efficiently or to cause capital expenditure projects to operate as anticipated; |
• | inabilityto designor manufactureproductsor technologies or to achieve timelycertificationor market acceptanceof new productsor technologies; |
• | unsuccessful relationshipswith our jointventurepartners; |
• | environmentalliabilities, including the Portland Harbor Superfund Site; |
• | the timingof our assetsalesand relatedrevenuerecognition 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 creditmarketsand the financialservicesindustry; |
• | volatilityin the globalfinancialmarkets; |
• | our actualresultsdifferingfromour announced expectations; |
• | fluctuationsin the availabilityand priceof energy,freighttransportation,steeland otherraw materials; |
• | inability to procurespecialtycomponentsor serviceson commerciallyreasonabletermsor on a timelybasis from a limited number of suppliers; |
• | 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 derailmentsor otheraccidentsor claims; |
• | changes in or failure to comply with legaland regulatoryrequirements; |
• | anadverseoutcomein any pending or futurelitigation or investigation; |
• | potentialmisconductby employees; |
• | labor strikesor work stoppages; |
• | the volatility of our stockprice; |
• | dilution to investors resulting from raising additional capital or due to other reasons; |
• | productand servicewarranty claims; |
• | misuse of our products by third parties; |
• | write-downsof goodwillor intangiblesin futureperiods; |
• | conversion at our option of our outstandingconvertible 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; |
2
THE GREENBRIER COMPANIES, INC.
• | governingdocuments, 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; |
• | fluctuationsin foreigncurrencyexchange rates; |
• | inability to raiseadditionalcapitalto operateour businessand achieveour businessobjectives; |
• | shareholder activism could cause us to incur significance expense, impact our stock price, and hinder execution of our business strategy; |
• | cybersecurityrisks; |
• | updates or changes to our informationtechnologysystems resulting in problems; |
• | inability to protectour intellectualpropertyand preventitsimproperuse by thirdparties; |
• | claims by third parties that our productsor servicesinfringetheirintellectualpropertyrights; |
• | liabilityforphysicaldamage,businessinterruptionor productliabilityclaimsthatexceedour insurancecoverage; |
• | inability to procureadequateinsuranceon a cost-effectivebasis; |
• | changes in accountingstandardsor inaccurateestimatesor assumptionsin the applicationof accounting policies; |
• | fires,naturaldisasters,severeweather conditionsor publichealthcrises; |
• | unusual weather conditionswhichreducedemand forour wheel-relatedpartsand repairservices; |
• | business, regulatory,and legaldevelopmentsregardingclimatechange which mayaffectthe demand forour productsor the abilityof our criticalsuppliersto meetour needs; |
• | repercussionsfromterroristactivitiesor armedconflict; |
• | unanticipatedchanges in our tax provisionsor exposureto additionalincometax liabilities; |
• | the inability of certain of our customers to utilizetax benefitsor tax credits; and |
• | suspension or termination of our share repurchase program. |
The foregoing risks are described in more detail in Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and Part I Item 1A “Risk Factors” in our most recent Annual Report on Form
3
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements Condensed |
(In thousands, unaudited)
|
| February 29, 2020 |
|
| August 31, 2019 |
| ||
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 169,899 |
|
| $ | 329,684 |
|
Restricted cash |
|
| 8,569 |
|
|
| 8,803 |
|
Accounts receivable, net |
|
| 326,229 |
|
|
| 373,383 |
|
Inventories |
|
| 709,115 |
|
|
| 664,693 |
|
Leased railcars for syndication |
|
| 255,073 |
|
|
| 182,269 |
|
Equipment on operating leases, net |
|
| 385,974 |
|
|
| 366,688 |
|
Property, plant and equipment, net |
|
| 723,326 |
|
|
| 717,973 |
|
Investment in unconsolidated affiliates |
|
| 79,082 |
|
|
| 91,818 |
|
Intangibles and other assets, net |
|
| 160,709 |
|
|
| 125,379 |
|
Goodwill |
|
| 129,684 |
|
|
| 129,947 |
|
|
| $ | 2,947,660 |
|
| $ | 2,990,637 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Revolving notes |
| $ | 37,196 |
|
| $ | 27,115 |
|
Accounts payable and accrued liabilities |
|
| 499,898 |
|
|
| 568,360 |
|
Deferred income taxes |
|
| 9,173 |
|
|
| 13,946 |
|
Deferred revenue |
|
| 70,869 |
|
|
| 85,070 |
|
Notes payable, net |
|
| 811,860 |
|
|
| 822,885 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingently redeemable noncontrolling interest |
|
| 30,782 |
|
|
| 31,564 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Greenbrier |
|
|
|
|
|
|
|
|
Preferred stock - without par value; 25,000 shares authorized; NaN outstanding |
|
| — |
|
|
| — |
|
Common stock - without par value; 50,000 shares authorized; 32,642 and 32,488 shares outstanding at February 29, 2020 and August 31, 2019 |
|
| — |
|
|
| — |
|
Additional paid-in capital |
|
| 458,908 |
|
|
| 453,943 |
|
Retained earnings |
|
| 875,885 |
|
|
| 867,602 |
|
Accumulated other comprehensive loss |
|
| (48,321 | ) |
|
| (44,815 | ) |
Total equity – Greenbrier |
|
| 1,286,472 |
|
|
| 1,276,730 |
|
Noncontrolling interest |
|
| 201,410 |
|
|
| 164,967 |
|
Total equity |
|
| 1,487,882 |
|
|
| 1,441,697 |
|
|
| $ | 2,947,660 |
|
| $ | 2,990,637 |
|
November 30, 2019 | August 31, 2019 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 253,602 | $ | 329,684 | ||||
Restricted cash | 8,648 | 8,803 | ||||||
Accounts receivable, net | 313,786 | 373,383 | ||||||
Inventories | 733,806 | 664,693 | ||||||
Leased railcars for syndication | 135,319 | 182,269 | ||||||
Equipment on operating leases, net | 396,187 | 366,688 | ||||||
Property, plant and equipment, net | 730,730 | 717,973 | ||||||
Investment in unconsolidated affiliates | 85,141 | 91,818 | ||||||
Intangibles and other assets, net | 162,089 | 125,379 | ||||||
Goodwill | 129,468 | 129,947 | ||||||
$ | 2,948,776 | $ | 2,990,637 | |||||
Liabilities and Equity | ||||||||
Revolving notes | $ | 29,502 | $ | 27,115 | ||||
Accounts payable and accrued liabilities | 527,789 | 568,360 | ||||||
Deferred income taxes | 9,417 | 13,946 | ||||||
Deferred revenue | 59,657 | 85,070 | ||||||
Notes payable, net | 817,830 | 822,885 | ||||||
Commitments and contingencies (Note 15) | ||||||||
Contingently redeemable noncontrolling interest | 31,723 | 31,564 | ||||||
Equity: | ||||||||
Greenbrier | ||||||||
Preferred stock | — | — | ||||||
Common stock | — | — | ||||||
Additional paid-in capital | 454,900 | 453,943 | ||||||
Retained earnings | 871,300 | 867,602 | ||||||
Accumulated other comprehensive loss | (44,392 | ) | (44,815 | ) | ||||
Total equity – Greenbrier | 1,281,808 | 1,276,730 | ||||||
Noncontrolling interest | 191,050 | 164,967 | ||||||
Total equity | 1,472,858 | 1,441,697 | ||||||
$ | 2,948,776 | $ | 2,990,637 | |||||
The accompanying notes are an integral part of these financial statements
4
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts, unaudited)
|
| Three Months |
|
| Six Months |
| ||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 489,943 |
|
| $ | 476,019 |
|
| $ | 1,147,310 |
|
| $ | 947,808 |
|
Wheels, Repair & Parts |
|
| 91,225 |
|
|
| 125,278 |
|
|
| 177,833 |
|
|
| 233,821 |
|
Leasing & Services |
|
| 42,680 |
|
|
| 57,374 |
|
|
| 68,064 |
|
|
| 81,565 |
|
|
|
| 623,848 |
|
|
| 658,671 |
|
|
| 1,393,207 |
|
|
| 1,263,194 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
| 422,309 |
|
|
| 442,996 |
|
|
| 1,004,221 |
|
|
| 860,801 |
|
Wheels, Repair & Parts |
|
| 84,373 |
|
|
| 118,455 |
|
|
| 166,265 |
|
|
| 219,433 |
|
Leasing & Services |
|
| 30,830 |
|
|
| 43,376 |
|
|
| 44,196 |
|
|
| 56,583 |
|
|
|
| 537,512 |
|
|
| 604,827 |
|
|
| 1,214,682 |
|
|
| 1,136,817 |
|
Margin |
|
| 86,336 |
|
|
| 53,844 |
|
|
| 178,525 |
|
|
| 126,377 |
|
Selling and administrative expense |
|
| 54,597 |
|
|
| 47,892 |
|
|
| 108,961 |
|
|
| 98,324 |
|
Net gain on disposition of equipment |
|
| (6,697 | ) |
|
| (12,102 | ) |
|
| (10,656 | ) |
|
| (26,455 | ) |
Earnings from operations |
|
| 38,436 |
|
|
| 18,054 |
|
|
| 80,220 |
|
|
| 54,508 |
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
| 12,609 |
|
|
| 9,237 |
|
|
| 25,461 |
|
|
| 13,641 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
|
| 25,827 |
|
|
| 8,817 |
|
|
| 54,759 |
|
|
| 40,867 |
|
Income tax expense |
|
| (7,463 | ) |
|
| (2,248 | ) |
|
| (13,457 | ) |
|
| (11,383 | ) |
Earnings before earnings (loss) from unconsolidated affiliates |
|
| 18,364 |
|
|
| 6,569 |
|
|
| 41,302 |
|
|
| 29,484 |
|
Earnings (loss) from unconsolidated affiliates |
|
| 1,651 |
|
|
| (786 | ) |
|
| 2,724 |
|
|
| (319 | ) |
Net earnings |
|
| 20,015 |
|
|
| 5,783 |
|
|
| 44,026 |
|
|
| 29,165 |
|
Net earnings attributable to noncontrolling interest |
|
| (6,386 | ) |
|
| (3,018 | ) |
|
| (22,728 | ) |
|
| (8,444 | ) |
Net earnings attributable to Greenbrier |
| $ | 13,629 |
|
| $ | 2,765 |
|
| $ | 21,298 |
|
| $ | 20,721 |
|
Basic earnings per common share |
| $ | 0.42 |
|
| $ | 0.08 |
|
| $ | 0.65 |
|
| $ | 0.63 |
|
Diluted earnings per common share |
| $ | 0.41 |
|
| $ | 0.08 |
|
| $ | 0.64 |
|
| $ | 0.63 |
|
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 32,661 |
|
|
| 32,628 |
|
|
| 32,645 |
|
|
| 32,634 |
|
Diluted |
|
| 33,482 |
|
|
| 33,206 |
|
|
| 33,382 |
|
|
| 33,149 |
|
Dividends declared per common share |
| $ | 0.27 |
|
| $ | 0.25 |
|
| $ | 0.52 |
|
| $ | 0.50 |
|
Three Months Ended November 30, | ||||||||
2019 | 2018 | |||||||
Revenue | ||||||||
Manufacturing | $ | 657,367 | $ | 471,789 | ||||
Wheels, Repair & Parts | 86,608 | 108,543 | ||||||
Leasing & Services | 25,384 | 24,191 | ||||||
769,359 | 604,523 | |||||||
Cost of revenue | ||||||||
Manufacturing | 581,912 | 417,805 | ||||||
Wheels, Repair & Parts | 81,892 | 100,978 | ||||||
Leasing & Services | 13,366 | 13,207 | ||||||
677,170 | 531,990 | |||||||
Margin | 92,189 | 72,533 | ||||||
Selling and administrative expense | 54,364 | 50,432 | ||||||
Net gain on disposition of equipment | (3,959 | ) | (14,353 | ) | ||||
Earnings from operations | 41,784 | 36,454 | ||||||
Other costs | ||||||||
Interest and foreign exchange | 12,852 | 4,404 | ||||||
Earnings before income taxes and earnings from unconsolidated affiliates | 28,932 | 32,050 | ||||||
Income tax expense | (5,994 | ) | (9,135 | ) | ||||
Earnings before earnings from unconsolidated affiliates | 22,938 | 22,915 | ||||||
Earnings from unconsolidated affiliates | 1,073 | 467 | ||||||
Net earnings | 24,011 | 23,382 | ||||||
Net earnings attributable to noncontrolling interest | (16,342 | ) | (5,426 | ) | ||||
Net earnings attributable to Greenbrier | $ | 7,669 | $ | 17,956 | ||||
Basic earnings per common share | $ | 0.24 | $ | 0.55 | ||||
Diluted earnings per common share | $ | 0.23 | $ | 0.54 | ||||
Weighted average common shares: | ||||||||
Basic | 32,629 | 32,640 | ||||||
Diluted | 33,284 | 33,093 | ||||||
Dividends declared per common share | $ | 0.25 | $ | 0.25 |
The accompanying notes are an integral part of these financial statements
5
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Comprehensive Income
(In thousands, unaudited)
|
| Three Months |
|
| Six Months |
| ||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||
Net earnings |
| $ | 20,015 |
|
| $ | 5,783 |
|
| $ | 44,026 |
|
| $ | 29,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
| (703 | ) |
|
| 1,745 |
|
|
| (2,286 | ) |
|
| (2,186 | ) |
Reclassification of derivative financial instruments recognized in net earnings 1 |
|
| 168 |
|
|
| 701 |
|
|
| 477 |
|
|
| 1,170 |
|
Unrealized loss on derivative financial instruments 2 |
|
| (3,638 | ) |
|
| (1,035 | ) |
|
| (1,484 | ) |
|
| (3,337 | ) |
Other (net of tax effect) |
|
| 242 |
|
|
| 306 |
|
|
| (221 | ) |
|
| 76 |
|
|
|
| (3,931 | ) |
|
| 1,717 |
|
|
| (3,514 | ) |
|
| (4,277 | ) |
Comprehensive income |
|
| 16,084 |
|
|
| 7,500 |
|
|
| 40,512 |
|
|
| 24,888 |
|
Comprehensive income attributable to noncontrolling interest |
|
| (6,384 | ) |
|
| (3,012 | ) |
|
| (22,720 | ) |
|
| (8,423 | ) |
Comprehensive income attributable to Greenbrier |
| $ | 9,700 |
|
| $ | 4,488 |
|
| $ | 17,792 |
|
| $ | 16,465 |
|
Three Months Ended November 30, | ||||||||
2019 | 2018 | |||||||
Net earnings | $ | 24,011 | $ | 23,382 | ||||
Other comprehensive income | ||||||||
Translation adjustment | (1,583 | ) | (3,931 | ) | ||||
Reclassification of derivative financial instruments recognized in net earnings 1 | 309 | 469 | ||||||
Unrealized gain (loss) on derivative financial instruments 2 | 2,154 | (2,302 | ) | |||||
Other (net of tax effect) | (463 | ) | (230 | ) | ||||
417 | (5,994 | ) | ||||||
Comprehensive income | 24,428 | 17,388 | ||||||
Comprehensive income attributable to noncontrolling interest | (16,336 | ) | (5,411 | ) | ||||
Comprehensive income attributable to Greenbrier | $ | 8,092 | $ | 11,977 | ||||
1 | Net of tax effect of |
2 | Net of tax effect of $1.3 million and $0.2 million for the three months ended |
The accompanying notes are an integral part of these financial statements
6
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Equity
(In thousands, 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, 2019 |
| 32,488 |
| $ | 453,943 |
| $ | 867,602 |
| $ | (44,815 | ) | $ | 1,276,730 |
| $ | 164,967 |
| $ | 1,441,697 |
| $ | 31,564 |
|
Cumulative effect adjustment due to adoption of ASU 2016-02 (See Note 1) |
| — |
|
| — |
|
| 4,393 |
|
| — |
|
| 4,393 |
|
| — |
|
| 4,393 |
|
| — |
|
Net earnings |
| — |
|
| — |
|
| 21,298 |
|
| — |
|
| 21,298 |
|
| 23,510 |
|
| 44,808 |
|
| (782 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| (3,506 | ) |
| (3,506 | ) |
| (8 | ) |
| (3,514 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 9,038 |
|
| 9,038 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (8,172 | ) |
| (8,172 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,075 |
|
| 12,075 |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 154 |
|
| 11,114 |
|
| — |
|
| — |
|
| 11,114 |
|
| — |
|
| 11,114 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (13,008 | ) |
| — |
|
| — |
|
| (13,008 | ) |
| — |
|
| (13,008 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 6,859 |
|
| — |
|
| — |
|
| 6,859 |
|
| — |
|
| 6,859 |
|
| — |
|
Cash dividends ($0.52 per share) |
| — |
|
| — |
|
| (17,408 | ) |
| — |
|
| (17,408 | ) |
| — |
|
| (17,408 | ) |
| — |
|
Balance February 29, 2020 |
| 32,642 |
| $ | 458,908 |
| $ | 875,885 |
| $ | (48,321 | ) | $ | 1,286,472 |
| $ | 201,410 |
| $ | 1,487,882 |
| $ | 30,782 |
|
| 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, 2019 |
| 32,596 |
| $ | 454,900 |
| $ | 871,300 |
| $ | (44,392 | ) | $ | 1,281,808 |
| $ | 191,050 |
| $ | 1,472,858 |
| $ | 31,723 |
|
Net earnings |
| — |
|
| — |
|
| 13,629 |
|
| — |
|
| 13,629 |
|
| 7,327 |
|
| 20,956 |
|
| (941 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| (3,929 | ) |
| (3,929 | ) |
| (2 | ) |
| (3,931 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7,302 |
|
| 7,302 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (4,267 | ) |
| (4,267 | ) |
| — |
|
Restricted stock awards (net of cancellations) |
| 46 |
|
| 1,642 |
|
| — |
|
| — |
|
| 1,642 |
|
| — |
|
| 1,642 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (1,667 | ) |
| — |
|
| — |
|
| (1,667 | ) |
| — |
|
| (1,667 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 4,033 |
|
| — |
|
| — |
|
| 4,033 |
|
| — |
|
| 4,033 |
|
| — |
|
Cash dividends ($0.27 per share) |
| — |
|
| — |
|
| (9,044 | ) |
| — |
|
| (9,044 | ) |
| — |
|
| (9,044 | ) |
| — |
|
Balance February 29, 2020 |
| 32,642 |
| $ | 458,908 |
| $ | 875,885 |
| $ | (48,321 | ) | $ | 1,286,472 |
| $ | 201,410 |
| $ | 1,487,882 |
| $ | 30,782 |
|
7
THE GREENBRIER COMPANIES, INC.
| 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, 2018 |
| 32,191 |
| $ | 442,569 |
| $ | 830,898 |
| $ | (23,366 | ) | $ | 1,250,101 |
| $ | 134,114 |
| $ | 1,384,215 |
| $ | 29,768 |
|
Cumulative effect adjustment due to adoption of ASU 2014-09 |
| — |
|
| — |
|
| 5,461 |
|
| — |
|
| 5,461 |
|
| — |
|
| 5,461 |
|
|
|
|
Net earnings |
| — |
|
| — |
|
| 20,721 |
|
| — |
|
| 20,721 |
|
| 12,575 |
|
| 33,296 |
|
| (4,131 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
|
|
|
| (4,256 | ) |
| (4,256 | ) |
| (21 | ) |
| (4,277 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,306 |
|
| 5,306 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (8,430 | ) |
| (8,430 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,915 |
|
| 1,915 |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 188 |
|
| 12,683 |
|
| — |
|
| — |
|
| 12,683 |
|
| — |
|
| 12,683 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (17,445 | ) |
| — |
|
| — |
|
| (17,445 | ) |
| — |
|
| (17,445 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 7,155 |
|
| — |
|
| — |
|
| 7,155 |
|
| — |
|
| 7,155 |
|
| — |
|
Cash dividends ($0.50 per share) |
| — |
|
| — |
|
| (16,602 | ) |
| — |
|
| (16,602 | ) |
| — |
|
| (16,602 | ) |
| — |
|
Balance February 28, 2019 |
| 32,379 |
| $ | 444,962 |
| $ | 840,478 |
| $ | (27,622 | ) | $ | 1,257,818 |
| $ | 145,459 |
| $ | 1,403,277 |
| $ | 25,637 |
|
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, 2019 | 32,488 | $ | 453,943 | $ | 867,602 | $ | (44,815 | ) | $ | 1,276,730 | $ | 164,967 | $ | 1,441,697 | $ | 31,564 | ||||||||||||||||
Cumulative effect adjustment due to adoption of ASU 2016-02 (See Note 1) | — | — | 4,393 | — | 4,393 | — | 4,393 | — | ||||||||||||||||||||||||
Net earnings | — | — | 7,669 | — | 7,669 | 16,183 | 23,852 | 159 | ||||||||||||||||||||||||
Other comprehensive income (loss), net | — | — | — | 423 | 423 | (6 | ) | 417 | — | |||||||||||||||||||||||
Noncontrolling interest adjustments | — | — | — | — | — | 1,736 | 1,736 | — | ||||||||||||||||||||||||
Joint venture partner distribution declared | — | — | — | — | — | (3,905 | ) | (3,905 | ) | — | ||||||||||||||||||||||
Consolidation of joint venture | — | — | — | — | — | 12,075 | 12,075 | — | ||||||||||||||||||||||||
Restricted stock awards (net of cancellations) | 108 | 9,472 | — | — | 9,472 | — | 9,472 | — | ||||||||||||||||||||||||
Unamortized restricted stock | — | (11,341 | ) | — | — | (11,341 | ) | — | (11,341 | ) | — | |||||||||||||||||||||
Restricted stock amortization | — | 2,826 | — | — | 2,826 | — | 2,826 | — | ||||||||||||||||||||||||
Cash dividends ($0.25 per share) | — | — | (8,364 | ) | — | (8,364 | ) | — | (8,364 | ) | — | |||||||||||||||||||||
Balance November 30, 2019 | 32,596 | $ | 454,900 | $ | 871,300 | $ | (44,392 | ) | $ | 1,281,808 | $ | 191,050 | $ | 1,472,858 | $ | 31,723 | ||||||||||||||||
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, 2018 | 32,191 | $ | 442,569 | $ | 830,898 | $ | (23,366 | ) | $ | 1,250,101 | $ | 134,114 | $ | 1,384,215 | $ | 29,768 | ||||||||||||||||
Cumulative effect adjustment due to adoption ASU 2014-09 | — | — | 5,461 | — | 5,461 | — | 5,461 | — | ||||||||||||||||||||||||
Net earnings | — | — | 17,956 | — | 17,956 | 6,745 | 24,701 | (1,319 | ) | |||||||||||||||||||||||
Other comprehensive loss , net | — | — | — | (5,979 | ) | (5,979 | ) | (15 | ) | (5,994 | ) | — | ||||||||||||||||||||
Noncontrolling interest adjustments | — | — | — | — | — | 3,919 | 3,919 | — | ||||||||||||||||||||||||
Joint venture partner distribution declared | — | — | — | — | — | (3,173 | ) | (3,173 | ) | — | ||||||||||||||||||||||
Restricted stock awards (net of cancellations) | 159 | 11,416 | — | — | 11,416 | — | 11,416 | — | ||||||||||||||||||||||||
Unamortized restricted stock | — | (16,163 | ) | — | — | (16,163 | ) | — | (16,163 | ) | — | |||||||||||||||||||||
Restricted stock amortization | — | 3,136 | — | — | 3,136 | — | 3,136 | — | ||||||||||||||||||||||||
Cash dividends ($0.25 per share) | — | — | (8,297 | ) | — | (8,297 | ) | — | (8,297 | ) | — | |||||||||||||||||||||
Balance November 30, 2018 | 32,350 | $ | 440,958 | $ | 846,018 | $ | (29,345 | ) | $ | 1,257,631 | $ | 141,590 | $ | 1,399,221 | $ | 28,449 | ||||||||||||||||
| 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, 2018 |
| 32,350 |
| $ | 440,958 |
| $ | 846,018 |
| $ | (29,345 | ) | $ | 1,257,631 |
| $ | 141,590 |
| $ | 1,399,221 |
| $ | 28,449 |
|
Net earnings |
| — |
|
| — |
|
| 2,765 |
|
|
|
|
| 2,765 |
|
| 5,830 |
|
| 8,595 |
|
| (2,812 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| 1,723 |
|
| 1,723 |
|
| (6 | ) |
| 1,717 |
|
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,387 |
|
| 1,387 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (5,257 | ) |
| (5,257 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,915 |
|
| 1,915 |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 29 |
|
| 1,267 |
|
| — |
|
| — |
|
| 1,267 |
|
| — |
|
| 1,267 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (1,282 | ) |
| — |
|
| — |
|
| (1,282 | ) |
| — |
|
| (1,282 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 4,019 |
|
| — |
|
| — |
|
| 4,019 |
|
| — |
|
| 4,019 |
|
| — |
|
Cash dividends ($0.25 per share) |
| — |
|
| — |
|
| (8,305 | ) |
| — |
|
| (8,305 | ) |
| — |
|
| (8,305 | ) |
| — |
|
Balance February 28, 2019 |
| 32,379 |
| $ | 444,962 |
| $ | 840,478 |
| $ | (27,622 | ) | $ | 1,257,818 |
| $ | 145,459 |
| $ | 1,403,277 |
| $ | 25,637 |
|
The accompanying notes are an integral part of these financial statements
8
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
|
| Six Months |
| |||||
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net earnings |
| $ | 44,026 |
|
| $ | 29,165 |
|
Adjustments to reconcile net earnings to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
| (6,714 | ) |
|
| (3,405 | ) |
Depreciation and amortization |
|
| 59,338 |
|
|
| 40,815 |
|
Net gain on disposition of equipment |
|
| (10,656 | ) |
|
| (26,455 | ) |
Accretion of debt discount |
|
| 2,718 |
|
|
| 2,165 |
|
Stock based compensation expense |
|
| 7,237 |
|
|
| 7,311 |
|
Noncontrolling interest adjustments |
|
| 9,038 |
|
|
| 5,306 |
|
Other |
|
| (39 | ) |
|
| 1,809 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| 46,109 |
|
|
| 23,298 |
|
Inventories |
|
| (55,158 | ) |
|
| (154,388 | ) |
Leased railcars for syndication |
|
| (123,033 | ) |
|
| (76,386 | ) |
Other |
|
| (39,433 | ) |
|
| (11,274 | ) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| (67,988 | ) |
|
| 28,458 |
|
Deferred revenue |
|
| 1,381 |
|
|
| (13,041 | ) |
Net cash used in operating activities |
|
| (133,174 | ) |
|
| (146,622 | ) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
| 41,827 |
|
|
| 63,879 |
|
Capital expenditures |
|
| (40,834 | ) |
|
| (98,176 | ) |
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 |
|
| 10,766 |
|
|
| (43,704 | ) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
| 10,246 |
|
|
| (6,007 | ) |
Proceeds from issuance of notes payable |
|
| — |
|
|
| 225,000 |
|
Repayments of notes payable |
|
| (17,120 | ) |
|
| (176,641 | ) |
Debt issuance costs |
|
| — |
|
|
| (2,770 | ) |
Dividends |
|
| (17,312 | ) |
|
| (16,651 | ) |
Cash distribution to joint venture partner |
|
| (8,706 | ) |
|
| (5,058 | ) |
Tax payments for net share settlement of restricted stock |
|
| (1,895 | ) |
|
| (4,762 | ) |
Net cash provided by (used in) financing activities |
|
| (34,787 | ) |
|
| 13,111 |
|
Effect of exchange rate changes |
|
| (2,824 | ) |
|
| 825 |
|
Decrease in cash and cash equivalents and restricted cash |
|
| (160,019 | ) |
|
| (176,390 | ) |
Cash and cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 338,487 |
|
|
| 539,474 |
|
End of period |
| $ | 178,468 |
|
| $ | 363,084 |
|
Balance Sheet Reconciliation: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 169,899 |
|
| $ | 341,500 |
|
Restricted cash |
|
| 8,569 |
|
|
| 21,584 |
|
Total cash and cash equivalents and restricted cash as presented above |
| $ | 178,468 |
|
| $ | 363,084 |
|
|
|
|
|
|
|
|
|
|
Interest |
| $ | 11,608 |
|
| $ | 8,600 |
|
Income taxes, net |
| $ | 25,503 |
|
| $ | 31,494 |
|
Non-cash activity |
|
|
|
|
|
|
|
|
Transfer from Leased railcars for syndication to Equipment on operating leases, net |
| $ | 55,739 |
|
| $ | 42,809 |
|
Capital expenditures accrued in Accounts payable and accrued liabilities |
| $ | 3,237 |
|
| $ | 11,812 |
|
Change in Accounts payable and accrued liabilities associated with dividends declared |
| $ | (96 | ) |
| $ | 50 |
|
Conversion of unconsolidated affiliate note receivable to Investment in unconsolidated affiliates |
| $ | 4,760 |
|
| $ | — |
|
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner |
| $ | 535 |
|
| $ | (3,372 | ) |
Three Months Ended November 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net earnings | $ | 24,011 | $ | 23,382 | ||||
Adjustments to reconcile net earnings to net cash used in operating activities: | ||||||||
Deferred income taxes | (6,515 | ) | (2,360 | ) | ||||
Depreciation and amortization | 29,335 | 20,700 | ||||||
Net gain on disposition of equipment | (3,959 | ) | (14,353 | ) | ||||
Accretion of debt discount | 1,350 | 1,076 | ||||||
Stock based compensation expense | 3,157 | 3,194 | ||||||
Noncontrolling interest adjustments | 1,736 | 3,920 | ||||||
Other | (391 | ) | 286 | |||||
Decrease (increase) in assets: | ||||||||
Accounts receivable, net | 58,488 | 54,834 | ||||||
Inventories | (69,662 | ) | (63,045 | ) | ||||
Leased railcars for syndication | (13,132 | ) | (116,726 | ) | ||||
Other | (37,304 | ) | (392 | ) | ||||
Increase (decrease) in liabilities: | ||||||||
Accounts payable and accrued liabilities | (47,421 | ) | (10,949 | ) | ||||
Deferred revenue | (10,012 | ) | 3,314 | |||||
Net cash used in operating activities | (70,319 | ) | (97,119 | ) | ||||
Cash flows from investing activities | ||||||||
Proceeds from sales of assets | 27,463 | 34,497 | ||||||
Capital expenditures | (23,216 | ) | (28,677 | ) | ||||
Investment in and advances to unconsolidated affiliates | (1,500 | ) | (11,393 | ) | ||||
Cash distribution from unconsolidated affiliates and other | 4,452 | 1,784 | ||||||
Net cash provided by (used in) investing activities | 7,199 | (3,789 | ) | |||||
Cash flows from financing activities | ||||||||
Net change in revolving notes with maturities of 90 days or less | 2,399 | (4,840 | ) | |||||
Proceeds from issuance of notes payable | — | 225,000 | ||||||
Repayments of notes payable | (9,749 | ) | (173,453 | ) | ||||
Debt issuance costs | (4 | ) | (2,766 | ) | ||||
Dividends | (343 | ) | (467 | ) | ||||
Cash distribution to joint venture partner | (4,531 | ) | (3,185 | ) | ||||
Tax payments for net share settlement of restricted stock | (1,870 | ) | (4,747 | ) | ||||
Net cash provided by ( used in) financing activities | (14,098 | ) | 35,542 | |||||
Effect of exchange rate changes | 981 | (2,439 | ) | |||||
Decrease in cash and cash equivalents and restricted cash | (76,237 | ) | (67,805 | ) | ||||
Cash and cash equivalents and restricted cash | ||||||||
Beginning of period | 338,487 | 539,474 | ||||||
End of period | $ | 262,250 | $ | 471,669 | ||||
Balance Sheet Reconciliation: | ||||||||
Cash and cash equivalents | $ | 253,602 | $ | 462,797 | ||||
Restricted cash | 8,648 | 8,872 | ||||||
Total cash and cash equivalents and restricted cash as presented above | $ | 262,250 | $ | 471,669 | ||||
Interest | $ | 6,601 | $ | 1,740 | ||||
Income taxes, net | $ | 11,692 | $ | 7,487 | ||||
Non-cash activity | ||||||||
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net | $ | 55,626 | $ | 14,304 | ||||
Capital expenditures accrued in Accounts payable and accrued liabilities | $ | 6,888 | $ | 6,972 | ||||
Change in Accounts payable and accrued liabilities associated with dividends declared | $ | 8,021 | $ | 7,830 | ||||
Conversion of unconsolidated affiliate note receivable to Investment in unconsolidated affiliates | $ | 4,760 | $ | — | ||||
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner | $ | 626 | $ | — |
The accompanying notes are an integral part of these financial statements
9
THE GREENBRIER COMPANIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Interim Financial Statements
The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and its subsidiaries (Greenbrier or the Company) as of November 30, 2019February 29, 2020, for the three and six months ended February 29, 2020 and for the three and six months ended November 30, 201
Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form
Management Estimates –
Initial Adoption of Accounting Standards
Lease accounting
On September 1, 2019, the Company adopted Accounting Standards Update
The Company adopted the provisions of the new standard using the modified retrospective adoption method, utilizing the simplified transition option available which allows entities to continue to apply the legacy guidance in Topic 840 in the comparative periods presented in the year of adoption. The Company elected the “package of practical expedients,” which allows it to not reassess under the new guidance prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the
As a result of adoption, the Company recognized operating lease ROU assets and lease liabilities of $40.4 and $41.6 million, respectively, as of September 1, 2019. The Company also recognized an immaterial finance lease asset and corresponding lease liability. Additionally, the Company derecognized certain existing property, plant and equipment and deferred revenue for railcar transactions previously not qualifying as sales due to continuing involvement, that now qualify as sales under the new guidance. The gain associated with this change in accounting, was mostly offset by the recognition of a new guarantee liability. The adoption of this new standard also required the Company to eliminate deferred gains associated with certain sale-leaseback transactions. Additionally, the Company derecognized $9.3 million of existing property, plant and equipment and $12.7 million of deferred revenue for railcar transactions previously not qualifying as sales due to continuing involvement, that now qualify for sale accounting under the new guidance. The gain associated with this change in accounting, was
10
THE GREENBRIER COMPANIES, INC.
Derivatives and Hedging
In August 2017, the FASB issued Accounting Standards Update
Prospective Accounting Changes
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued Accounting Standard Update
Note 2 – Revenue Recognition
Contract balances
Contract assets primarily consist of unbilled receivables related to marine vessel construction and repair services, for which the respective contracts do not yet permit billing at the reporting date. Contract liabilities primarily consist of customer prepayments for manufacturing, maintenance, and other management-type services, for which the Company has not yet satisfied the related performance obligations.
The opening and closing balances of the Company’s contract balances are as follows:
(in thousands) |
| Balance sheet classification |
| February 29, 2020 |
|
| August 31, 2019 |
|
| $ change |
| |||
Contract assets |
| Inventories |
| $ | 7,472 |
|
| $ | 10,196 |
|
| $ | (2,724 | ) |
Contract liabilities 1 |
| Deferred revenue |
| $ | 55,844 |
|
| $ | 52,118 |
|
| $ | 3,726 |
|
(in thousands) | Balance sheet | November 30 , 2019 | August 31 , 2019 | $ change | ||||||||||||
Contract assets | Inventories | $ | 9,045 | $ | 10,196 | $ | (1,151 | ) | ||||||||
Contract liabilities 1 | Deferred revenue | $ | 43,105 | $ | 52,118 | $ | (9,013 | ) |
1 | Contract liabilities balance includes deferred revenue within the scope of Topic |
For the three month periodand six months ended November 30, 2019,February 29, 2020, the Company recognized $20.1$3.8 million and $24.5 million of revenue that was included in Contract liabilities as of
11
THE GREENBRIER COMPANIES, INC.
Performance obligations
As of November 30, 2019,February 29, 2020, the Company has entered into contracts with customers for which revenue has not yet been recognized. The following table outlines estimated revenue related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.
(in millions) |
| February 29, 2020 |
| |
Revenue type: |
|
|
|
|
Manufacturing – Railcar sales |
| $ | 2,698.1 |
|
Manufacturing – Marine |
| $ | 58.8 |
|
Services |
| $ | 140.1 |
|
Other |
| $ | 43.6 |
|
|
|
|
|
|
Manufacturing – Railcars intended for syndication 1 |
| $ | 261.5 |
|
(in millions) | November 30, 2019 | |||
Revenue type : | ||||
Manufacturing – Railcar sales | $ | 2,722.9 | ||
Manufacturing – Marine | $ | 80.2 | ||
Services | $ | 150.0 | ||
Other | $ | 65.2 | ||
Manufacturing – Railcars intended for syndication 1 | $ | 298.3 |
1 | Not a performance obligation as defined in Topic 606: Contracts with Customers |
Based on current production and delivery schedules and existing contracts, approximately $1.4$0.9 billion of the Railcar
Revenue amounts reflected in Railcars intended for syndication may be syndicated to third parties or held in the Company’s fleet depending on a variety of factors.
Marine revenue is expected to be recognized
Services includes management and maintenance services of which approximately 52%
Note 3 – Acquisitions
Manufacturing business of American Railcar Industries, Inc. (ARI)
On July 26, 2019, the Company completed its acquisition of the manufacturing business of ARI for a purchase price of approximately $417.1$417.2 million. In connection with the acquisition, the Company acquired two2 railcar manufacturing facilities in Arkansas, as well as other facilities which produce a range of railcar components and parts and create enhanced vertical integration for our manufacturing operations. The purchase price
The purchase price was funded by, and consisted of, a combination of cash on hand, the proceeds of a $300 million secured term loan, the issuance to the seller of a $50 million senior convertible note and a payable to the seller for a working capital
For the threesix months ended November 30, 2019,February 29, 2020, the
12
THE GREENBRIER COMPANIES, INC.
The preliminary purchase price of the n
(in thousands) |
|
|
|
|
Accounts receivable, net |
| $ | 27,659 |
|
Inventories |
|
| 98,053 |
|
Property, plant and equipment, net |
|
| 225,045 |
|
Investments in unconsolidated affiliates |
|
| 40,314 |
|
Intangibles and other assets, net |
|
| 36,785 |
|
Goodwill |
|
| 56,514 |
|
Total assets acquired |
|
| 484,370 |
|
Total liabilities assumed |
|
| 67,174 |
|
Net assets acquired |
| $ | 417,196 |
|
(in thousands) | ||||
Accounts receivable, net | 27,595 | |||
Inventories | 98,227 | |||
Property, plant and equipment, net | 225,045 | |||
Investments in unconsolidated affiliates | 40,314 | |||
Intangibles and other assets, net | 36,785 | |||
Goodwill | 56,339 | |||
Total assets acquired | 484,305 | |||
Total liabilities assumed | 67,174 | |||
Net assets acquired | $ | 417,131 | ||
The above pur
The identified intangible assets assumed in the acquisition were recognized as follows:
(in thousands) |
| Fair value |
|
| Weighted average estimated useful life (in years) |
| ||
Trademarks and patents |
| $ | 19,500 |
|
|
| 9 |
|
Customer and supplier relationships |
|
| 16,071 |
|
|
| 7 |
|
Identified intangible assets subject to amortization |
|
| 35,571 |
|
|
|
|
|
Other identified intangible assets not subject to amortization |
|
| 860 |
|
|
|
|
|
Total identified intangible assets |
| $ | 36,431 |
|
|
|
|
|
(in thousands) | Fair value | Weighted average estimated (in years) | ||||||
Trademarks and patents | $ | 19,500 | 9 | |||||
Customer and supplier relationships | 16,071 | 7 | ||||||
Identified intangible assets subject to amortization | 35,571 | |||||||
Other identified intangible assets not subject to amortization | 860 | |||||||
Total identified intangible assets | $ | 36,431 | ||||||
Note 4 – Inventories
Inventories are valued at the lower of cost or net realizable value using the first-in first-out method. Work-in-process includes material, labor and overhead. Finished goods includes completed wheels, parts and railcars not on lease or in transit. The following table summarizes the Company’s inventory balance:
(In thousands) |
| February 29, 2020 |
|
| August 31, 2019 |
| ||
Manufacturing supplies and raw materials |
| $ | 352,291 |
|
| $ | 387,015 |
|
Work-in-process |
|
| 161,616 |
|
|
| 156,614 |
|
Finished goods |
|
| 206,035 |
|
|
| 130,576 |
|
Excess and obsolete adjustment |
|
| (10,827 | ) |
|
| (9,512 | ) |
|
| $ | 709,115 |
|
| $ | 664,693 |
|
(In thousands) | November 30, 2019 | August 31, 2019 | ||||||
Manufacturing supplies and raw materials | $ | 357,260 | $ | 387,015 | ||||
Work-in-process | 184,286 | 156,614 | ||||||
Finished goods | 202,780 | 130,576 | ||||||
Excess and obsolete adjustment | (10,520 | ) | (9,512 | ) | ||||
$ | 733,806 | $ | 664,693 | |||||
13
THE GREENBRIER COMPANIES, INC.
Note 5 – Intangibles and Other Assets, net
Intangible assets that are determined to have finite lives are amortized over their useful lives. Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment
The following table summarizes the Company’s identifiable intangible and other assets balance:
(In thousands) |
| February 29, 2020 |
|
| August 31, 2019 |
| ||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
Customer relationships |
| $ | 89,722 |
|
| $ | 89,722 |
|
Accumulated amortization |
|
| (52,691 | ) |
|
| (48,850 | ) |
Other intangibles |
|
| 33,845 |
|
|
| 34,031 |
|
Accumulated amortization |
|
| (8,188 | ) |
|
| (6,908 | ) |
|
|
| 62,688 |
|
|
| 67,995 |
|
Intangible assets not subject to amortization |
|
| 5,107 |
|
|
| 5,450 |
|
Prepaid and other assets |
|
| 18,779 |
|
|
| 15,749 |
|
Operating lease ROU assets |
|
| 34,624 |
|
|
| — |
|
Nonqualified savings plan investments |
|
| 31,766 |
|
|
| 27,967 |
|
Revolving notes issuance costs, net |
|
| 4,095 |
|
|
| 4,568 |
|
Assets held for sale |
|
| 3,650 |
|
|
| 3,650 |
|
Total Intangible and other assets, net |
| $ | 160,709 |
|
| $ | 125,379 |
|
(In thousands) | November 30, 2019 | August 31, 2019 | ||||||
Intangible assets subject to amortization: | ||||||||
Customer relationships | $ | 89,722 | $ | 89,722 | ||||
Accumulated amortization | (50,782 | ) | (48,850 | ) | ||||
Other intangibles | 33,904 | 34,031 | ||||||
Accumulated amortization | (7,531 | ) | (6,908 | ) | ||||
65,313 | 67,995 | |||||||
Intangible assets not subject to amortization | 5,273 | 5,450 | ||||||
Prepaid and other assets | 15,038 | 15,749 | ||||||
Operating lease ROU assets | 37,229 | — | ||||||
Nonqualified savings plan investments | 31,248 | 27,967 | ||||||
Revolving notes issuance costs, net | 4,338 | 4,568 | ||||||
Assets held for sale | 3,650 | 3,650 | ||||||
Total Intangible and other assets, net | $ | 162,089 | $ | 125,379 | ||||
Amortization expense was $2.7
Note 6 – Revolving Notes
Senior secured credit facilities, consisting of 3 components, aggregated to $705.9$706.0 million as of November 30, 2019.
As of November 30, 2019,February 29, 2020, a $600.0 million revolving line of credit, maturing June 2024, secured by substantially all the Company’s assets in the U.S. not otherwise pledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this facility bear interest at LIBOR plus 1.50% or Prime plus 0.50% depending on the type of
As of November 30, 2019,February 29, 2020, lines of credit totaling $55.9$56.0 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1% to WIBOR plus 1.5% and Euro Interbank Offered Rate (EURIBOR) plus 1.1%, were available for working capital needs of the European manufacturing operations. The European lines of credit include $13.8$14.0 million
As of November 30
14
THE GREENBRIER COMPANIES, INC.
As of November 30, 2019,February 29, 2020, outstanding commitments under the senior secured credit facilities consisted of $24.9$27.5 million in letters of credit under the North American credit facility and $29.5$37.2 million outstanding under the European credit facilities.
As of August 31, 2019, outstanding commitments under the senior secured credit facilities consisted of $24.4 million in letters of credit under the North American credit facility and $27.1 million outstanding under the European credit facilities
Note 7 – Accounts Payable and Accrued Liabilities
(In thousands) |
| February 29, 2020 |
|
| August 31, 2019 |
| ||
Trade payables |
| $ | 220,123 |
|
| $ | 302,009 |
|
Other accrued liabilities |
|
| 105,206 |
|
|
| 108,939 |
|
Operating lease liabilities |
|
| 35,996 |
|
|
| — |
|
Accrued payroll and related liabilities |
|
| 91,723 |
|
|
| 106,669 |
|
Accrued warranty |
|
| 46,850 |
|
|
| 46,678 |
|
Income taxes payable |
|
| — |
|
|
| 4,065 |
|
|
| $ | 499,898 |
|
| $ | 568,360 |
|
(In thousands) | November 30, 2019 | August 31, 2019 | ||||||
Trade payables | $ | 237,670 | $ | 302,009 | ||||
Other accrued liabilities | 107,457 | 108,939 | ||||||
Operating lease liabilities | 38,397 | — | ||||||
Accrued payroll and related liabilities | 91,960 | 106,669 | ||||||
Accrued warranty | 47,110 | 46,678 | ||||||
Income taxes payable | 5,195 | 4,065 | ||||||
$ | 527,789 | $ | 568,360 | |||||
Note 8 – Warranty Accruals
Warranty costs are estimated and charged to operations to cover a defined warranty period. The estimated warranty cost is based on the history of warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historical information for similar product types. The warranty accruals, included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, are reviewed periodically and updated based on warranty trends and expirations of warranty periods.
Warranty accrual activity:
|
| Three Months |
|
| Six Months |
| ||||||||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||
Balance at beginning of period |
| $ | 47,110 |
|
| $ | 26,264 |
|
| $ | 46,678 |
|
| $ | 27,395 |
|
Charged to cost of revenue, net |
|
| 884 |
|
|
| 1,412 |
|
|
| 3,262 |
|
|
| 2,853 |
|
Payments |
|
| (1,136 | ) |
|
| (2,612 | ) |
|
| (3,135 | ) |
|
| (4,796 | ) |
Currency translation effect |
|
| (8 | ) |
|
| (70 | ) |
|
| 45 |
|
|
| (458 | ) |
Balance at end of period |
| $ | 46,850 |
|
| $ | 24,994 |
|
| $ | 46,850 |
|
| $ | 24,994 |
|
Three Months Ended November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Balance at beginning of period | $ | 46,678 | $ | 27,395 | ||||
Charged to cost of revenue, net | 2,378 | 1,441 | ||||||
Payments | (1,999 | ) | (2,184 | ) | ||||
Currency translation effect | 53 | (388 | ) | |||||
Balance at end of period | $ | 47,110 | $ | 26,264 | ||||
Note 9 – Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following:
(In thousands) |
| Unrealized Gain (Loss) on Derivative Financial Instruments |
|
| Foreign Currency Translation Adjustment |
|
| Other |
|
| Accumulated Other Comprehensive Loss |
| ||||
Balance, August 31, 2019 |
| $ | (8,841 | ) |
| $ | (34,194 | ) |
| $ | (1,780 | ) |
| $ | (44,815 | ) |
Other comprehensive loss before reclassifications |
|
| (1,484 | ) |
|
| (2,278 | ) |
|
| (221 | ) |
|
| (3,983 | ) |
Amounts reclassified from Accumulated other comprehensive loss |
|
| 477 |
|
|
| — |
|
|
| — |
|
|
| 477 |
|
Balance, February 29, 2020 |
| $ | (9,848 | ) |
| $ | (36,472 | ) |
| $ | (2,001 | ) |
| $ | (48,321 | ) |
(In thousands) | Unrealized Gain ( L oss) onDerivative Financial Instruments | Foreign Currency Translation Adjustment | Other | Accumulated Other Comprehensive Loss | ||||||||||||
Balance, August 31, 2019 | $ | (8,841 | ) | $ | (34,194 | ) | $ | (1,780 | ) | $ | (44,815 | ) | ||||
Other comprehensive gain (loss) before reclassifications | 2,154 | (1,577 | ) | (463 | ) | 114 | ||||||||||
Amounts reclassified from Accumulated other comprehensive loss | 309 | — | — | 309 | ||||||||||||
Balance, November 30, 2019 | $ | (6,378 | ) | $ | (35,771 | ) | $ | (2,243 | ) | $ | (44,392 | ) | ||||
15
THE GREENBRIER COMPANIES, INC.
The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with financial statement caption, were as follows:
|
| Three Months Ended |
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Financial Statement Caption | ||
(Gain) loss on derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
| $ | (140 | ) |
| $ | 769 |
|
| Revenue and Cost of revenue |
Interest rate swap contracts |
|
| 369 |
|
|
| 151 |
|
| Interest and foreign exchange |
|
|
| 229 |
|
|
| 920 |
|
| Total before tax |
|
|
| (61 | ) |
|
| (219 | ) |
| Income tax expense |
|
| $ | 168 |
|
| $ | 701 |
|
| Net of tax |
|
| Six Months Ended |
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Financial Statement Location | ||
(Gain) loss on derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
| $ | 101 |
|
| $ | 1,257 |
|
| Revenue and cost of revenue |
Interest rate swap contracts |
|
| 536 |
|
|
| 295 |
|
| Interest and foreign exchange |
|
|
| 637 |
|
|
| 1,552 |
|
| Total before tax |
|
|
| (160 | ) |
|
| (382 | ) |
| Income tax expense |
|
| $ | 477 |
|
| $ | 1,170 |
|
| Net of tax |
Three Months November 30, | ||||||||||
(In thousands) | 2019 | 2018 | Financial Statement Caption | |||||||
(Gain) loss on derivative financial instruments: | ||||||||||
Foreign exchange contracts | $ | 241 | $ | 488 | Revenue and Cost | |||||
Interest rate swap contracts | 167 | 144 | Interest and foreign exchange | |||||||
408 | 632 | Total before tax | ||||||||
(99 | ) | (163 | ) | Income tax expense | ||||||
$ | 309 | $ | 469 | Net of tax | ||||||
Note 10 – Earnings Per Share
The shares used in the computation of basic and diluted earnings per common share are reconciled as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||
Weighted average basic common shares outstanding (1) |
|
| 32,661 |
|
|
| 32,628 |
|
|
| 32,645 |
|
|
| 32,634 |
|
Dilutive effect of 2.875% Convertible notes (2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Dilutive effect of 2.25% Convertible notes (3) |
|
| — |
|
| n/a |
|
|
| — |
|
| n/a |
| ||
Dilutive effect of restricted stock units (4) |
|
| 821 |
|
|
| 578 |
|
|
| 737 |
|
|
| 515 |
|
Weighted average diluted common shares outstanding |
|
| 33,482 |
|
|
| 33,206 |
|
|
| 33,382 |
|
|
| 33,149 |
|
Three Months November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Weighted average basic common shares outstanding (1) | 32,629 | 32,640 | ||||||
Dilut i ve effect of 2.875% Convertible notes(2) | — | — | ||||||
Dilutive effect of 2.25% Convertible notes (3) | — | n/a | ||||||
Dilutive effect of restricted stock units (4) | 655 | 453 | ||||||
Weighted average diluted common shares outstanding | 33,284 | 33,093 | ||||||
(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 was excluded for the three and six months ended |
(3) | The 2.25% Convertible notes were issued in July 2019. The dilutive effect of the 2.25% Convertible notes was excluded for the three and six months ended February 29, 2020 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive. |
16
THE GREENBRIER COMPANIES, INC.
(4) | 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. |
Diluted EPS is calculated 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.
|
| Three Months Ended |
|
| Six Months Ended |
|
| ||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
|
| ||||
Net earnings attributable to Greenbrier |
| $ | 13,629 |
|
| $ | 2,765 |
|
| $ | 21,298 |
|
| $ | 20,721 |
|
|
Weighted average diluted common shares outstanding |
|
| 33,482 |
|
|
| 33,206 |
|
|
| 33,382 |
|
|
| 33,149 |
|
|
Diluted earnings per share |
| $ | 0.41 |
|
| $ | 0.08 |
|
| $ | 0.64 |
|
| $ | 0.63 |
|
|
Three Months Ended November 30, | ||||||||
2019 | 2018 | |||||||
Net earnings attributable to Greenbrier | $ | 7,669 | $ | 17,956 | ||||
Weighted average diluted common shares outstanding | 33,284 | 33,093 | ||||||
Diluted earnings per share | $ | 0.23 | $ | 0.54 |
Note 11 – Stock Based Compensation
The value of stock based compensation awards is amortized as compensation expense from the date of grant through the earlier of the vesting period or in some instances the recipient’s eligible retirement date. Stock based compensation expense consists of restricted stock units,unit, restricted stock and phantom stock unitsunit awards.
Stock based compensation expense was $3.2$4.1 million and $7.2 million for the three and six months ended November 30, 2019February 29, 2020, respectively and $3.2$4.1 million and $7.3 million for the three and six months ended November 30, 2018.February 28, 2019, respectively. Compensation expense is recorded in Selling and administrative expense and Cost of revenue on the Consolidated Statements of Income.
Note 12 – Derivative Instruments
Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign currency forward exchange contracts with established financial institutions are utilized to hedge a portion of that risk. Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The Company’s foreign currency forward exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in accumulated other comprehensive income or loss.
At November 30, 2019February 29, 2020 exchange rates,
At November 30, 2019,February 29, 2020, an interest rate swap agreement maturing in September 2023
17
THE GREENBRIER COMPANIES, INC.
Fair Values of Derivative Instruments
|
| Asset Derivatives |
|
| Liability Derivatives |
| ||||||||||||||
|
|
|
| February 29, 2020 |
|
| August 31, 2019 |
|
|
|
| February 29, 2020 |
|
| August 31, 2019 |
| ||||
(In thousands) |
| Balance sheet location |
| Fair Value |
|
| Fair Value |
|
| Balance sheet location |
| Fair Value |
|
| Fair Value |
| ||||
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign forward exchange contracts |
| Accounts receivable, net |
| $ | 488 |
|
| $ | 64 |
|
| Accounts payable and accrued liabilities |
| $ | 194 |
|
| $ | 437 |
|
Interest rate swap contracts |
| Accounts receivable, net |
|
| — |
|
|
| — |
|
| Accounts payable and accrued liabilities |
|
| 12,504 |
|
|
| 10,255 |
|
|
|
|
| $ | 488 |
|
| $ | 64 |
|
|
|
| $ | 12,698 |
|
| $ | 10,692 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign forward exchange contracts |
| Accounts receivable, net |
| $ | 39 |
|
| $ | — |
|
| Accounts payable and accrued liabilities |
| $ | 281 |
|
| $ | 587 |
|
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
November 30, 2019 | August 31, 2019 | November 30, 2019 | August 31, 2019 | |||||||||||||||||
(In thousands) | Balance sheet location | Fair Value | Fair Value | Balance sheet location | Fair Value | Fair Value | ||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||
Foreign forward exchange contracts | Accounts receivable, net | $ | 386 | $ | 64 | Accounts payable accrued liabilities | $ | 640 | $ | 437 | ||||||||||
Interest rate swap contracts | Accounts receivable, net | — | — | Accounts payable and accrued liabilities | 7,369 | 10,255 | ||||||||||||||
$ | 386 | $ | 64 | $ | 8,009 | $ | 10,692 | |||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||||
Foreign forward exchange contracts | Accounts receivable, net | $ | 56 | $ | — | Accounts payable and accrued liabilities | $ | 165 | $ | 587 |
The Effect of Derivative Instruments on the Statements of Income
Three Months Ended November 30,February 29, 2020 and February 28, 2019
Derivatives in cash flow hedging relationships |
| Location of gain (loss) recognized in income on derivatives |
| Gain (loss) recognized in income on derivatives three months ended |
| |||||
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Foreign forward exchange contract |
| Interest and foreign exchange |
| $ | (165 | ) |
| $ | 115 |
|
Derivatives in cash flow hedging relationships |
| Gain (loss) recognized in OCI on derivatives three months ended, |
|
| Location of gain (loss) reclassified from accumulated OCI into income |
| Gain (loss) reclassified from accumulated OCI into income three months ended |
|
| Location of gain (loss) on derivative (amount excluded from effectiveness testing) |
| Gain (loss) recognized on derivative (amount excluded from effectiveness testing) three months ended |
| |||||||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||||
Foreign forward exchange contracts |
| $ | 190 |
|
| $ | (418 | ) |
| Revenue |
| $ | 67 |
|
| $ | (411 | ) |
| Revenue |
| $ | 190 |
|
| $ | 638 |
|
Foreign forward exchange contracts |
|
| 411 |
|
|
| 1,100 |
|
| Cost of revenue |
|
| 73 |
|
|
| (358 | ) |
| Cost of revenue |
|
| 210 |
|
|
| 289 |
|
Interest rate swap contracts |
|
| (5,503 | ) |
|
| (1,916 | ) |
| Interest and foreign exchange |
|
| (369 | ) |
|
| (151 | ) |
| Interest and foreign exchange |
|
| (116 | ) |
|
| 25 |
|
|
| $ | (4,902 | ) |
| $ | (1,234 | ) |
|
|
| $ | (229 | ) |
| $ | (920 | ) |
|
|
| $ | 284 |
|
| $ | 952 |
|
Derivatives in cash flow hedging relationships | Location of gain (loss) recognized in income on derivatives | Gain (loss) recognized in income on derivatives three months ended November 30, | ||||||||
2019 | 2018 | |||||||||
Foreign forward exchange contract | Interest and foreign exchange | $ | 71 | $ | 380 |
Derivatives in cash flow hedging relationships | Gain (loss) recognized in OCI on derivatives three months ended November 30, | Location of gain (loss) reclassified from accumulated OCI into income | Gain (loss) reclassified from accumulated OCI into income three months ended November 30, | Location of gain (loss) on derivative (amount excluded from effectiveness testing) | Gain (loss) recognized on derivative (amount excluded from effectiveness testing) three months ended November 30, | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Foreign forward exchange contracts | $ | 573 | $ | 72 | Revenue | $ | (166 | ) | $ | (256) | Revenue | $ | 453 | $ | 262 | |||||||||||||
Foreign forward exchange contracts | (594 | ) | (1,495 | ) | Cost of revenue | (75 | ) | (232 | ) | Cost of revenue | 134 | 389 | ||||||||||||||||
Interest rate swap contracts | 2,719 | (1,773 | ) | Interest and foreign exchange | (167 | ) | (144 | ) | Interest and foreign exchange | (165 | ) | (47 | ) | |||||||||||||||
$ | 2,698 | $ | (3,196 | ) | $ | (408 | ) | $ | (632 | ) | $ | 422 | $ | 604 | ||||||||||||||
The following table presents the amounts in the Consolidated Statements of Income in which the effects of the cash flow hedges are recorded and the effects of the cash flow hedge activity on these line items for the three months ended November 30,February 29, 2020 and February 28, 2019:
|
| For The Three Months Ended |
| |||||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||||||||
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
| ||||
Revenue |
| $ | 623,848 |
|
| $ | 67 |
|
| $ | 658,671 |
|
| $ | (411 | ) |
Cost of revenue |
|
| 537,512 |
|
|
| 73 |
|
|
| 604,827 |
|
|
| (358 | ) |
Interest and foreign exchange |
|
| 12,609 |
|
|
| (369 | ) |
|
| 9,237 |
|
|
| (151 | ) |
18
THE GREENBRIER COMPANIES, INC.
Six Months Ended February 29, 2020 and February 28, 2019 and 2018:
Derivatives in cash flow hedging relationships |
| Location of gain (loss) recognized in income on derivatives |
| Gain (loss) recognized in income on derivatives six months ended |
| |||||
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Foreign forward exchange contract |
| Interest and foreign exchange |
| $ | (94 | ) |
| $ | 495 |
|
Derivatives in cash flow hedging relationships |
| Gain (loss) recognized in OCI on derivatives six months ended |
|
| Location of gain (loss) reclassified from accumulated OCI into income |
| Gain (loss) reclassified from accumulated OCI into income six months ended |
|
| Location of gain (loss) on derivative amount excluded from effectiveness testing) |
| Gain (loss) recognized on derivative (amount excluded from effectiveness testing) six months ended |
| |||||||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
|
|
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||||
Foreign forward exchange contracts |
| $ | 763 |
|
| $ | (346 | ) |
| Revenue |
| $ | (99 | ) |
| $ | (667 | ) |
| Revenue |
| $ | 643 |
|
| $ | 900 |
|
Foreign forward exchange contracts |
|
| (183 | ) |
|
| (395 | ) |
| Cost of revenue |
|
| (2 | ) |
|
| (590 | ) |
| Cost of revenue |
|
| 344 |
|
|
| 678 |
|
Interest rate swap contracts |
|
| (2,784 | ) |
|
| (3,689 | ) |
| Interest and foreign exchange |
|
| (536 | ) |
|
| (295 | ) |
| Interest and foreign exchange |
|
| (281 | ) |
|
| (22 | ) |
|
| $ | (2,204 | ) |
| $ | (4,430 | ) |
|
|
| $ | (637 | ) |
| $ | (1,552 | ) |
|
|
| $ | 706 |
|
| $ | 1,556 |
|
|
| For The Six Months Ended |
| |||||||||||||
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||||||||
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
| ||||
Revenue |
| $ | 1,393,207 |
|
| $ | (99 | ) |
| $ | 1,263,194 |
|
| $ | (667 | ) |
Cost of revenue |
|
| 1,214,682 |
|
|
| (2 | ) |
|
| 1,136,817 |
|
|
| (590 | ) |
Interest and foreign exchange |
|
| 25,461 |
|
|
| (536 | ) |
|
| 13,641 |
|
|
| (295 | ) |
For the Three Months Ended November 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Total | Amount of (loss) on cash flow hedge activity | Total | Amount of (loss) on cash flow hedge activity | |||||||||||||
Revenue | $ | 769,359 | $ | (166 | ) | $ | 604,523 | $ | (256 | ) | ||||||
Cost of revenue | 677,170 | (75 | ) | 531,990 | (232 | ) | ||||||||||
Interest and foreign exchange | 12,852 | (167 | ) | 4,404 | (144 | ) |
Note 13 – Segment Information
The Company operates in 3
The accounting policies of the segments are described in the summary of significant accounting policies in the Consolidated Financial Statements contained in the Company’s 2019 Annual Report on Form
The information in the following ta
19
THE GREENBRIER COMPANIES, INC.
For the three months ended November 30, 2019:February 29, 2020:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| 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 |
|
For the six months ended February 29, 2020:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||
Manufacturing |
| $ | 1,147,310 |
|
| $ | 118 |
|
| $ | 1,147,428 |
|
| $ | 99,248 |
|
| $ | (22 | ) |
| $ | 99,226 |
|
Wheels, Repair & Parts |
|
| 177,833 |
|
|
| 10,984 |
|
|
| 188,817 |
|
|
| 4,434 |
|
|
| (510 | ) |
|
| 3,924 |
|
Leasing & Services |
|
| 68,064 |
|
|
| 16,989 |
|
|
| 85,053 |
|
|
| 22,570 |
|
|
| 15,673 |
|
|
| 38,243 |
|
Eliminations |
|
| — |
|
|
| (28,091 | ) |
|
| (28,091 | ) |
|
| — |
|
|
| (15,141 | ) |
|
| (15,141 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (46,032 | ) |
|
| — |
|
|
| (46,032 | ) |
|
| $ | 1,393,207 |
|
| $ | — |
|
| $ | 1,393,207 |
|
| $ | 80,220 |
|
| $ | — |
|
| $ | 80,220 |
|
Revenue | Earnings (loss) from operations | |||||||||||||||||||||||
(In thousands) | External | Intersegment | Total | External | Intersegment | Total | ||||||||||||||||||
Manufacturing | $ | 657,367 | $ | 97 | $ | 657,464 | $ | 53,143 | $ | (23 | ) | $ | 53,120 | |||||||||||
Wheels, Repair & Parts | 86,608 | 5,851 | 92,459 | 1,114 | (342 | ) | 772 | |||||||||||||||||
Leasing & Services | 25,384 | 1,749 | 27,133 | 9,777 | 1,289 | 11,066 | ||||||||||||||||||
Eliminations | — | (7,697 | ) | (7,697 | ) | — | (924 | ) | (924 | ) | ||||||||||||||
Corporate | — | — | — | (22,250 | ) | — | (22,250 | ) | ||||||||||||||||
$ | 769,359 | $ | — | $ | 769,359 | $ | 41,784 | $ | — | $ | 41,784 | |||||||||||||
For the three months ended November 30, 2018:February 28, 2019:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||
Manufacturing |
| $ | 476,019 |
|
| $ | 46,855 |
|
| $ | 522,874 |
|
| $ | 13,990 |
|
| $ | 2,358 |
|
| $ | 16,348 |
|
Wheels, Repair & Parts |
|
| 125,278 |
|
|
| 8,858 |
|
|
| 134,136 |
|
|
| 2,823 |
|
|
| (858 | ) |
|
| 1,965 |
|
Leasing & Services |
|
| 57,374 |
|
|
| 2,911 |
|
|
| 60,285 |
|
|
| 21,030 |
|
|
| 2,101 |
|
|
| 23,131 |
|
Eliminations |
|
| — |
|
|
| (58,624 | ) |
|
| (58,624 | ) |
|
| — |
|
|
| (3,601 | ) |
|
| (3,601 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (19,789 | ) |
|
| — |
|
|
| (19,789 | ) |
|
| $ | 658,671 |
|
| $ | — |
|
| $ | 658,671 |
|
| $ | 18,054 |
|
| $ | — |
|
| $ | 18,054 |
|
For the six months ended February 28, 2019:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||
Manufacturing |
| $ | 947,808 |
|
| $ | 53,056 |
|
| $ | 1,000,864 |
|
| $ | 50,845 |
|
| $ | 2,791 |
|
| $ | 53,636 |
|
Wheels, Repair & Parts |
|
| 233,821 |
|
|
| 24,839 |
|
|
| 258,660 |
|
|
| 6,070 |
|
|
| (546 | ) |
|
| 5,524 |
|
Leasing & Services |
|
| 81,565 |
|
|
| 8,910 |
|
|
| 90,475 |
|
|
| 38,543 |
|
|
| 7,553 |
|
|
| 46,096 |
|
Eliminations |
|
| — |
|
|
| (86,805 | ) |
|
| (86,805 | ) |
|
| — |
|
|
| (9,798 | ) |
|
| (9,798 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (40,950 | ) |
|
| — |
|
|
| (40,950 | ) |
|
| $ | 1,263,194 |
|
| $ | — |
|
| $ | 1,263,194 |
|
| $ | 54,508 |
|
| $ | — |
|
| $ | 54,508 |
|
Revenue | Earnings (loss) from operations | |||||||||||||||||||||||
(In thousands) | External | Intersegment | Total | External | Intersegment | Total | ||||||||||||||||||
Manufacturing | $ | 471,789 | $ | 6,201 | $ | 477,990 | $ | 36,855 | $ | 433 | $ | 37,288 | ||||||||||||
Wheels, Repair & Parts | 108,543 | 15,981 | 124,524 | 3,247 | 312 | 3,559 | ||||||||||||||||||
Leasing & Services | 24,191 | 5,999 | 30,190 | 17,513 | 5,452 | 22,965 | ||||||||||||||||||
Eliminations | — | (28,181 | ) | (28,181 | ) | — | (6,197 | ) | (6,197 | ) | ||||||||||||||
Corporate | — | — | — | (21,161 | ) | — | (21,161 | ) | ||||||||||||||||
$ | 604,523 | $ | — | $ | 604,523 | $ | 36,454 | $ | — | $ | 36,454 | |||||||||||||
|
| Total assets |
| |||||
(In thousands) |
| February 29, 2020 |
|
| August 31, 2019 |
| ||
Manufacturing |
| $ | 1,535,118 |
|
| $ | 1,606,571 |
|
Wheels, Repair & Parts |
|
| 314,069 |
|
|
| 306,725 |
|
Leasing & Services |
|
| 897,745 |
|
|
| 708,799 |
|
Unallocated |
|
| 200,728 |
|
|
| 368,542 |
|
|
| $ | 2,947,660 |
|
| $ | 2,990,637 |
|
Total assets | ||||||||
(In thousands) | November 30, | August 31, | ||||||
Manufacturing | $ | 1,568,338 | $ | 1,606,571 | ||||
Wheels, Repair & Parts | 317,786 | 306,725 | ||||||
Leasing & Services | 776,724 | 708,799 | ||||||
Unallocated | 285,928 | 368,542 | ||||||
$ | 2,948,776 | $ | 2,990,637 | |||||
20
THE GREENBRIER COMPANIES, INC.
Reconciliation of Earnings from operations to Earnings before income tax and earnings (loss) from unconsolidated affiliates:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| February 29, 2020 |
|
| February 28, 2019 |
| ||||
Earnings from operations |
| $ | 38,436 |
|
| $ | 18,054 |
|
| $ | 80,220 |
|
| $ | 54,508 |
|
Interest and foreign exchange |
|
| 12,609 |
|
|
| 9,237 |
|
|
| 25,461 |
|
|
| 13,641 |
|
Earnings before income tax and earnings (loss) from unconsolidated affiliates |
| $ | 25,827 |
|
| $ | 8,817 |
|
| $ | 54,759 |
|
| $ | 40,867 |
|
Three Months Ended November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Earnings from operations | $ | 41,784 | $ | 36,454 | ||||
Interest and foreign exchange | 12,852 | 4,404 | ||||||
Earnings before income tax and earnings from unconsolidated affiliates | $ | 28,932 | $ | 32,050 | ||||
Note 14 – Leases
Lessor
Equipment on operating leases is reported net of accumulated depreciation of $35.1$32.9 million and $44.2 million as of November 30, 2019February 29, 2020 and August 31, 2019, respectively. Depreciation expense was $3.5$3.0 million and $6.6 million for the three and six months ended November 30, 2019.February 29, 2020. In addition, certain railcar equipment
Aggregate minimum future amounts receivable under all
(in thousands) |
|
|
|
|
Remaining six months of 2020 |
| $ | 12,272 |
|
2021 |
|
| 22,314 |
|
2022 |
|
| 20,372 |
|
2023 |
|
| 14,812 |
|
2024 |
|
| 11,135 |
|
Thereafter |
|
| 22,009 |
|
|
| $ | 102,914 |
|
(in thousands) | ||||
Remaining nine months of 2020 | 24,502 | |||
2021 | 22,541 | |||
2022 | 21,019 | |||
2023 | 15,219 | |||
2024 | 11,371 | |||
Thereafter | 22,005 | |||
$ | 116,657 | |||
Lessee
The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements. As of and for the three and six months ended November 30, 2019,February 29, 2020, finance leases were not a material component of the Company’sCompany's lease portfolio.The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 79 years, with some including options to extend up to 15 years. The Company recognizes a lease liability and corresponding
The components of operating lease costs were as follows:
(in thousands) |
| Three months ended February 29, 2020 |
|
| Six months ended February 29, 2020 |
| ||
Operating lease expense |
| $ | 3,424 |
|
| $ | 6,850 |
|
Short-term lease expense |
|
| 3,217 |
|
|
| 4,730 |
|
Total |
| $ | 6,641 |
|
| $ | 11,580 |
|
(in thousands) | Three months ended November 30, 2019 | |||
Operating lease expense | $ | 3,422 | ||
Short-term lease expense | 1,406 | |||
Total | $ | 4,828 | ||
21
THE GREENBRIER COMPANIES, INC.
Aggregate minimum future amounts payable under operating leases having initial or remaining
(in thousands) |
|
|
|
|
Remaining six months of 2020 |
| $ | 6,153 |
|
2021 |
|
| 8,988 |
|
2022 |
|
| 5,935 |
|
2023 |
|
| 5,433 |
|
2024 |
|
| 3,948 |
|
Thereafter |
|
| 10,436 |
|
Total lease payments |
| $ | 40,893 |
|
Less: Imputed interest |
|
| (4,897 | ) |
Total lease obligations |
| $ | 35,996 |
|
(in thousands) | ||||
Remaining nine months of 2020 | $ | 9,355 | ||
2021 | 8,810 | |||
2022 | 5,765 | |||
2023 | 5,264 | |||
2024 | 3,814 | |||
Thereafter | 10,367 | |||
Total lease payments | $ | 43,375 | ||
Less: Imputed interest | (4,978 | ) | ||
Total lease obligations | $ | 38,397 | ||
The table below presents additional information related to the Company’s leases:
Weighted average remaining lease term | |||||
Operating leases | 14.4 years | ||||
Weighted average discount rate | |||||
Operating leases | 3.2 | % |
Supplemental cash flow information related to leases were as follows:
(in thousands) |
| Six months ended February 29, 2020 |
| |
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
Operating cash flows from operating leases |
| $ | 7,432 |
|
(in thousands) | Three months ended November 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ | 3,641 |
Note 15 – Commitments and Contingencies
Portland Harbor Superfund Site
The Company’sCompany's Portland, Oregon manufacturing facility is located adjacent to the Willamette River. In December 2000, the U.S. Environmental Protection Agency (EPA) classified portions of the Willamette River bed known as the Portland Harbor, including the portion fronting the Company’sCompany's manufacturing facility, as a federal “National"National Priority List”List" or “Superfund”"Superfund" site due to sediment contamination (the Portland Harbor Site). The Company and more than 140 other parties have received a “General Notice”"General Notice" of potential liability from the EPA relating to the Portland Harbor Site. The letter advised the Company that it may be liable for the costs of investigation and remediation (which liability
22
THE GREENBRIER COMPANIES, INC.
Separate from the process described above, which focused on the type of remediation to be performed at the Portland Harbor Site and the schedule for such remediation, 83 parties, including the State of Oregon and the federal government, entered into a16, 2020.It is likely to be further stayed to allow the allocation process to continue.
The EPA’sEPA's January 6, 2017 ROD identifies a
The ROD does not address responsibility for the costs of
On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including the Company as well as the United States and the State of Oregon for costs it incurred in assessing alleged natural resource damages to the Columbia River from contaminants deposited in Portland Harbor.
23
THE GREENBRIER COMPANIES, INC.
Oregon Department of Environmental Quality (DEQ) Regulation of Portland Manufacturing Operations
The Company has entered into a Voluntary Cleanup Agreement with the Oregon Department of Environmental Quality (DEQ) in which the Company agreed to conduct an investigation of whether, and to what extent, past or present operations at the Portland property may have released hazardous substances into the environment. The Company has also signed an Order on Consent with the DEQ to finalize the investigation of potential onsite sources of contamination that may have a release pathway to the Willamette River. Interim precautionary measures are also required in the order and the Company is discussing with the DEQ potential remedial actions which may be required. The Company’sCompany's aggregate expenditure has not been material, however the Company could incur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties.
Other Litigation, Commitments and Contingencies
In connection with the acquisition of the manufacturing business of ARI, the Company agreed to assume potential legacy liabilities (known and unknown) related to railcars manufactured by ARI. Among these potential liabilities are certain retrofit and repair obligations arising from regulatory actions by the Federal Railroad Administration and the Association of American Railroads. In some cases, the seller shares with the Company the costs of these retrofit and repair obligations. The Company currently is not able to determine if any of these liabilities will have a material adverse impact on the Company’s results of operations.
From time to time, Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcomes of which cannot be predicted with certainty. While the ultimate outcome of such legal proceedings cannot be determined at this time, the Company believes that the resolution of pending litigation will not have a material adverse effect on the Company’sCompany's Consolidated Financial Statements.
As of November 30, 2019,February 29, 2020, the Company had outstanding letters of credit aggregating to $24.9$27.5 million associated with performance guarantees, facility leases and workers compensation insurance.
As of November 30, 2019,February 29, 2020, the Company had a $4.5 million note receivable from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a
Note 16 – Fair Value Measures
Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value, for this disclosure, is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1
Level 2
Level 3
24
THE GREENBRIER COMPANIES, INC.
Assets and liabilities measured at fair value on a recurring basis as of November 30, 2019February 29, 2020 were:
(In thousands) |
| Total |
|
| Level 1 |
|
| Level 2 (1) |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 527 |
|
| $ | — |
|
| $ | 527 |
|
| $ | — |
|
Nonqualified savings plan investments |
|
| 31,766 |
|
|
| 31,766 |
|
|
| — |
|
|
| — |
|
Cash equivalents |
|
| 23,166 |
|
|
| 23,166 |
|
|
| — |
|
|
| — |
|
|
| $ | 55,459 |
|
| $ | 54,932 |
|
| $ | 527 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 12,979 |
|
| $ | — |
|
| $ | 12,979 |
|
| $ | — |
|
(In thousands) | Total | Level 1 | Level 2 (1) | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
Derivative financial instruments | $ | 442 | $ | — | $ | 442 | $ | — | ||||||||
Nonqualified savings plan investments | 31,248 | 31,248 | — | — | ||||||||||||
Cash equivalents | 58,006 | 58,006 | — | — | ||||||||||||
$ | 89,696 | $ | 89,254 | $ | 442 | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Derivative financial instruments | $ | 8,174 | $ | — | $ | 8,174 | $ | — |
(1) | Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 12 |
Assets and liabilities measured at fair value on a recurring basis as of August 31, 2019 were:
(In thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 64 |
|
| $ | — |
|
| $ | 64 |
|
| $ | — |
|
Nonqualified savings plan investments |
|
| 27,967 |
|
|
| 27,967 |
|
|
| — |
|
|
| — |
|
Cash equivalents |
|
| 68,100 |
|
|
| 68,100 |
|
|
| — |
|
|
| — |
|
|
| $ | 96,131 |
|
| $ | 96,067 |
|
| $ | 64 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 11,279 |
|
| $ | — |
|
| $ | 11,279 |
|
| $ | — |
|
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
Derivative financial instruments | $ | 64 | $ | — | $ | 64 | $ | — | ||||||||
Nonqualified savings plan investments | 27,967 | 27,967 | — | — | ||||||||||||
Cash equivalents | 68,100 | 68,100 | — | — | ||||||||||||
$ | 96,131 | $ | 96,067 | $ | 64 | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Derivative financial instruments | $ | 11,279 | $ | — | $ | 11,279 | $ | — |
Note 17 – Related Party Transactions
In June 2017, the Company purchased a 40% interest in the common equity of an entity that buys and sells railcar assets that are leased to third parties. The railcars sold to this leasing warehouse are principally built by Greenbrier. The Company accounts for this leasing warehouse investment under the equity method of accounting. As of November 30, 2019,February 29, 2020, the carrying amount of the investment was $5.2$5.4 million which is classified in Investment in unconsolidated affiliates in the Consolidated Balance Sheet. Upon sale of railcars to this entity from Greenbrier, 60% of the related revenue and margin is recognized and 40% is deferred until the railcars are ultimately sold by the entity.
On November 1, 2019, the Company increased its ownership interest in Amsted-Maxion Cruzeiro from 24.5% to 29.5%. This transaction included a conversion to equity of $4.8 million from a note receivable, including accrued interest, and a
The Company has a 41.9% interest in Axis, LLC (Axis), a joint venture. The Company obtained its ownership interest in Axis as part of the acquisition of the manufacturing business of ARI on July 26, 2019. For the three and six months ended November 30, 2019,February 29, 2020, the Company purchased $4.0$3.2 million and $7.2 million of railcar components from Axis.
25
THE GREENBRIER COMPANIES, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
We operate in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. Our segments are operationally integrated. The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland, Romania and Turkey, produces double-stack intermodal railcars, tank cars, conventional railcars, automotive railcar products and marine vessels. The Wheels, Repair & Parts segment performs wheel and axle servicing; railcar repair, refurbishment and maintenance; as well as production of a variety of parts for the rail industry in North America. The Leasing & Services segment owns approximately 9,30010,300 railcars and provides management services for approximately 385,000389,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America as of November 30, 2019.February 29, 2020. Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil and a lease financing warehouse.
Our total manufacturing backlog of railcar units, for direct sale or lease to a third party, as of November 30, 2019February 29, 2020 was approximately 28,50030,800 units with an estimated value of $3.09$3.16 billion. Approximately 4%9% of backlog units and 2%6% of estimated backlog value as of November 30, 2019 wasFebruary 29, 2020 were associated with our Brazilian manufacturing operations which isare accounted for under the equity method. Backlog units for lease may be syndicated to third parties or held in our own fleet depending on a variety of factors. Multi-year supply agreements are a part ofcommon in the rail industry practice.industry. A portion of the orders included in backlog reflects an assumed product mix. Under the terms of the orders, the exact mix and pricing will be determined in the future, which may impact backlog. Marine backlog as of November 30, 2019February 29, 2020 was $80$59 million.
Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Subsequent to the quarter, we agreed in principle to remove 575 units in backlog in exchange for financial consideration. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time. We cannot guarantee that our reported backlog will convert to revenue in any particular period, if at all.
We expect that the COVID-19 coronavirus pandemic and the related governmental reaction will negatively impact our business including our liquidity and financial position, results of operations, stock price and ability to convert backlog to revenue among other negative impacts. These risks to our business are more fully described in Part II, item 1A “Risk Factors” of this Quarterly Report on Form 10-Q. We are closely monitoring the impact of COVID-19 on all aspects of our business. COVID-19 emerged in Asia at the end of calendar year 2019. Because we have no operations in Asia, the negative impact of COVID-19 did not materially impact our financial condition and results of operations during our quarter ended February 29, 2020. Our business operates within a critical infrastructure sector as established by the Cybersecurity & Infrastructure Security Agency of the Department of Homeland Security. Thus, as of the date of the filing of this Quarterly Report our manufacturing, repair shops, and wheel shops in the United States generally are permitted to continue to operate subject to enhanced safety protocols, both voluntary and government mandated, that are aimed to protect the health of our workforce. The situation is similar in our manufacturing facilities and shops in Mexico, Europe, Brazil and Turkey which also have continued to operate subject to enhanced health and safety protocols. At this time, while we have identified risks discussed in Part II, Item 2A of this Quarterly Report on Form 10-Q, we are unable to predict specifically how the COVID-19 coronavirus pandemic and related governmental reaction will negatively impact our business due to numerous uncertainties, including the duration of the pandemic, the impact to our customers, suppliers and employees, actions that may be taken by governmental authorities, including preventing or curtailing the operations of our plants and/or shops, and other consequences. We expect that negative impacts related to the COVID-19 coronavirus pandemic will be reflected in our Quarterly Report on Form 10-Q for the quarter ended May 31, 2020.
26
THE GREENBRIER COMPANIES, INC.
Three Months Ended November 30, 2019February 29, 2020 Compared to the Three Months Ended November 30, 2018
Overview
Revenue, cost of revenue, margin and operating profit presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
|
| Three Months Ended |
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 489,943 |
|
| $ | 476,019 |
|
Wheels, Repair & Parts |
|
| 91,225 |
|
|
| 125,278 |
|
Leasing & Services |
|
| 42,680 |
|
|
| 57,374 |
|
|
|
| 623,848 |
|
|
| 658,671 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 422,309 |
|
|
| 442,996 |
|
Wheels, Repair & Parts |
|
| 84,373 |
|
|
| 118,455 |
|
Leasing & Services |
|
| 30,830 |
|
|
| 43,376 |
|
|
|
| 537,512 |
|
|
| 604,827 |
|
Margin: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 67,634 |
|
|
| 33,023 |
|
Wheels, Repair & Parts |
|
| 6,852 |
|
|
| 6,823 |
|
Leasing & Services |
|
| 11,850 |
|
|
| 13,998 |
|
|
|
| 86,336 |
|
|
| 53,844 |
|
Selling and administrative |
|
| 54,597 |
|
|
| 47,892 |
|
Net gain on disposition of equipment |
|
| (6,697 | ) |
|
| (12,102 | ) |
Earnings from operations |
|
| 38,436 |
|
|
| 18,054 |
|
Interest and foreign exchange |
|
| 12,609 |
|
|
| 9,237 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
|
| 25,827 |
|
|
| 8,817 |
|
Income tax expense |
|
| (7,463 | ) |
|
| (2,248 | ) |
Earnings before earnings (loss) from unconsolidated affiliates |
|
| 18,364 |
|
|
| 6,569 |
|
Earnings (loss) from unconsolidated affiliates |
|
| 1,651 |
|
|
| (786 | ) |
Net earnings |
|
| 20,015 |
|
|
| 5,783 |
|
Net earnings attributable to noncontrolling interest |
|
| (6,386 | ) |
|
| (3,018 | ) |
Net earnings attributable to Greenbrier |
| $ | 13,629 |
|
| $ | 2,765 |
|
Diluted earnings per common share |
| $ | 0.41 |
|
| $ | 0.08 |
|
Three Months Ended November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Revenue: | ||||||||
Manufacturing | $ | 657,367 | $ | 471,789 | ||||
Wheels, Repair & Parts | 86,608 | 108,543 | ||||||
Leasing & Services | 25,384 | 24,191 | ||||||
769,359 | 604,523 | |||||||
Cost of revenue: | ||||||||
Manufacturing | 581,912 | 417,805 | ||||||
Wheels, Repair & Parts | 81,892 | 100,978 | ||||||
Leasing & Services | 13,366 | 13,207 | ||||||
677,170 | 531,990 | |||||||
Margin: | ||||||||
Manufacturing | 75,455 | 53,984 | ||||||
Wheels, Repair & Parts | 4,716 | 7,565 | ||||||
Leasing & Services | 12,018 | 10,984 | ||||||
92,189 | 72,533 | |||||||
Selling and administrative | 54,364 | 50,432 | ||||||
Net gain on disposition of equipment | (3,959 | ) | (14,353 | ) | ||||
Earnings from operations | 41,784 | 36,454 | ||||||
Interest and foreign exchange | 12,852 | 4,404 | ||||||
Earnings before income taxes and earnings from unconsolidated affiliates | 28,932 | 32,050 | ||||||
Income tax expense | (5,994 | ) | (9,135 | ) | ||||
Earnings before earnings from unconsolidated affiliates | 22,938 | 22,915 | ||||||
Earnings from unconsolidated affiliates | 1,073 | 467 | ||||||
Net earnings | 24,011 | 23,382 | ||||||
Net earnings attributable to noncontrolling interest | (16,342 | ) | (5,426 | ) | ||||
Net earnings attributable to Greenbrier | $ | 7,669 | $ | 17,956 | ||||
Diluted earnings per common share | $ | 0.23 | $ | 0.54 |
Performance for our segments is evaluated based on Earnings from operations (operating profit). Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.
|
| Three Months Ended |
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Operating profit (loss): |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 46,105 |
|
| $ | 13,990 |
|
Wheels, Repair & Parts |
|
| 3,320 |
|
|
| 2,823 |
|
Leasing & Services |
|
| 12,793 |
|
|
| 21,030 |
|
Corporate |
|
| (23,782 | ) |
|
| (19,789 | ) |
|
| $ | 38,436 |
|
| $ | 18,054 |
|
Three Months Ended November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Operating profit (loss): | ||||||||
Manufacturing | $ | 53,143 | $ | 36,855 | ||||
Wheels, Repair & Parts | 1,114 | 3,247 | ||||||
Leasing & Services | 9,777 | 17,513 | ||||||
Corporate | (22,250 | ) | (21,161 | ) | ||||
$41,784 | $36,454 | |||||||
27
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
| Three Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 623,848 |
|
| $ | 658,671 |
|
| $ | (34,823 | ) |
|
| (5.3 | %) |
Cost of revenue |
| $ | 537,512 |
|
| $ | 604,827 |
|
| $ | (67,315 | ) |
|
| (11.1 | %) |
Margin (%) |
|
| 13.8 | % |
|
| 8.2 | % |
|
| 5.6 | % |
| * |
| |
Net earnings attributable to Greenbrier |
| $ | 13,629 |
|
| $ | 2,765 |
|
| $ | 10,864 |
|
|
| 392.9 | % |
Three Months Ended November 30, | Increase | % | ||||||||||||||
(In thousands) | 2019 | 2018 | (Decrease) | Change | ||||||||||||
Revenue | $ | 769,359 | $ | 604,523 | $ | 164,836 | 27.3 | % | ||||||||
Cost of revenue | $ | 677,170 | $ | 531,990 | $ | 145,180 | 27.3 | % | ||||||||
Margin (%) | 12.0 | % | 12.0 | % | — | * | ||||||||||
Net earnings attributable to Greenbrier | $ | 7,669 | $ | 17,956 | $ | (10,287 | ) | (57.3 | %) |
* | Not meaningful |
As of July 26, 2019, the consolidated results included the results of the manufacturing business of ARI. This contributed to the increase inincreased revenue and cost of revenue for the three months ended November 30, 2019February 29, 2020 compared to the prior year.
Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various average selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our results of operations.
The 27.3% increase5.3% decrease in revenue for the three months ended November 30, 2019February 29, 2020 as compared to the three months ended November 30, 2018February 28, 2019 was primarily due to a 39.3% increase in Manufacturing revenue primarily attributed to a 40.5% increase in the volume of railcar deliveries. This was partially offset by a 20.2%27.2% decrease in Wheels, Repair & Parts revenue primarily due tofrom lower wheelset, component and componentparts volumes due to lower demand, lower repair revenue primarily from four fewer shops in the current period and a decrease in scrap metal pricing.
The 27.3% increase11.1% decrease in cost of revenue for the three months ended November 30, 2019February 29, 2020 as compared to the three months ended November 30, 2018February 28, 2019 was primarily due to a 39.3% increase28.8% decrease in Wheels, Repair & Parts cost of revenue from lower costs associated with a reduction in wheelset, component and parts volumes and four fewer repair shops in the current period. The decrease in cost of revenue was also due to a 4.7% decline in Manufacturing cost of revenue primarily attributed to a 40.5% increase17.8% decrease in the volume of railcar deliveries. This was partially offset by an 18.9% decrease in Wheels, Repair & Parts cost of revenue primarily due to lower costs associated with a reduction in wheelset and component volumes and lower costs from four fewer repair shops in the current period.
Margin as a percentage of revenue was 12.0%13.8% and 8.2% for both the three months ended November 30,February 29, 2020 and February 28, 2019, and 2018.respectively. The overall margin as a percentage of revenue was positively impacted by an increase in Manufacturing margin to 11.5%13.8% from 11.4%6.9% primarily attributed to a change in product mix partially offset by operating inefficiencies at some of our manufacturing facilities. The overall margin as a percentage of revenue was negatively impacted by a decrease in Wheels, Repair & Parts margin to 5.4% from 7.0% primarily attributed to operating at lower volumes and a decrease in scrap metal pricing.
The $10.3$10.9 million decreaseincrease in Net earnings attributable to Greenbrier for the three months ended November 30, 2019February 29, 2020 as compared to the three months ended November 30, 2018February 28, 2019 was primarily attributable to an increase in Net earnings attributable to noncontrolling interest, which is deductedmargin from Net earnings.a change in product mix and the contract modification fee received during the three months ended February 29, 2020. This was partially offset by an increase in Selling and administrative expense from higher employee related costs and the addition of the manufacturing business of ARI selling and administrative costs. The decreaseincrease in Net earnings attributable to Greenbrier was also due topartially offset by a reductiondecrease in Net gain on disposition of equipment and an increase in Interest and foreign exchange primarily due a change in the Mexican Peso relative to the U.S. Dollar and interest expense associated with our $300 million of senior term debt issued in July 2019. These were partially offset by an increase in margin primarily attributed to a 40.5% increase in the volume of railcar deliveries.
28
THE GREENBRIER COMPANIES, INC.
Manufacturing Segment
|
| Three Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 489,943 |
|
| $ | 476,019 |
|
| $ | 13,924 |
|
|
| 2.9 | % |
Cost of revenue |
| $ | 422,309 |
|
| $ | 442,996 |
|
| $ | (20,687 | ) |
|
| (4.7 | %) |
Margin (%) |
|
| 13.8 | % |
|
| 6.9 | % |
|
| 6.9 | % |
| * |
| |
Operating profit ($) |
| $ | 46,105 |
|
| $ | 13,990 |
|
| $ | 32,115 |
|
|
| 229.6 | % |
Operating profit (%) |
|
| 9.4 | % |
|
| 2.9 | % |
|
| 6.5 | % |
| * |
| |
Deliveries |
|
| 3,700 |
|
|
| 4,500 |
|
|
| (800 | ) |
|
| (17.8 | %) |
Three Months Ended November 30, | Increase | % | ||||||||||||||
(In thousands) | 2019 | 2018 | (Decrease) | Change | ||||||||||||
Revenue | $ | 657,367 | $ | 471,789 | $ | 185,578 | 39.3 | % | ||||||||
Cost of revenue | $ | 581,912 | $ | 417,805 | $ | 164,107 | 39.3 | % | ||||||||
Margin (%) | 11.5 | % | 11.4 | % | 0.1 | % | * | |||||||||
Operating profit ($) | $ | 53,143 | $ | 36,855 | $ | 16,288 | 44.2 | % | ||||||||
Operating profit (%) | 8.1 | % | 7.8 | % | 0.3 | % | * | |||||||||
Deliveries | 5,900 | 4,200 | 1,700 | 40.5 | % |
* Not meaningful
As of July 26, 2019, the Manufacturing segment included the results of the manufacturing business of ARI which is consolidated for financial reporting purposes. This contributed to the increase inincreased Manufacturing revenue and cost of revenue for the three months ended November 30, 2019February 29, 2020 compared to the prior year.
Manufacturing revenue increased $185.6$13.9 million or 39.3%2.9% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increase in revenue was primarily attributed to a 40.5% increasechange in product mix and a $12.9 million customer order contract modification fee received during the volume ofthree months ended February 29, 2020. These were partially offset by a 17.8% decrease in railcar deliveries. Manufacturing revenue for the three months ended November 30, 2019February 29, 2020 included $103.5$107.2 million in revenue associated with the acquired manufacturing business of ARI.
Manufacturing cost of revenue increased $164.1decreased $20.7 million or 39.3%4.7% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increasedecrease in cost of revenue was primarily attributed to a 40.5% increase17.8% decrease in the volume of railcar deliveries.deliveries partially offset by a change in product mix. Manufacturing cost of revenue for the three months ended November 30, 2019February 29, 2020 included $106.1$104.9 million in costs associated with the acquired manufacturing business of ARI.
Manufacturing margin as a percentage of revenue increased 0.1%6.9% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increase was primarily attributed to a change in product mix partially offset by operating inefficiencies at our recently acquired manufacturing facilities.
Manufacturing operating profit increased $32.1 million or 229.6% for the three months ended February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increase in operating profit was primarily attributed to an increasea change in product mix and the contract modification fee received during the three months ended February 29, 2020. Operating profit for the three months ended February 28, 2019 was negatively impacted by railcar contract loss accruals in the volume of railcar deliveries. This was partially offset by operating inefficiencies and integration and acquisition-related expenses from the newly acquired manufacturing business of ARI.
29
THE GREENBRIER COMPANIES, INC.
Wheels, Repair & Parts Segment
|
| Three Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 91,225 |
|
| $ | 125,278 |
|
| $ | (34,053 | ) |
|
| (27.2 | %) |
Cost of revenue |
| $ | 84,373 |
|
| $ | 118,455 |
|
| $ | (34,082 | ) |
|
| (28.8 | %) |
Margin (%) |
|
| 7.5 | % |
|
| 5.4 | % |
|
| 2.1 | % |
| * |
| |
Operating profit ($) |
| $ | 3,320 |
|
| $ | 2,823 |
|
| $ | 497 |
|
|
| 17.6 | % |
Operating profit (%) |
|
| 3.6 | % |
|
| 2.3 | % |
|
| 1.3 | % |
| * |
|
Three Months Ended November 30, | Increase (Decrease) | % Change | ||||||||||||||
(In thousands) | 2019 | 2018 | ||||||||||||||
Revenue | $ | 86,608 | $ | 108,543 | $ | (21,935 | ) | (20.2 | %) | |||||||
Cost of revenue | $ | 81,892 | $ | 100,978 | $ | (19,086 | ) | (18.9 | %) | |||||||
Margin (%) | 5.4 | % | 7.0 | % | (1.6 | %) | * | |||||||||
Operating profit ($) | $ | 1,114 | $ | 3,247 | $ | (2,133 | ) | (65.7 | %) | |||||||
Operating profit (%) | 1.3 | % | 3.0 | % | (1.7 | %) | * |
* Not meaningful
Wheels, Repair & Parts revenue decreased $21.9$34.1 million or 20.2%27.2% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The decrease was primarily due to lower wheelset, component and componentparts volumes due to lower demand, lower repair revenue primarily from four fewer shops in the current period and a decrease in scrap metal pricing.
Wheels, Repair & Parts cost of revenue decreased $19.1$34.1 million or 18.9%28.8% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The decrease was primarily due to lower costs associated with a reduction in wheelset, component and componentparts volumes and four fewer repair shops in the current period.
Wheels, Repair & Parts margin as a percentage of revenue decreased 1.6%increased 2.1% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The decreaseincrease was primarily attributed to operatingefficiencies at lower volumes andour repair shops in the current period. In addition, the three months ended February 28, 2019 was negatively impacted by costs associated with closing sites in our repair network. These factors which had a positive impact to Wheels, Repair & Parts margin as a percentage of revenue compared to the prior year, were partially offset by a decrease in scrap metal pricing.
Wheels, Repair & Parts operating profit decreased $2.1increased $0.5 million or 65.7%17.6% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The decreaseincrease was primarily due to a reductionefficiencies at our repair shops in volumes and a decrease in scrap metal pricing.
30
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
| Three Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 42,680 |
|
| $ | 57,374 |
|
| $ | (14,694 | ) | �� |
| (25.6 | %) |
Cost of revenue |
| $ | 30,830 |
|
| $ | 43,376 |
|
| $ | (12,546 | ) |
|
| (28.9 | %) |
Margin (%) |
|
| 27.8 | % |
|
| 24.4 | % |
|
| 3.4 | % |
| * |
| |
Operating profit ($) |
| $ | 12,793 |
|
| $ | 21,030 |
|
| $ | (8,237 | ) |
|
| (39.2 | %) |
Operating profit (%) |
|
| 30.0 | % |
|
| 36.7 | % |
|
| (6.7 | %) |
| * |
|
Three Months Ended November 30, | Increase (Decrease) | % Change | ||||||||||||||
(In thousands) | 2019 | 2018 | ||||||||||||||
Revenue | $ | 25,384 | $ | 24,191 | $ | 1,193 | 4.9 | % | ||||||||
Cost of revenue | $ | 13,366 | $ | 13,207 | $ | 159 | 1.2 | % | ||||||||
Margin (%) | 47.3 | % | 45.4 | % | 1.9 | % | * | |||||||||
Operating profit ($) | $ | 9,777 | $ | 17,513 | $ | (7,736 | ) | (44.2 | %) | |||||||
Operating profit (%) | 38.5 | % | 72.4 | % | (33.9 | %) | * |
* Not meaningful
The Leasing & Services segment generates revenue from leasing railcars from its lease fleet, providing various management services, interim rent on leased railcars for syndication, and the sale of railcars purchased from third parties with the intent to resell them.resell. The gross proceeds from the sale of these railcars are recorded in revenue and the costs of purchasing these railcars are recorded in cost of revenue.
Leasing & Services revenue increased $1.2decreased $14.7 million or 4.9%25.6% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increasedecrease was primarily attributed to a decrease in the sale of railcars which we had purchased from third parties with the intent to resell. This was partially offset by higher leasing revenue from our lease fleet and an increase in management services revenue.
Leasing & Services cost of revenue increased $0.2decreased $12.5 million or 1.2%28.9% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The increasedecrease was primarily due to a decrease in the volume of railcars sold that we purchased from third parties partially offset by higher costs associated with an increase in management services activity.
Leasing & Services margin as a percentage of revenue increased 1.9%3.4% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. Margin as a percentage of revenue for the three months ended February 29, 2020 benefited from fewer sales of railcars that we purchased from third parties which have lower margin percentages. The increase in margin as a percentage of revenue was primarily attributedalso due to lower transportation costs.
Leasing & Services operating profit decreased $7.7$8.2 million or 44.2%39.2% for the three months ended November 30, 2019February 29, 2020 compared to the three months ended November 30, 2018.February 28, 2019. The decrease was primarily attributed to a $7.5$5.4 million decrease in net gain on disposition of equipment.
31
THE GREENBRIER COMPANIES, INC.
Selling and Administrative Expense
|
| Three Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Selling and administrative expense |
| $ | 54,597 |
|
| $ | 47,892 |
|
| $ | 6,705 |
|
|
| 14.0 | % |
Three Months Ended November 30, | Increase (Decrease) | % Change | ||||||||||||||
(In thousands) | 2019 | 2018 | ||||||||||||||
Selling and administrative expense | $ | 54,364 | $ | 50,432 | $ | 3,932 | 7.8 | % |
Selling and administrative expense was $54.4$54.6 million or 7.1%8.8% of revenue for the three months ended November 30, 2019February 29, 2020 compared to $50.4$47.9 million or 8.3%7.3% of revenue for the prior comparable period. The $3.9$6.7 million increase was primarily attributed to $3.0a $5.3 million increase in employee related costs and $2.8 million from the addition of the manufacturing business of ARI selling and administrative costs. These were partially offset by $2.1 million in transaction related costs and a $0.9 million increase in employee related costs.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $4.0$6.7 million for the three months ended November 30, 2019February 29, 2020 compared to $14.4$12.1 million for the prior comparable period. Net gain on disposition of equipment primarily includes the sale of assets from our lease fleet (Equipment on operating leases, net) that are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity; and disposition of property, plant and equipment.
Other Costs
Interest and foreign exchange expense was composed of the following:
|
| Three Months Ended |
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
| |||
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
| $ | 10,329 |
|
| $ | 7,617 |
|
| $ | 2,712 |
|
Foreign exchange loss |
|
| 2,280 |
|
|
| 1,620 |
|
|
| 660 |
|
|
| $ | 12,609 |
|
| $ | 9,237 |
|
| $ | 3,372 |
|
Three Months Ended November 30, | Increase (Decrease) | |||||||||||
(In thousands) | 2019 | 2018 | ||||||||||
Interest and foreign exchange: | ||||||||||||
Interest and other expense | $ | 10,239 | $ | 7,165 | $ | 3,074 | ||||||
Foreign exchange (gain) loss | 2,613 | (2,761 | ) | 5,374 | ||||||||
$ | 12,852 | $ | 4,404 | $ | 8,448 | |||||||
The $8.4$3.4 million increase in interest and foreign exchange expense from the prior comparable period was primarily attributed to interest expense associated with our $300 million of senior term debt issued in July 2019.
Income Tax
The effective tax rate for the three months ended February 29, 2020 was 28.9% compared to 25.5% for the three months ended February 28, 2019. The increase in the effective rate from the prior year was primarily attributable to net unfavorable discrete items in the current quarter compared to net favorable discrete items in the prior comparable period. Excluding the impact of discrete items in both periods, the effective tax rate was 25.5% for the three months ended February 29, 2020 compared to 29.8% in the prior comparable period which decreased primarily due to the geographic mix of earnings.
The effective tax rate can fluctuate year-to-year due to changes in the mix of foreign and domestic pre-tax earnings. It can also fluctuate with changes in the proportion of pre-tax earnings attributable to our Mexican railcar manufacturing joint venture. The joint venture is treated as a partnership for tax purposes and, as a result, the partnership’s entire pre-tax earnings are included in Earnings before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.
32
THE GREENBRIER COMPANIES, INC.
Earnings (Loss) From Unconsolidated Affiliates
Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil and a lease financing warehouse.
Earnings from unconsolidated affiliates was $1.7 million for the three months ended February 29, 2020 compared to a loss from unconsolidated affiliates of $0.8 million for the three months ended February 28, 2019. The increase in earnings from unconsolidated affiliates was primarily related to earnings from our investment in Axis, a joint venture that manufactures and sells axles to its joint venture partners. We obtained our ownership interest in Axis as part of the acquisition of the manufacturing business of ARI on July 26, 2019.
Noncontrolling Interest
Net earnings attributable to noncontrolling interest was $6.4 million for the three months ended February 29, 2020 compared to $3.0 million in the prior comparable period, which primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint venture, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.
33
THE GREENBRIER COMPANIES, INC.
Six Months Ended February 29, 2020 Compared to the Six Months Ended February 28, 2019
Overview
Revenue, cost of revenue, margin and operating profit presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
|
| Six Months Ended |
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 1,147,310 |
|
| $ | 947,808 |
|
Wheels, Repair & Parts |
|
| 177,833 |
|
|
| 233,821 |
|
Leasing & Services |
|
| 68,064 |
|
|
| 81,565 |
|
|
|
| 1,393,207 |
|
|
| 1,263,194 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 1,004,221 |
|
|
| 860,801 |
|
Wheels, Repair & Parts |
|
| 166,265 |
|
|
| 219,433 |
|
Leasing & Services |
|
| 44,196 |
|
|
| 56,583 |
|
|
|
| 1,214,682 |
|
|
| 1,136,817 |
|
Margin: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 143,089 |
|
|
| 87,007 |
|
Wheels, Repair & Parts |
|
| 11,568 |
|
|
| 14,388 |
|
Leasing & Services |
|
| 23,868 |
|
|
| 24,982 |
|
|
|
| 178,525 |
|
|
| 126,377 |
|
Selling and administrative |
|
| 108,961 |
|
|
| 98,324 |
|
Net gain on disposition of equipment |
|
| (10,656 | ) |
|
| (26,455 | ) |
Earnings from operations |
|
| 80,220 |
|
|
| 54,508 |
|
Interest and foreign exchange |
|
| 25,461 |
|
|
| 13,641 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
|
| 54,759 |
|
|
| 40,867 |
|
Income tax expense |
|
| (13,457 | ) |
|
| (11,383 | ) |
Earnings before earnings (loss) from unconsolidated affiliates |
|
| 41,302 |
|
|
| 29,484 |
|
Earnings (loss) from unconsolidated affiliates |
|
| 2,724 |
|
|
| (319 | ) |
Net earnings |
|
| 44,026 |
|
|
| 29,165 |
|
Net earnings attributable to noncontrolling interest |
|
| (22,728 | ) |
|
| (8,444 | ) |
Net earnings attributable to Greenbrier |
| $ | 21,298 |
|
| $ | 20,721 |
|
Diluted earnings per common share |
| $ | 0.64 |
|
| $ | 0.63 |
|
Performance for our segments is evaluated based on Earnings from operations (operating profit). Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.
|
| Six Months Ended |
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Operating profit (loss): |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 99,248 |
|
| $ | 50,845 |
|
Wheels, Repair & Parts |
|
| 4,434 |
|
|
| 6,070 |
|
Leasing & Services |
|
| 22,570 |
|
|
| 38,543 |
|
Corporate |
|
| (46,032 | ) |
|
| (40,950 | ) |
|
| $ | 80,220 |
|
| $ | 54,508 |
|
34
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
| Six Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 1,393,207 |
|
| $ | 1,263,194 |
|
| $ | 130,013 |
|
|
| 10.3 | % |
Cost of revenue |
| $ | 1,214,682 |
|
| $ | 1,136,817 |
|
| $ | 77,865 |
|
|
| 6.8 | % |
Margin (%) |
|
| 12.8 | % |
|
| 10.0 | % |
|
| 2.8 | % |
| * |
| |
Net earnings attributable to Greenbrier |
| $ | 21,298 |
|
| $ | 20,721 |
|
| $ | 577 |
|
|
| 2.8 | % |
* | Not meaningful |
As of July 26, 2019, the consolidated results included the results of the manufacturing business of ARI. This increased revenue and cost of revenue for the six months ended February 29, 2020 compared to the prior year.
Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various average selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our results of operations.
The 10.3% increase in revenue for the six months ended February 29, 2020 as compared to the six months ended February 28, 2019 was primarily due to a 21.0% increase in Manufacturing revenue primarily attributed to a 10.3% increase in railcar deliveries and a change in product mix. This was partially offset by a 23.9% decrease in Wheels, Repair & Parts revenue primarily due to lower wheelset, component and parts volumes due to lower demand, lower repair revenue primarily from four fewer shops in the current year and a decrease in scrap metal pricing.
The 6.8% increase in cost of revenue for the six months ended February 29, 2020 as compared to the six months ended February 28, 2019 was primarily due to a 16.7% increase in Manufacturing cost of revenue primarily attributed to a 10.3% increase in the volume of railcar deliveries. This was partially offset by a 24.2% decrease in Wheels, Repair & Parts cost of revenue primarily due to lower costs associated with a reduction in wheelset, component and parts volumes and four fewer repair shops in the current period.
Margin as a percentage of revenue was 12.8% and 10.0% for the six months ended February 29, 2020 and February 28, 2019, respectively. The overall margin as a percentage of revenue was positively impacted by an increase in Manufacturing margin to 12.5% from 9.2% primarily attributed to a change in product mix and a customer order contract modification fee received during the six months ended February 29, 2020.
Net earnings attributable to Greenbrier is impacted by our operating activities and noncontrolling interest associated with our 50/50 joint venture at one of our Mexican railcar manufacturing facilities and our 75% interest in Greenbrier-Astra Rail, both of which we consolidate for financial reporting purposes. The $0.6 million increase in Net earnings attributable to Greenbrier for the six months ended February 29, 2020 as compared to the prior comparable period was primarily attributable to an increase in margin due to a higher volume of railcar deliveries. This was partially offset by higher Net earnings attributable to noncontrolling interest. The higher Net earnings attributable to noncontrolling interest was a result of our Mexican railcar manufacturing 50/50 joint venture operating at higher volumes and margins.
35
THE GREENBRIER COMPANIES, INC.
Manufacturing Segment
|
| Six Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 1,147,310 |
|
| $ | 947,808 |
|
| $ | 199,502 |
|
|
| 21.0 | % |
Cost of revenue |
| $ | 1,004,221 |
|
| $ | 860,801 |
|
| $ | 143,420 |
|
|
| 16.7 | % |
Margin (%) |
|
| 12.5 | % |
|
| 9.2 | % |
|
| 3.3 | % |
| * |
| |
Operating profit ($) |
| $ | 99,248 |
|
| $ | 50,845 |
|
| $ | 48,403 |
|
|
| 95.2 | % |
Operating profit (%) |
|
| 8.7 | % |
|
| 5.4 | % |
|
| 3.3 | % |
| * |
| |
Deliveries |
|
| 9,600 |
|
|
| 8,700 |
|
|
| 900 |
|
|
| 10.3 | % |
* | Not meaningful |
As of July 26, 2019, the Manufacturing segment included the results of the manufacturing business of ARI which is consolidated for financial reporting purposes. This increased Manufacturing revenue and cost of revenue for the six months ended February 29, 2020 compared to the prior year.
Manufacturing revenue increased $199.5 million or 21.0% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The increase in revenue was primarily attributed to a 10.3% increase in railcar deliveries and a change in product mix. Manufacturing revenue for the six months ended February 29, 2020 included $210.7 million in revenue associated with the acquired manufacturing business of ARI.
Manufacturing cost of revenue increased $143.4 million or 16.7% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The increase in cost of revenue was primarily attributed to a 10.3% increase in the volume of railcar deliveries. Manufacturing cost of revenue for the six months ended February 29, 2020 included $211.1 million in costs associated with the acquired manufacturing business of ARI.
Manufacturing margin as a percentage of revenue increased 3.3% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The increase was primarily attributed to a change in product mix and a $12.9 million customer order contract modification fee received during the six months ended February 29, 2020. These were partially offset by operating inefficiencies at our recently acquired manufacturing facilities.
Manufacturing operating profit increased $48.4 million or 95.2% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The increase was primarily attributed to an increase in the volume of railcar deliveries.
36
THE GREENBRIER COMPANIES, INC.
Wheels, Repair & Parts Segment
|
| Six Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 177,833 |
|
| $ | 233,821 |
|
| $ | (55,988 | ) |
|
| (23.9 | %) |
Cost of revenue |
| $ | 166,265 |
|
| $ | 219,433 |
|
| $ | (53,168 | ) |
|
| (24.2 | %) |
Margin (%) |
|
| 6.5 | % |
|
| 6.2 | % |
|
| 0.3 | % |
| * |
| |
Operating profit ($) |
| $ | 4,434 |
|
| $ | 6,070 |
|
| $ | (1,636 | ) |
|
| (27.0 | %) |
Operating profit (%) |
|
| 2.5 | % |
|
| 2.6 | % |
|
| (0.1 | %) |
| * |
|
* | Not meaningful |
Wheels, Repair & Parts revenue decreased $56.0 million or 23.9% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily due to lower wheelset, component and parts volumes due to lower demand, lower repair revenue primarily from four fewer shops in the current year and a decrease in scrap metal pricing.
Wheels, Repair & Parts cost of revenue decreased $53.2 million or 24.2% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily due to lower costs associated with a reduction in wheelset, component and parts volumes and four fewer repair shops in the current period.
Wheels, Repair & Parts margin as a percentage of revenue increased 0.3% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The increase was primarily attributed to efficiencies at our repair shops in the current year. In addition, the six months ended February 28, 2019 was negatively impacted by costs associated with closing sites in our repair network. These factors which had a positive impact to Wheels, Repair & Parts margin as a percentage of revenue as compared to the prior year, were partially offset by a decrease in scrap metal pricing for the six months ended February 29, 2020.
Wheels, Repair & Parts operating profit decreased $1.6 million or 27.0% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily due to a reduction in volumes and a decrease in scrap metal pricing.
37
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
| Six Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Revenue |
| $ | 68,064 |
|
| $ | 81,565 |
|
| $ | (13,501 | ) |
|
| (16.6 | %) |
Cost of revenue |
| $ | 44,196 |
|
| $ | 56,583 |
|
| $ | (12,387 | ) |
|
| (21.9 | %) |
Margin (%) |
|
| 35.1 | % |
|
| 30.6 | % |
|
| 4.5 | % |
| * |
| |
Operating profit ($) |
| $ | 22,570 |
|
| $ | 38,543 |
|
| $ | (15,973 | ) |
|
| (41.4 | %) |
Operating profit (%) |
|
| 33.2 | % |
|
| 47.3 | % |
|
| (14.1 | %) |
| * |
|
* | Not meaningful |
The Leasing & Services segment generates revenue from leasing railcars from its lease fleet, providing various management services, interim rent on leased railcars for syndication, and the sale of railcars purchased from third parties with the intent to resell. The gross proceeds from the sale of these railcars are recorded in revenue and the costs of purchasing these railcars are recorded in cost of revenue.
Leasing & Services revenue decreased $13.5 million or 16.6% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily attributed to a decrease in the sale of railcars which we had purchased from third parties with the intent to resell. This was partially offset by higher average volume of rent-producing leased railcars for syndication.
Leasing & Services cost of revenue decreased $12.4 million or 21.9% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily due to a decrease in the volume of railcars sold that we purchased from third parties partially offset by higher transportation costs.
Leasing & Services margin as a percentage of revenue increased 4.5% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. Margin as a percentage of revenue for the six months ended February 29, 2020 benefited from fewer sales of railcars that we purchased from third parties which have lower margin percentages. The increase in margin as a percentage of revenue was also due to a higher average volume of rent-producing leased railcars for syndication.
Leasing & Services operating profit decreased $16.0 million or 41.4% for the six months ended February 29, 2020 compared to the six months ended February 28, 2019. The decrease was primarily attributed to a $12.9 million decrease in net gain on disposition of equipment.
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THE GREENBRIER COMPANIES, INC.
Selling and Administrative Expense
|
| Six Months Ended |
|
|
|
|
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||
Selling and administrative expense |
| $ | 108,961 |
|
| $ | 98,324 |
|
| $ | 10,637 |
|
|
| 10.8 | % |
Selling and administrative expense was $109.0 million or 7.8% of revenue for the six months ended February 29, 2020 compared to $98.3 million or 7.8% of revenue for the prior comparable period. The $10.6 million increase was primarily attributed to a $6.3 million increase in employee related costs and $5.8 million from the addition of the manufacturing business of ARI selling and administrative costs. These were partially offset by $2.6 million in transaction related costs incurred during six months ended February 28, 2019.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $10.7 million for the six months ended February 29, 2020 compared to $26.5 million for the prior comparable period. Net gain on disposition of equipment primarily includes the sale of assets from our lease fleet (Equipment on operating leases, net) that are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity; and disposition of property, plant and equipment.
Other Costs
Interest and foreign exchange expense was composed of the following:
|
| Six Months Ended |
|
|
|
|
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
|
| Increase (Decrease) |
| |||
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
| $ | 20,568 |
|
| $ | 14,782 |
|
| $ | 5,786 |
|
Foreign exchange (gain) loss |
|
| 4,893 |
|
|
| (1,141 | ) |
|
| 6,034 |
|
|
| $ | 25,461 |
|
| $ | 13,641 |
|
| $ | 11,820 |
|
The $11.8 million increase in interest and foreign exchange expense from the prior comparable period was primarily attributed to a $2.6$4.9 million foreign exchange loss for the threesix months ended November 30, 2019February 29, 2020 compared to a $2.8$1.1 million foreign exchange gain in the prior comparable period. The change in foreign exchange (gain) loss was primarily attributed to the change in the Mexican Peso relative to the U.S. Dollar. The increase in interest and foreign exchange expense was also due to interest expense associated with our $300 million of senior term debt issued in July 2019.
Income Tax
The effective tax rate for the threesix months ended November 30, 2019February 29, 2020 was 20.7%24.6% compared to a 28.5% rate27.9% for the threesix months ended November 30, 2018.February 28, 2019. The decrease in the effective rate from the prior year was primarily attributable to net favorable foreign tax discrete items infor the current year versussix months ended February 29, 2020 compared to net unfavorable discrete items in the first quarter of 2019.prior comparable period. Excluding the impact of discrete items in both periods, the effective tax rate was 24.0%24.7% for the threesix months ended November 30, 2019February 29, 2020 compared to 24.3%25.5% in the prior comparable period.
The effective tax rate can fluctuate
39
THE GREENBRIER COMPANIES, INC.
Earnings (Loss) From Unconsolidated Affiliates
Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil and a lease financing warehouse.
Earnings from unconsolidated affiliates was $1.1$2.7 million for the threesix months ended November 30, 2019February 29, 2020 compared to $0.5a loss from unconsolidated affiliates of $0.3 million for the threesix months ended November 30, 2018.February 28, 2019. The increase in earnings from unconsolidated affiliates was primarily related to earnings from our investment in Axis, a joint venture that manufactures and sells axles to its joint venture partners. We obtained our ownership interest in Axis as part of the acquisition of the manufacturing business of ARI on July 26, 2019.
Noncontrolling Interest
Net earnings attributable to noncontrolling interest was $16.3$22.7 million for the threesix months ended November 30, 2019February 29, 2020 compared to $5.4$8.4 million in the prior comparable period, which primarily represents our joint venture partner’spartner's share in the results of operations of our Mexican railcar manufacturing joint venture, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.
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THE GREENBRIER COMPANIES, INC.
Liquidity and Capital Resources
|
| Six Months Ended |
| |||||
(In thousands) |
| February 29, 2020 |
|
| February 28, 2019 |
| ||
Net cash used in operating activities |
| $ | (133,174 | ) |
| $ | (146,622 | ) |
Net cash provided by (used in) investing activities |
|
| 10,766 |
|
|
| (43,704 | ) |
Net cash provided by (used in) financing activities |
|
| (34,787 | ) |
|
| 13,111 |
|
Effect of exchange rate changes |
|
| (2,824 | ) |
|
| 825 |
|
Decrease in cash and cash equivalents and restricted cash |
| $ | (160,019 | ) |
| $ | (176,390 | ) |
Three Months Ended November 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Net cash used in operating activities | $ | (70,319 | ) | $ | (97,119 | ) | ||
Net cash provided by (used in) investing activities | 7,199 | (3,789 | ) | |||||
Net cash provided by (used in) financing activities | (14,098 | ) | 35,542 | |||||
Effect of exchange rate changes | 981 | (2,439 | ) | |||||
Decrease in cash and cash equivalents and restricted cash | $ | (76,237 | ) | $ | (67,805 | ) | ||
We have been financed through cash generated from operations and borrowings. At November 30, 2019,February 29, 2020, cash and cash equivalents and restricted cash were $262.3$178.5 million, a decrease of $76.2$160.0 million from $338.5 million at August 31, 2019.
The change in cash used in operating activities for the threesix months ended November 30, 2019February 29, 2020 compared to the threesix months ended November 30, 2018February 28, 2019 was primarily due to a change in cash flows associated with leased railcars for syndication and a net change in working capital.
Cash provided by (used in) investing activities primarily related to investment activity with our unconsolidated affiliates and capital expenditures net of proceeds from the sale of assets.assets and investment activity with our unconsolidated affiliates. The change in cash provided by (used in) investing activities for the threesix months ended November 30, 2019February 29, 2020 compared to the threesix months ended November 30, 2018February 28, 2019 was primarily attributable to a decrease of investments in and advances to unconsolidated affiliates.
Capital expenditures totaled $23.2$40.8 million and $28.7$98.2 million for the threesix months ended November 30,February 29, 2020 and February 28, 2019, and 2018, respectively. Manufacturing capital expenditures were approximately $18.8$31.6 million and $17.5$40.5 million for the threesix months ended November 30,February 29, 2020 and February 28, 2019, and 2018, respectively. Capital expenditures for Manufacturing are expected to be approximately $95$60 million in 2020 and primarily relate to enhancements of our existing manufacturing facilities. Wheels, Repair & Parts capital expenditures were approximately $1.5$4.3 million and $2.1$3.2 million for the threesix months ended November 30,February 29, 2020 and February 28, 2019, and 2018, respectively. Capital expenditures for Wheels, Repair & Parts are expected to be approximately $15$10 million in 2020 for enhancements of our existing facilities. Leasing & Services and corporate capital expenditures were approximately $2.9$4.9 million and $9.1$54.5 million for the threesix months ended November 30,February 29, 2020 and February 28, 2019, and 2018, respectively. Leasing & Services and corporate capital expenditures for 2020 are expected to be approximately $30$25 million. Proceeds from sales of leased railcar equipment are expected to be $95$90 million for 2020. Assets from our lease fleet are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity.
Proceeds from the sale of assets, which primarily related to sales of railcars from our lease fleet within Leasing & Services, were approximately $27.5$41.8 million and $34.5$63.9 million for the threesix months ended November 30,February 29, 2020 and February 28, 2019, and 2018, respectively.
The change in cash provided by (used in) financing activities for the threesix months ended November 30, 2019February 29, 2020 compared to the threesix months ended November 30, 2018February 28, 2019 was primarily attributed to a decrease in the proceeds of debt, net of repayments and a change in the net activities with joint venture partners.
A quarterly dividend of $0.27 per share was declared on January 7, 2020, which was an increase from $0.25 per share.
The Board of Directors has authorized our company to repurchase shares of our common stock. In January 2019, the expiration date of this share repurchase program was extended from March 31, 2019 to March 31, 2021 and the amount remaining for repurchase was increased from $88 million to $100 million. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time to time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. The program may be modified, suspended or discontinued at any time without prior notice. The share repurchase program does not obligate us to acquire any specific number of shares in any period.
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THE GREENBRIER COMPANIES, INC.
Senior secured credit facilities, consisting of three components, aggregated to $705.9$706.0 million as of November 30, 2019.February 29, 2020. We had an aggregate of $342.4$451.1 million available to draw down under committed credit facilities as of November 30, 2019.February 29, 2020. This amount consists of $266.0$382.3 million available on the North American credit facility, $26.4$18.8 million on the European credit facilities and $50.0 million on the Mexican railcar manufacturing joint venture credit facilities.
As of November 30, 2019,February 29, 2020, a $600.0 million revolving line of credit, maturing June 2024, secured by substantially all of our assets in the U.S. not otherwise pledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this facility bear interest at LIBOR plus 1.50% or Prime plus 0.50% depending on the type of borrowing. Available borrowings under the credit facility are generally based on defined levels of inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.
As of November 30, 2019,February 29, 2020, lines of credit totaling $55.9$56.0 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1% to WIBOR plus 1.5% and Euro Interbank Offered Rate (EURIBOR) plus 1.1%, were available for working capital needs of our European manufacturing operations. The European lines of credit include a $13.8$14.0 million facility which is guaranteed by us. European credit facilities are continually beingregularly renewed. Currently, these European credit facilities have maturities that range from June 2020 through July 2021.
As of November 30, 2019,February 29, 2020, our Mexican railcar manufacturing joint venture had two lines of credit totaling $50.0 million. The first line of credit provides up to $30.0 million. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw against this facility through March 2024. The second line of credit provides up to $20.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2021.
As of November 30, 2019,February 29, 2020, outstanding commitments under the senior secured$600.0 million revolving line of credit facilities consisted of $24.9$27.5 million in letters of credit, which reduced our available borrowings under the North Americanthis credit facility, and $29.5$37.2 million outstanding under the European credit facilities.
The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us and our various subsidiaries, the most restrictive of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into capital leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of November 30, 2019,February 29, 2020, we were in compliance with all such restrictive covenants.
From time to time, we may seek to repurchase or otherwise retire or exchange securities, including outstanding notes, borrowings and equity securities, and take other steps to reduce our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated transactions or other retirements, repurchases or exchanges. Such retirements, repurchases or exchanges, if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity requirements and contractual restrictions, if applicable. The amounts involved in any such transactions may, individually or in the aggregate, be material and may involve all or a portion of a particular series of notes or other indebtedness which may reduce the float and impact the trading market of notes or other indebtedness which remain outstanding.
We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency, we enter into foreign currency forward exchange contracts with established financial institutions to protect the margin on a portion of foreign currency sales in firm backlog. Given the strong credit standing of the counterparties, no provision has been made for credit loss due to counterparty
42
THE GREENBRIER COMPANIES, INC.
As of November 30, 2019,February 29, 2020, we had a $4.5 million note receivable from Amsted-Maxion Cruzeiro, our unconsolidated Brazilian castings and components manufacturer and an $18.0 millionmanufacturer. This note receivable balance from Greenbrier-Maxion, our unconsolidated Brazilian railcar manufacturer. These note receivables areis included on the Consolidated Balance Sheet in Accounts receivable, net. In the future, we may make loans to or provide guarantees for Amsted-Maxion Cruzeiro or Greenbrier-Maxion.
We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.
Off-Balance
We do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.
Income taxes
Warranty accruals
Environmental costs
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THE GREENBRIER COMPANIES, INC.
Revenue recognition
Manufacturing
Railcars are manufactured in accordance with contracts with customers. We recognize revenue upon our customers’ acceptance of the completed railcars at a specified delivery point. From time to time, we enter into multi-year supply agreements. Each railcar delivery is considered a distinct performance obligation, such that the amounts that are recognized as revenue following railcar delivery are generally not subject to change.
We typically recognize marine vessel manufacturing revenue over time using the cost input method, based on progress toward contract completion measured by actual costs incurred to date in relation to the estimate of total expected costs. This method best depicts our performance in completing the construction of the marine vessel for the customer and is consistent with the percentage of completion method used prior to the adoption of Topic 606.
Wheels, Repair & Parts
We operate a network of wheel, repair and parts shops in North America that provide complete wheelset reconditioning and railcar repair services.
Wheels revenue is recognized when wheelsets are shipped to the customer or when consumed by customers in the case of consignment arrangements. Parts revenue is recognized upon shipment of the parts to the customers.
Repair revenue is typically recognized over time using the cost input method, based on progress toward contract completion measured by actual costs incurred to date in relation to the estimate of total expected costs. This method best depicts our performance in repairing the railcars for the customer. Repair services are typically completed in less than 90 days.
Leasing & Services
We own a fleet of new and used railcars which are leased to third-party customers. Lease revenue is recognized over the lease-term in the period in which it is earned.
Syndication transactions represent new and used railcars which have been placed on lease to a customer and which we intend to sell to an investor with the lease attached. At the time of such sale, revenue and cost of revenue associated with railcars that we have manufactured are recognized in the Manufacturing segment; while revenue and cost of revenue associated with railcars which were obtained from a third-party with the intent to resell them and subsequently sold, are recognized in the Leasing & Services segment.
We enter into multi-year contracts to provide management and maintenance services to customers for which revenue is generally recognized on a straight-line basis over the contract term as a stand-ready obligation. Costs to fulfill these contracts are recognized as incurred.
Impairment of long-lived assets
44
THE GREENBRIER COMPANIES, INC.
Goodwill and acquired intangible assets
Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third quarter. The provisions of ASC 350
Our goodwill balance was $129.5$129.7 million as of November 30, 2019February 29, 2020 of which $86.2$86.4 million related to our Manufacturing segment and $43.3 million related to our Wheels, Repair & Parts segment.
45
THE GREENBRIER COMPANIES, INC.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protect revenue or margin on a portion of forecast foreign currency sales and expenses. At November 30, 2019February 29, 2020 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros and Pound Sterling; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $71.4$54.1 million. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible to predict the impact a movement in a single foreign currency exchange rate would have on future operating results.
In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At November 30, 2019,February 29, 2020, net assets of foreign subsidiaries aggregated $157.2$152.3 million and a 10% strengthening of the U.S. Dollar relative to the foreign currencies would result in a decrease in equity of $15.7$15.2 million, or 1.2% of Total equity –- Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.
Interest Rate Risk
We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $258.6$255.7 million of variable rate debt to fixed rate debt. As a result, we are exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates. At November 30, 2019, 66%February 29, 2020, 65% of our outstanding debt had fixed rates and 34%35% had variable rates. At November 30, 2019,February 29, 2020, a uniform 10% increase in variable interest rates would result in approximately $0.6$0.5 million of additional annual interest expense.
46
THE GREENBRIER COMPANIES, INC.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule
Changes in Internal Control over Financial Reporting
There have been no other changes in our internal control over financial reporting during the quarter ended November 30, 2019February 29, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
47
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There is hereby incorporated by reference the information disclosed in Note 15 to Consolidated Financial Statements, Part I of this quarterly report.
Item 1A. Risk Factors
This Form
The COVID-19 coronavirus pandemic and the governmental reaction to COVID-19 most likely will have a material negative impact on our business, liquidity and financial position, results of operations, stock price, and ability to convert backlog to revenue.
The COVID-19 coronavirus outbreak has been categorized as a global pandemic by the World Health Organization. As human mortality and morbidity increase in numbers and expand geographically, the negative impact on the global economy of the COVID-19 pandemic and related governmental responses have been wide ranging and multi-faceted including historically steep and rapid declines in consumer activity in the geographic markets where we operate, widespread national or local “stay-at-home” orders and travel restrictions that reduce or prevent businesses in most of the world’s large economies from operating, disruptions in global supply chains, steep downturns and price volatility in equities markets, and concern that credit markets will not remain liquid.
COVID-19 and the related governmental reaction most likely will have a material negative impact on our business, liquidity, results of operations, and stock price due to the occurrence of some or all of the following events or circumstances among others:
• | We may be prevented from operating our manufacturing facilities, repair shops, wheel shops or other worksites due to the illness of our employees, “stay-at-home” regulations, and employee reluctance to appear for work. |
• | The operations of our customers may be disrupted thereby increasing the likelihood that our customers may attempt to delay or cancel orders, may reduce orders for our products and services in the future or may cease to operate as going concerns. |
• | The operations of our suppliers may be disrupted and the markets for the inputs to our business may not operate effectively or efficiently thereby negatively impacting our ability to purchase inputs for our business at efficient prices and in sufficient amounts. |
• | We may not be able to manage our business effectively or integrate recent acquisition including ARI due to key employees becoming ill, working from home inefficiently, being unable to travel to our facilities, or being prevented from otherwise engaging in the consortium necessary for effective management. |
• | Our indebtedness may increase due to our need to increase borrowing to fund operations during a period of reduced revenue. |
• | We may not be able to raise capital efficiently or at all due to a reduction in the value of our assets or illiquidity in the global credit markets. |
• | We may need to raise capital, and if we raise capital by issuing equity securities, our common stock may be diluted. |
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THE GREENBRIER COMPANIES, INC.
• | We may not be able to pay dividends. |
• | The market price of our common stock may drop or remain volatile. |
• | We may incur significant employee health care costs under our self-insurance programs. |
• | The goodwill on our balance sheet may be adjusted downward. We are required to perform an annual impairment review of goodwill and indefinite lived assets which could result in an impairment charge if it is determined that the carrying value of the asset is in excess of the fair value. We perform a goodwill impairment test annually during our third quarter. Since February 29, 2020, the market price of our common stock has declined along with many other registrants as a result of the COVID-19 pandemic. A sustained decline in the market price of our common price is one of the qualitative factors to be considered when evaluating whether events or changes in circumstances may indicate that it is more likely than not that potential goodwill impairment exists. We will consider this decline and entity-specific and other macroeconomic factors as a result of the COVID-19 pandemic as we perform our annual goodwill impairment test during the third quarter. |
The COVID-19 pandemic has not yet been contained and the number of its victims and the extent of negative impact on the global economy cannot be foreseen at this time. The longer the pandemic continues, the more likely that more of the foregoing risks will be realized and that other negative impacts on our business will occur some of which we cannot now foresee. Our business, liquidity, financial position, results of operations and stock price most likely will be adversely impacted.
A change in our product mix or decline in revenue due to shifts in demand or fluctuations in commodity and energy prices could have an adverse effect on our profitability.
We manufacture, lease and repair a variety of railcars. The demand for purchase, lease, or syndication of specific types of railcars and the mix of repair and refurbishment work varies from time to time. Instability and changes in the global economy, volatility in the industries that our products serve or adverse changes in the financial condition of our customers could adversely impact the demand for our railcars. In addition, fluctuations in commodity and energy prices, including crude oil and gas prices, could negatively impact the activities of our customers resulting in a corresponding adverse effect on the demand for our products and services or their ability to meet their contractual obligations including making payments. A decline in oil prices can result from a number of factors including, among others, a decline in commercial activity caused by the COVID-19 coronavirus pandemic or oil producing countries increasing the global supply of oil over a sustained period of time. The demand for certain types of railcars generally declines if oil prices remain low relative to the cost of production. Sustained low oil prices can also lead to oil producers ceasing to operate as going concerns thereby further reducing demand for certain types of railcars. These impacts could affect our results of operations and could have an adverse effect on our profitability. Demand for railcars that are used to transport crude oil and other energy related products is dependent on the demand for these commodities. Prices for oil and gas are subject to large fluctuations in response to relatively minor changes in the supply of, and demand for, oil and gas, market uncertainty and a variety of other economic factors that are beyond our control.
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THE GREENBRIER COMPANIES, INC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock. The share repurchase program has an expiration date of March 31, 2021 and the amount remaining for repurchase is $100 million. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time to time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. The program may be modified, suspended or discontinued at any time without prior notice. The share repurchase program does not obligate the Company to acquire any specific number of shares in any period.
There were no shares repurchased under the share repurchase program during the three months ended November 30, 2019.February 29, 2020.
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid Per Share (Including Commissions) |
|
| Total Number of Shares Purchased as Part of Publically Announced Plans or Programs |
|
| Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
| ||||
December 1, 2019 – December 31, 2019 |
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 100,000,000 |
|
January 1, 2020 – January 31, 2020 |
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 100,000,000 |
|
February 1, 2020 – February 29, 2020 |
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 100,000,000 |
|
|
|
| — |
|
|
|
|
|
|
| — |
|
|
|
|
|
Period | Total Number of Shares Purchased | Average Price Paid Per Share (Including Commissions) | Total Number of Shares Purchased as Part of Publically Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
September 1, 2019 – September 30, 2019 | — | — | — | $ | 100,000,000 | |||||||||||
October 1, 2019 – October 31, 2019 | — | — | — | $ | 100,000,000 | |||||||||||
November 1, 2019 – November 30, 2019 | — | — | — | $ | 100,000,000 | |||||||||||
— | — | |||||||||||||||
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THE GREENBRIER COMPANIES, INC.
Item 6. Exhibits
(a) | List of Exhibits: |
31.1 | ||||
31.2 | ||||
32.1 | ||||
32.2 | ||||
101.INS | Inline XBRL Instance Document. | |||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 | Cover Page Interactive Data File (Formatted as inline XBRL and contained in Exhibit 101). |
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THE GREENBRIER COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE GREENBRIER COMPANIES, INC. | |||||||||
Date: | April 7, 2020 | By: | /s/ Adrian J. Downes | ||||||
Adrian J. Downes | |||||||||
Senior Vice President, | |||||||||
Chief Financial Officer and Chief Accounting Officer | |||||||||
(Principal Financial Officer and Principal Accounting Officer) |
52