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 May 31, November 30, 2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the transition period from ______ to ______
Commission File No. 1-13146
THE GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Oregon | 93-0816972 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
One Centerpointe Drive, Suite 200, Lake Oswego, OR | 97035 |
(Address of principal executive offices) | (Zip Code) |
(503) 684-7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock without par value |
| GBX |
| New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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| Accelerated filer |
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Non-accelerated filer |
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| Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares of the registrant’s common stock, without par value, outstanding on July 6,December 31, 2020 was 32,700,93332,824,080 shares.
FORM 10-Q
Table of Contents
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THE GREENBRIER COMPANIES, INC.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events and include any statement that does not relate to any historical or current fact. We use words such as “anticipates,” “believes,” “forecast,” “potential,” “contemplates,” “expects,” “intends,” “plans,” “projects,” “seeks,” “estimates,” “could,” “would,” “should,” “likely,” “will,” “may,” “can,” “future,” “preliminary” and similar expressions to identify forward-looking statements. In addition, any statements that refer to the costs or revenue related to the completion of contracts, timing of recognition of revenue, the estimated and anticipated impact of the ARI acquisition (including working capital true up, and purchase price allocation, among other factors), estimated warranty costs, contingencies, fair value estimates, and any statements that explicitly or implicitly draw trends in our performance or the markets in which we operate, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements are not guarantees of future performance.
Forward-looking statements are based on currently available operating, financial and market information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to:
| • | the COVID-19 coronavirus pandemic, the governmental reaction to COVID-19 and the related significant global decline in general economic activity |
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| changes in our product mix or decline in revenue due to shifts in demand |
| • | the cyclicalnature of our business; |
• | equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities; |
• | a decline in demand for our railcar equipment and services; |
• | a decline in performance, or |
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| risks related to our operations outside of the U.S. |
| • | governmental policy changes impacting international trade and corporate tax; |
| • | the loss of, or reduction of, business from one or more of our limited number of customers; |
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1
THE GREENBRIER COMPANIES, INC.
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2
THE GREENBRIER COMPANIES, INC.
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The foregoing risks are described in more detail in Part I Item 1A “Risk Factors” in our most recent Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q, which areis incorporated herein by reference. You are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements. All references to years refer to the fiscal years ended August 31st unless otherwise noted.
3
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
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| May 31, 2020 |
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| August 31, 2019 |
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| November 30, 2020 |
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| August 31, 2020 |
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Assets |
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Cash and cash equivalents |
| $ | 735,258 |
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| $ | 329,684 |
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| $ | 724,547 |
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| $ | 833,745 |
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Restricted cash |
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| 8,704 |
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| 8,803 |
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| 8,547 |
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| 8,342 |
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Accounts receivable, net |
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| 261,629 |
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| 373,383 |
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| 240,668 |
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| 239,597 |
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Inventories |
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| 675,442 |
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| 664,693 |
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| 490,282 |
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| 529,529 |
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Leased railcars for syndication |
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| 136,144 |
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| 182,269 |
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| 51,087 |
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| 107,671 |
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Equipment on operating leases, net |
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| 355,841 |
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| 366,688 |
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| 445,542 |
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| 350,442 |
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Property, plant and equipment, net |
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| 719,155 |
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| 717,973 |
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| 696,333 |
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| 711,524 |
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Investment in unconsolidated affiliates |
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| 75,508 |
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| 91,818 |
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| 72,254 |
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| 72,354 |
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Intangibles and other assets, net |
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| 181,315 |
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| 125,379 |
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| 186,509 |
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| 190,322 |
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Goodwill |
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| 130,035 |
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| 129,947 |
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| 130,315 |
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| 130,308 |
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| $ | 3,279,031 |
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| $ | 2,990,637 |
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| $ | 3,046,084 |
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| $ | 3,173,834 |
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Liabilities and Equity |
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Revolving notes |
| $ | 416,535 |
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| $ | 27,115 |
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| $ | 276,248 |
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| $ | 351,526 |
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Accounts payable and accrued liabilities |
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| 488,969 |
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| 568,360 |
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| 434,138 |
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| 463,880 |
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Deferred income taxes |
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| 4,354 |
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| 13,946 |
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| 10,120 |
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| 7,701 |
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Deferred revenue |
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| 63,536 |
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| 85,070 |
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| 36,916 |
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| 42,467 |
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Notes payable, net |
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| 806,919 |
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| 822,885 |
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| 797,089 |
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| 804,088 |
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Commitments and contingencies (Note 15) |
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Commitments and contingencies (Note 14) |
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Contingently redeemable noncontrolling interest |
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| 30,611 |
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| 31,564 |
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| 30,711 |
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| 31,117 |
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Equity: |
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Greenbrier |
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Preferred stock - without par value; 25,000 shares authorized; NaN outstanding |
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Common stock - without par value; 50,000 shares authorized; 32,701 and 32,488 shares outstanding at May 31, 2020 and August 31, 2019 |
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Common stock - without par value; 50,000 shares authorized; 32,824 and 32,701 shares outstanding at November 30, 2020 and August 31, 2020 |
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Additional paid-in capital |
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| 459,668 |
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| 453,943 |
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| 462,498 |
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| 460,400 |
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Retained earnings |
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| 894,619 |
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| 867,602 |
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| 866,367 |
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| 885,460 |
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Accumulated other comprehensive loss |
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| (63,066 | ) |
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| (44,815 | ) |
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| (48,458 | ) |
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| (52,817 | ) |
Total equity – Greenbrier |
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| 1,291,221 |
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| 1,276,730 |
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| 1,280,407 |
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| 1,293,043 |
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Noncontrolling interest |
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| 176,886 |
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| 164,967 |
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| 180,455 |
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| 180,012 |
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Total equity |
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| 1,468,107 |
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| 1,441,697 |
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| 1,460,862 |
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| 1,473,055 |
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| $ | 3,279,031 |
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| $ | 2,990,637 |
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| $ | 3,046,084 |
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| $ | 3,173,834 |
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The accompanying notes are an integral part of these financial statements
4
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of IncomeOperations
(In thousands, except per share amounts, unaudited)
|
| Three Months Ended May 31, |
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| Nine Months Ended May 31, |
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| Three Months Ended November 30, |
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| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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Revenue |
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Manufacturing |
| $ | 653,007 |
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| $ | 681,588 |
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| $ | 1,800,317 |
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| $ | 1,629,396 |
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| $ | 308,722 |
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| $ | 657,367 |
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Wheels, Repair & Parts |
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| 82,024 |
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| 124,980 |
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| 259,857 |
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| 358,801 |
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| 65,556 |
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| 86,608 |
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Leasing & Services |
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| 27,526 |
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| 49,584 |
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| 95,590 |
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| 131,149 |
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| 28,711 |
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| 25,384 |
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| 762,557 |
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| 856,152 |
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| 2,155,764 |
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| 2,119,346 |
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| 402,989 |
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| 769,359 |
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Cost of revenue |
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Manufacturing |
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| 562,793 |
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| 590,788 |
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| 1,567,014 |
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| 1,451,589 |
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| 280,890 |
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| 581,912 |
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Wheels, Repair & Parts |
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| 75,001 |
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| 119,821 |
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| 241,266 |
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| 339,254 |
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| 62,984 |
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| 81,892 |
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Leasing & Services |
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| 17,232 |
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| 38,971 |
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| 61,428 |
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| 95,554 |
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| 18,444 |
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| 13,366 |
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| 655,026 |
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| 749,580 |
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| 1,869,708 |
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| 1,886,397 |
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| 362,318 |
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| 677,170 |
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Margin |
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| 107,531 |
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| 106,572 |
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| 286,056 |
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| 232,949 |
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| 40,671 |
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| 92,189 |
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Selling and administrative expense |
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| 49,494 |
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| 54,377 |
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| 158,455 |
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| 152,701 |
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| 43,707 |
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| 54,364 |
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Net gain on disposition of equipment |
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| (8,775 | ) |
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| (11,019 | ) |
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| (19,431 | ) |
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| (37,474 | ) |
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| (922 | ) |
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| (3,959 | ) |
Goodwill impairment |
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| 10,025 |
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| — |
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| 10,025 |
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Earnings from operations |
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| 66,812 |
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| 53,189 |
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| 147,032 |
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| 107,697 |
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Earnings (loss) from operations |
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| (2,114 | ) |
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| 41,784 |
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Other costs |
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Interest and foreign exchange |
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| 7,562 |
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| 9,770 |
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| 33,023 |
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| 23,411 |
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| 11,103 |
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| 12,852 |
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Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
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| 59,250 |
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| 43,419 |
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| 114,009 |
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| 84,286 |
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Income tax expense |
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| (24,421 | ) |
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| (13,008 | ) |
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| (37,878 | ) |
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| (24,391 | ) | ||||||||
Earnings before earnings (loss) from unconsolidated affiliates |
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| 34,829 |
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| 30,411 |
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| 76,131 |
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| 59,895 |
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Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
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| (13,217 | ) |
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| 28,932 |
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Income tax benefit (expense) |
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| 7,332 |
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| (5,994 | ) | ||||||||||||||||
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
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| (5,885 | ) |
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| 22,938 |
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Earnings (loss) from unconsolidated affiliates |
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| 1,040 |
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| (4,564 | ) |
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| 3,764 |
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| (4,883 | ) |
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| (744 | ) |
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| 1,073 |
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Net earnings |
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| 35,869 |
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| 25,847 |
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| 79,895 |
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| 55,012 |
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Net earnings (loss) |
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| (6,629 | ) |
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| 24,011 |
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Net earnings attributable to noncontrolling interest |
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| (8,097 | ) |
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| (10,599 | ) |
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| (30,825 | ) |
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| (19,043 | ) |
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| (3,343 | ) |
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| (16,342 | ) |
Net earnings attributable to Greenbrier |
| $ | 27,772 |
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| $ | 15,248 |
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| $ | 49,070 |
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| $ | 35,969 |
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Basic earnings per common share |
| $ | 0.85 |
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| $ | 0.47 |
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| $ | 1.50 |
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| $ | 1.10 |
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Diluted earnings per common share |
| $ | 0.83 |
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| $ | 0.46 |
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| $ | 1.47 |
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| $ | 1.08 |
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Net earnings (loss) attributable to Greenbrier |
| $ | (9,972 | ) |
| $ | 7,669 |
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Basic earnings (loss) per common share |
| $ | (0.30 | ) |
| $ | 0.24 |
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Diluted earnings (loss) per common share |
| $ | (0.30 | ) |
| $ | 0.23 |
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Weighted average common shares: |
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Basic |
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| 32,690 |
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| 32,603 |
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| 32,660 |
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| 32,623 |
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| 32,723 |
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| 32,629 |
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Diluted |
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| 33,478 |
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| 33,183 |
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| 33,414 |
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| 33,161 |
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| 32,723 |
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| 33,284 |
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Dividends declared per common share |
| $ | 0.27 |
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| $ | 0.25 |
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| $ | 0.79 |
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| $ | 0.75 |
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The accompanying notes are an integral part of these financial statements
5
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands, unaudited)
|
| Three Months Ended May 31, |
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| Nine Months Ended May 31, |
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| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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Net earnings |
| $ | 35,869 |
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| $ | 25,847 |
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| $ | 79,895 |
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| $ | 55,012 |
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Other comprehensive income (loss) |
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Translation adjustment |
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| (11,029 | ) |
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| (5,083 | ) |
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| (13,315 | ) |
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| (7,269 | ) |
Reclassification of derivative financial instruments recognized in net earnings 1 |
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| 1,845 |
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| 306 |
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| 2,322 |
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| 1,476 |
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Unrealized loss on derivative financial instruments 2 |
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| (5,643 | ) |
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| (1,729 | ) |
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| (7,127 | ) |
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| (5,066 | ) |
Other (net of tax effect) |
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| 81 |
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| (1 | ) |
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| (140 | ) |
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| 75 |
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| (14,746 | ) |
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| (6,507 | ) |
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| (18,260 | ) |
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| (10,784 | ) |
Comprehensive income |
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| 21,123 |
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| 19,340 |
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| 61,635 |
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| 44,228 |
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Comprehensive income attributable to noncontrolling interest |
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| (8,096 | ) |
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| (10,590 | ) |
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| (30,816 | ) |
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| (19,013 | ) |
Comprehensive income attributable to Greenbrier |
| $ | 13,027 |
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| $ | 8,750 |
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| $ | 30,819 |
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| $ | 25,215 |
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|
| Three Months Ended November 30, |
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| 2020 |
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| 2019 |
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Net earnings (loss) |
| $ | (6,629 | ) |
| $ | 24,011 |
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Other comprehensive income (loss) |
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Translation adjustment |
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| 3,867 |
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| (1,583 | ) |
Reclassification of derivative financial instruments recognized in net earnings (loss) 1 |
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| 1,241 |
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| 309 |
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Unrealized gain (loss) on derivative financial instruments 2 |
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| (753 | ) |
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| 2,154 |
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Other (net of tax effect) |
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| 1 |
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| (463 | ) |
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| 4,356 |
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| 417 |
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Comprehensive income (loss) |
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| (2,273 | ) |
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| 24,428 |
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Comprehensive income attributable to noncontrolling interest |
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| (3,340 | ) |
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| (16,336 | ) |
Comprehensive income (loss) attributable to Greenbrier |
| $ | (5,613 | ) |
| $ | 8,092 |
|
1 | Net of tax effect of |
2 | Net of tax effect of |
The accompanying notes are an integral part of these financial statements
6
THE GREENBRIER COMPANIES, INC.
Condensed Consolidated Statements of Equity
(In thousands, except per share amounts, unaudited)
| Attributable to Greenbrier |
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Common Stock Shares |
| Additional Paid-in Capital |
| Retained Earnings |
| Accumulated Other Comprehensive Loss |
| Total Equity - Greenbrier |
| Noncontrolling Interest |
| Total Equity |
| Contingently Redeemable Noncontrolling Interest |
| ||||||||
Balance August 31, 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 |
| — |
|
| — |
|
| 49,070 |
|
| — |
|
| 49,070 |
|
| 31,778 |
|
| 80,848 |
|
| (953 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| (18,251 | ) |
| (18,251 | ) |
| (9 | ) |
| (18,260 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,826 |
|
| 2,826 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (34,751 | ) |
| (34,751 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,075 |
|
| 12,075 |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 213 |
|
| 6,797 |
|
| — |
|
| — |
|
| 6,797 |
|
| — |
|
| 6,797 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (9,063 | ) |
| — |
|
| — |
|
| (9,063 | ) |
| — |
|
| (9,063 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 7,991 |
|
| — |
|
| — |
|
| 7,991 |
|
| — |
|
| 7,991 |
|
| — |
|
Cash dividends ($0.79 per share) |
| — |
|
| — |
|
| (26,446 | ) |
| — |
|
| (26,446 | ) |
| — |
|
| (26,446 | ) |
| — |
|
Balance May 31, 2020 |
| 32,701 |
| $ | 459,668 |
| $ | 894,619 |
| $ | (63,066 | ) | $ | 1,291,221 |
| $ | 176,886 |
| $ | 1,468,107 |
| $ | 30,611 |
|
| Attributable to Greenbrier |
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Common Stock Shares |
| Additional Paid-in Capital |
| Retained Earnings |
| Accumulated Other Comprehensive Loss |
| Total Equity - Greenbrier |
| Noncontrolling Interest |
| Total Equity |
| Contingently Redeemable Noncontrolling Interest |
| ||||||||
Balance August 31, 2020 |
| 32,701 |
| $ | 460,400 |
| $ | 885,460 |
| $ | (52,817 | ) | $ | 1,293,043 |
| $ | 180,012 |
| $ | 1,473,055 |
| $ | 31,117 |
|
Cumulative effect adjustment due to adoption of ASU 2016-13 (see Note 1) |
| — |
|
| — |
|
| (509 | ) |
| — |
|
| (509 | ) |
| — |
|
| (509 | ) |
| — |
|
Net earnings (loss) |
| — |
|
| — |
|
| (9,972 | ) |
| — |
|
| (9,972 | ) |
| 3,749 |
|
| (6,223 | ) |
| (406 | ) |
Other comprehensive income (loss), net |
| — |
|
| — |
|
| — |
|
| 4,359 |
|
| 4,359 |
|
| (3 | ) |
| 4,356 |
|
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1,271 | ) |
| (1,271 | ) |
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (2,032 | ) |
| (2,032 | ) |
| — |
|
Restricted stock awards (net of cancellations) |
| 123 |
|
| 14,196 |
|
| — |
|
| — |
|
| 14,196 |
|
| — |
|
| 14,196 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (16,533 | ) |
| — |
|
| — |
|
| (16,533 | ) |
| — |
|
| (16,533 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 4,435 |
|
| — |
|
| — |
|
| 4,435 |
|
| — |
|
| 4,435 |
|
| — |
|
Cash dividends ($0.27 per share) |
| — |
|
| — |
|
| (8,612 | ) |
| — |
|
| (8,612 | ) |
| — |
|
| (8,612 | ) |
| — |
|
Balance November 30, 2020 |
| 32,824 |
| $ | 462,498 |
| $ | 866,367 |
| $ | (48,458 | ) | $ | 1,280,407 |
| $ | 180,455 |
| $ | 1,460,862 |
| $ | 30,711 |
|
| 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 February 29, 2020 |
| 32,642 |
| $ | 458,908 |
| $ | 875,885 |
| $ | (48,321 | ) | $ | 1,286,472 |
| $ | 201,410 |
| $ | 1,487,882 |
| $ | 30,782 |
|
Net earnings |
| — |
|
| — |
|
| 27,772 |
|
| — |
|
| 27,772 |
|
| 8,268 |
|
| 36,040 |
|
| (171 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| (14,745 | ) |
| (14,745 | ) |
| (1 | ) |
| (14,746 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (6,212 | ) |
| (6,212 | ) |
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (26,579 | ) |
| (26,579 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 59 |
|
| (4,317 | ) |
| — |
|
| — |
|
| (4,317 | ) |
| — |
|
| (4,317 | ) |
| — |
|
Unamortized restricted stock |
| — |
|
| 3,945 |
|
| — |
|
| — |
|
| 3,945 |
|
| — |
|
| 3,945 |
|
| — |
|
Restricted stock amortization |
| — |
|
| 1,132 |
|
| — |
|
| — |
|
| 1,132 |
|
| — |
|
| 1,132 |
|
| — |
|
Cash dividends ($0.27 per share) |
| — |
|
| — |
|
| (9,038 | ) |
| — |
|
| (9,038 | ) |
| — |
|
| (9,038 | ) |
| — |
|
Balance May 31, 2020 |
| 32,701 |
| $ | 459,668 |
| $ | 894,619 |
| $ | (63,066 | ) | $ | 1,291,221 |
| $ | 176,886 |
| $ | 1,468,107 |
| $ | 30,611 |
|
| 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 |
| — |
|
| — |
|
| 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 |
|
The accompanying notes are an integral part of these financial statements
Condensed Consolidated Statements of Cash Flows
7
THE GREENBRIER COMPANIES, INC.
(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, 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 Topic 606 |
| — |
|
| — |
|
| 5,461 |
|
| — |
|
| 5,461 |
|
| — |
|
| 5,461 |
|
| — |
|
Net earnings |
| — |
|
| — |
|
| 35,969 |
|
| — |
|
| 35,969 |
|
| 24,089 |
|
| 60,058 |
|
| (5,046 | ) |
Other comprehensive loss, net |
| — |
|
| — |
|
| — |
|
| (10,754 | ) |
| (10,754 | ) |
| (30 | ) |
| (10,784 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7,322 |
|
| 7,322 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (12,494 | ) |
| (12,494 | ) |
| — |
|
Noncontrolling interest acquired |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,915 |
|
| 1,915 |
|
| — |
|
Restricted stock awards (net of cancellations) |
| 293 |
|
| 12,721 |
|
| — |
|
| — |
|
| 12,721 |
|
| — |
|
| 12,721 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| (17,445 | ) |
| — |
|
| — |
|
| (17,445 | ) |
| — |
|
| (17,445 | ) |
| — |
|
Restricted stock amortization |
| — |
|
| 11,157 |
|
| — |
|
| — |
|
| 11,157 |
|
| — |
|
| 11,157 |
|
| — |
|
Cash dividends ($0.75 per share) |
| — |
|
| — |
|
| (24,895 | ) |
| — |
|
| (24,895 | ) |
| — |
|
| (24,895 | ) |
| — |
|
Balance May 31, 2019 |
| 32,484 |
| $ | 449,002 |
| $ | 847,433 |
| $ | (34,120 | ) | $ | 1,262,315 |
| $ | 154,916 |
| $ | 1,417,231 |
| $ | 24,722 |
|
| 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 February 28, 2019 |
| 32,379 |
| $ | 444,962 |
| $ | 840,478 |
| $ | (27,622 | ) | $ | 1,257,818 |
| $ | 145,459 |
| $ | 1,403,277 |
| $ | 25,637 |
|
Net earnings |
| — |
|
| — |
|
| 15,248 |
|
| — |
|
| 15,248 |
|
| 11,514 |
|
| 26,762 |
|
| (915 | ) |
Other comprehensive loss, net |
| — |
|
| ��� |
|
| — |
|
| (6,498 | ) |
| (6,498 | ) |
| (9 | ) |
| (6,507 | ) |
| — |
|
Noncontrolling interest adjustments |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,016 |
|
| 2,016 |
|
| — |
|
Joint venture partner distribution declared |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (4,064 | ) |
| (4,064 | ) |
| — |
|
Restricted stock awards (net of cancellations) |
| 105 |
|
| 38 |
|
| — |
|
| — |
|
| 38 |
|
| — |
|
| 38 |
|
| — |
|
Unamortized restricted stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Restricted stock amortization |
| — |
|
| 4,002 |
|
| — |
|
| — |
|
| 4,002 |
|
| — |
|
| 4,002 |
|
| — |
|
Cash dividends ($0.25 per share) |
| — |
|
| — |
|
| (8,293 | ) |
| — |
|
| (8,293 | ) |
| — |
|
| (8,293 | ) |
| — |
|
Balance May 31, 2019 |
| 32,484 |
| $ | 449,002 |
| $ | 847,433 |
| $ | (34,120 | ) | $ | 1,262,315 |
| $ | 154,916 |
| $ | 1,417,231 |
| $ | 24,722 |
|
|
| Three Months Ended November 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net earnings (loss) |
| $ | (6,629 | ) |
| $ | 24,011 |
|
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
| 2,338 |
|
|
| (6,515 | ) |
Depreciation and amortization |
|
| 26,046 |
|
|
| 29,335 |
|
Net gain on disposition of equipment |
|
| (922 | ) |
|
| (3,959 | ) |
Accretion of debt discount |
|
| 1,419 |
|
|
| 1,350 |
|
Stock based compensation expense |
|
| 4,435 |
|
|
| 3,157 |
|
Noncontrolling interest adjustments |
|
| (1,271 | ) |
|
| 1,736 |
|
Other |
|
| 560 |
|
|
| (391 | ) |
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| (6,377 | ) |
|
| 58,488 |
|
Inventories |
|
| 13,404 |
|
|
| (69,662 | ) |
Leased railcars for syndication |
|
| 6,222 |
|
|
| (13,132 | ) |
Other assets |
|
| 2,224 |
|
|
| (37,304 | ) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| (27,257 | ) |
|
| (47,421 | ) |
Deferred revenue |
|
| (5,521 | ) |
|
| (10,012 | ) |
Net cash provided by (used in) operating activities |
|
| 8,671 |
|
|
| (70,319 | ) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
| 8,691 |
|
|
| 27,463 |
|
Capital expenditures |
|
| (38,604 | ) |
|
| (23,216 | ) |
Investments in and advances to / repayments from unconsolidated affiliates |
|
| 4,526 |
|
|
| (1,500 | ) |
Cash distribution from unconsolidated affiliates and other |
|
| 488 |
|
|
| 4,452 |
|
Net cash provided by (used in) investing activities |
|
| (24,899 | ) |
|
| 7,199 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
| (9,738 | ) |
|
| 2,399 |
|
Proceeds from revolving notes with maturities longer than 90 days |
|
| 110,000 |
|
|
| — |
|
Repayments of revolving notes with maturities longer than 90 days |
|
| (175,000 | ) |
|
| — |
|
Repayments of notes payable |
|
| (8,908 | ) |
|
| (9,749 | ) |
Debt issuance costs |
|
| — |
|
|
| (4 | ) |
Dividends |
|
| (9,180 | ) |
|
| (343 | ) |
Cash distribution to joint venture partner |
|
| (2,810 | ) |
|
| (4,531 | ) |
Tax payments for net share settlement of restricted stock |
|
| (2,337 | ) |
|
| (1,870 | ) |
Net cash used in financing activities |
|
| (97,973 | ) |
|
| (14,098 | ) |
Effect of exchange rate changes |
|
| 5,208 |
|
|
| 981 |
|
Decrease in cash and cash equivalents and restricted cash |
|
| (108,993 | ) |
|
| (76,237 | ) |
Cash and cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 842,087 |
|
|
| 338,487 |
|
End of period |
| $ | 733,094 |
|
| $ | 262,250 |
|
Balance sheet reconciliation |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 724,547 |
|
| $ | 253,602 |
|
Restricted cash |
|
| 8,547 |
|
|
| 8,648 |
|
Total cash and cash equivalents and restricted cash as presented above |
| $ | 733,094 |
|
| $ | 262,250 |
|
Cash paid during the period for |
|
|
|
|
|
|
|
|
Interest |
| $ | 6,347 |
|
| $ | 6,601 |
|
Income taxes, net |
| $ | 5,203 |
|
| $ | 11,692 |
|
Non-cash activity |
|
|
|
|
|
|
|
|
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net |
| $ | 75,677 |
|
| $ | 55,626 |
|
Capital expenditures accrued in Accounts payable and accrued liabilities |
| $ | 1,831 |
|
| $ | 6,888 |
|
Change in Accounts payable and accrued liabilities associated with dividends declared |
| $ | (568 | ) |
| $ | 8,021 |
|
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 |
| $ | 778 |
|
| $ | 626 |
|
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)
|
| Nine Months |
| |||||
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net earnings |
| $ | 79,895 |
|
| $ | 55,012 |
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
| (11,450 | ) |
|
| (20,478 | ) |
Depreciation and amortization |
|
| 82,452 |
|
|
| 60,833 |
|
Net gain on disposition of equipment |
|
| (19,431 | ) |
|
| (37,474 | ) |
Accretion of debt discount |
|
| 4,102 |
|
|
| 3,268 |
|
Stock based compensation expense |
|
| 8,265 |
|
|
| 10,792 |
|
Goodwill impairment |
|
| — |
|
|
| 10,025 |
|
Noncontrolling interest adjustments |
|
| 2,826 |
|
|
| 7,322 |
|
Other |
|
| 568 |
|
|
| 1,916 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| 110,431 |
|
|
| 27,926 |
|
Inventories |
|
| 12,555 |
|
|
| (169,813 | ) |
Leased railcars for syndication |
|
| (38,826 | ) |
|
| (43,796 | ) |
Other assets |
|
| (59,212 | ) |
|
| (2,525 | ) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| (77,243 | ) |
|
| 30,581 |
|
Deferred revenue |
|
| (5,900 | ) |
|
| (27,712 | ) |
Net cash provided by (used in) operating activities |
|
| 89,032 |
|
|
| (94,123 | ) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
| 78,521 |
|
|
| 100,730 |
|
Capital expenditures |
|
| (55,326 | ) |
|
| (149,945 | ) |
Investment in and advances to unconsolidated affiliates |
|
| (1,500 | ) |
|
| (11,393 | ) |
Cash distribution from unconsolidated affiliates and other |
|
| 11,273 |
|
|
| 1,986 |
|
Net cash provided by (used in) investing activities |
|
| 32,968 |
|
|
| (58,622 | ) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
| 214,932 |
|
|
| (1,882 | ) |
Proceeds from revolving notes with maturities longer than 90 days |
|
| 175,000 |
|
|
| — |
|
Proceeds from issuance of notes payable |
|
| — |
|
|
| 225,000 |
|
Repayments of notes payable |
|
| (24,002 | ) |
|
| (179,803 | ) |
Debt issuance costs |
|
| — |
|
|
| (2,974 | ) |
Dividends |
|
| (26,344 | ) |
|
| (25,072 | ) |
Cash distribution to joint venture partner |
|
| (36,152 | ) |
|
| (11,715 | ) |
Tax payments for net share settlement of restricted stock |
|
| (2,266 | ) |
|
| (6,321 | ) |
Net cash provided by (used in) financing activities |
|
| 301,168 |
|
|
| (2,767 | ) |
Effect of exchange rate changes |
|
| (17,693 | ) |
|
| (2,866 | ) |
Increase (decrease) in cash and cash equivalents and restricted cash |
|
| 405,475 |
|
|
| (158,378 | ) |
Cash and cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 338,487 |
|
|
| 539,474 |
|
End of period |
| $ | 743,962 |
|
| $ | 381,096 |
|
Balance sheet reconciliation |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 735,258 |
|
| $ | 359,625 |
|
Restricted cash |
|
| 8,704 |
|
|
| 21,471 |
|
Total cash and cash equivalents and restricted cash as presented above |
| $ | 743,962 |
|
| $ | 381,096 |
|
Cash paid during the period for |
|
|
|
|
|
|
|
|
Interest |
| $ | 16,757 |
|
| $ | 11,350 |
|
Income taxes, net |
| $ | 36,393 |
|
| $ | 45,904 |
|
Non-cash activity |
|
|
|
|
|
|
|
|
Transfer from Leased railcars for syndication to Equipment on operating leases, net |
| $ | 55,739 |
|
| $ | 42,802 |
|
Capital expenditures accrued in Accounts payable and accrued liabilities |
| $ | 2,769 |
|
| $ | 14,455 |
|
Change in Accounts payable and accrued liabilities associated with dividends declared |
| $ | (102 | ) |
| $ | 177 |
|
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 |
| $ | 1,401 |
|
| $ | (779 | ) |
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 May 31,November 30, 2020 and for the three and nine months ended May 31,November 30, 2020 and 2019 have been prepared to reflect all adjustments (consisting of normal recurring accruals) that, in the opinion of management, are necessary for a fair presentation of the financial position, operating results and cash flows for the periods indicated. The results of operations for the three and nine months ended May 31,November 30, 2020 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2020.2021.
Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these unaudited financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s 20192020 Annual Report on Form 10-K.
Management 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.
Initial Adoption of Accounting Standards
Lease accounting
On September 1, 2019, the Company adopted Accounting Standards Update 2016-02, Leases (Topic 842). The new guidance supersedes existing guidance on accounting for leases in Topic 840 and is intended to increase the transparency and comparability of accounting for lease transactions. Topic 842 requires most leases to be recognized on the balance sheet by recording a right-of-use (ROU) asset and a lease liability. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting remains similar to the prior model, but updated to align with certain changes to the lessee model and ASC 606: Revenue from Contracts with Customers (Topic 606).
The Company adopted the provisions of the new standard using the modified retrospective adoption method, utilizing the simplified transition option 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 use-of-hindsight practical expedient. The Company elected to not separate lease and non-lease components. The Company elected the short-term lease recognition exemption for all leases that qualify, which means it will not recognize ROU assets or lease liabilities for leases with lease terms of less than twelve months. Following the adoption of Topic 842, the Company will utilize both Topic 842 and Topic 606 when evaluating retained risk of services and other performance obligations in conjunction with selling railcars with a lease attached as part of the syndication model.
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. A cumulative-effect adjustment of $4.4 million was recorded as an increase to retained earnings as of September 1, 2019.
10
THE GREENBRIER COMPANIES, INC.
Derivatives and Hedging
In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). This update improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. The guidance expands the ability to qualify for hedge accounting for non-financial and financial risk components, reduces complexity in fair value hedges of interest rate risk and eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. The Company adopted this guidance effective September 1, 2019 and it did not have a material impact on our consolidated financial statements.
Prospective Accounting Changes
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued Accounting Standard Update 2016-13, Financial Instruments – Credit Losses (ASU 2016-13). This update introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new guidance will applyapplies to loans, accounts receivable, trade receivables, other financial assets measured at amortized cost, loan commitments and other off-balance sheet credit exposures. The new guidance will also applyapplies to debt securities and other financial assets measured at fair value through other comprehensive income. The new guidance is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adoptadopted this guidance beginning September 1, 2020. The Company estimated the expected lifetime credit loss by pooling financial instruments based on similar characteristics. Expected losses were then estimated using historical loss information and aging considerations, as well as other information such as the current and future economic conditions of its customers and the end markets in which they operate. The Company adopted this guidance using a modified retrospective approach through a cumulative effect adjustment, which decreased opening retained earnings by $0.5 million on September 1, 2020. The ongoing application of ASU 2016-13 is not expected to materially impact the Company’s consolidated financial statements.
Prospective Accounting Changes
Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the FASB issued Accounting Standard Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted EPS calculations as a result of these changes. The guidance in this ASU can be adopted using either a full or modified retrospective approach and becomes effective for annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.
Simplification of Accounting for Income Taxes
In December 2019, the FASB issued Accounting Standard Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 for: recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The ASU also improves consistent application of GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and disclosures.
Note 2 – Revenue Recognition
Contract balances
Contract assets primarily consist of unbilled receivables related to marine vessel construction and railcar 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 contract balances are as follows:
(in thousands) |
| Balance sheet classification |
| May 31, 2020 |
|
| August 31, 2019 |
|
| $ change |
|
| Balance sheet classification |
| November 30, 2020 |
|
| August 31, 2020 |
|
| $ change |
| ||||||
Contract assets |
| Inventories |
| $ | 7,471 |
|
| $ | 10,196 |
|
| $ | (2,725 | ) |
| Inventories |
| $ | 5,738 |
|
| $ | 7,081 |
|
| $ | (1,343 | ) |
Contract liabilities 1 |
| Deferred revenue |
| $ | 47,648 |
|
| $ | 52,118 |
|
| $ | (4,470 | ) |
| Deferred revenue |
| $ | 30,444 |
|
| $ | 27,009 |
|
| $ | 3,435 |
|
1 | Contract liabilities balance includes deferred revenue within the scope of Topic 606. |
For the three and nine months ended May 31,November 30, 2020, the Company recognized $2.7 million and $27.2 million of revenue that was included in Contract liabilities as of August 31, 2019.
11
THE GREENBRIER COMPANIES, INC.2020.
Performance obligations
As of May 31,November 30, 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) |
| May 31, 2020 |
|
| November 30, 2020 |
| ||
Revenue type: |
|
|
|
|
|
|
|
|
Manufacturing – Railcar sales |
| $ | 2,292.1 |
|
| $ | 1,923.0 |
|
Manufacturing – Marine |
| $ | 36.8 |
|
| $ | 66.4 |
|
Services |
| $ | 134.8 |
|
| $ | 127.1 |
|
Other |
| $ | 132.3 |
|
| $ | 60.4 |
|
|
|
|
|
|
|
|
|
|
Manufacturing – Railcars intended for syndication 1 |
| $ | 239.1 |
|
| $ | 237.0 |
|
1 | Not a performance obligation as defined in Topic 606 |
Based on current production and delivery schedules and existing contracts, approximately $0.4$1.0 billion of the Railcar sales amount is expected to be recognized in the final threeremaining nine months of 20202021 while the remaining amount is expected to be recognized through 2024. The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operations, as they are accounted for under the equity method.
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 through 20212022 as vessel construction is completed.
Services includes management and maintenance services of which approximately 45%50% are expected to be performed through 20242025 and the remaining amount through 2037.
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 $417.2 million. In connection with the acquisition, the Company acquired two 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 included approximately $8.5 million for capital expenditures on railcar lining operations and other facility improvements. Included in the acquisition were equity interests in 2 railcar component manufacturing businesses which Greenbrier accounts for under the equity method of accounting and recognized at their respective fair value as investments in unconsolidated affiliates.
The purchase price was funded by, and consisted of, a combination of cash on hand, the proceeds of a $300 million secured term loan and the issuance to the seller of a $50 million senior convertible note.
For the nine months ended May 31, 2020, the operations contributed by ARI’s manufacturing business generated revenues of $338.7 million and net earnings of $6.7 million, which are reported in the Company’s consolidated financial statements as part of the Manufacturing segment.
12
THE GREENBRIER COMPANIES, INC.
The preliminary purchase price of the net assets acquired from ARI was allocated as follows:
(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 |
|
The above purchase price allocation, including the residual amount allocated to goodwill, is based on preliminary information and is subject to change as additional information is obtained related to the amounts allocated to the assets acquired and liabilities assumed. During the measurement period, which may extend up to 12 months after the date of acquisition, the Company will adjust these assets and liabilities if new information is obtained about the facts and circumstances that existed as of the acquisition date and revised amounts will be recorded as of that date. The effect of measurement period adjustments to the estimated amounts will be reflected on a prospective basis and were not material during the nine months ended May 31, 2020.
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 |
|
|
|
|
|
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) |
| May 31, 2020 |
|
| August 31, 2019 |
|
| November 30, 2020 |
|
| August 31, 2020 |
| ||||
Manufacturing supplies and raw materials |
| $ | 326,686 |
|
| $ | 387,015 |
|
| $ | 255,112 |
|
| $ | 263,080 |
|
Work-in-process |
|
| 148,342 |
|
|
| 156,614 |
|
|
| 103,540 |
|
|
| 116,909 |
|
Finished goods |
|
| 219,050 |
|
|
| 130,576 |
|
|
| 153,878 |
|
|
| 173,761 |
|
Excess and obsolete adjustment |
|
| (18,636 | ) |
|
| (9,512 | ) |
|
| (22,248 | ) |
|
| (24,221 | ) |
|
| $ | 675,442 |
|
| $ | 664,693 |
|
| $ | 490,282 |
|
| $ | 529,529 |
|
13
THE GREENBRIER COMPANIES, INC.
Note 54 – 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) |
| May 31, 2020 |
|
| August 31, 2019 |
|
| November 30, 2020 |
|
| August 31, 2020 |
| ||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
| $ | 89,722 |
|
| $ | 89,722 |
|
| $ | 89,722 |
|
| $ | 89,722 |
|
Accumulated amortization |
|
| (54,600 | ) |
|
| (48,850 | ) |
|
| (58,419 | ) |
|
| (56,509 | ) |
Other intangibles |
|
| 36,748 |
|
|
| 34,031 |
|
|
| 39,477 |
|
|
| 37,798 |
|
Accumulated amortization |
|
| (9,274 | ) |
|
| (6,908 | ) |
|
| (11,569 | ) |
|
| (10,595 | ) |
|
|
| 62,596 |
|
|
| 67,995 |
|
|
| 59,211 |
|
|
| 60,416 |
|
Intangible assets not subject to amortization |
|
| 2,513 |
|
|
| 5,450 |
|
|
| 2,474 |
|
|
| 2,474 |
|
Prepaid and other assets |
|
| 19,646 |
|
|
| 15,749 |
|
|
| 18,231 |
|
|
| 22,026 |
|
Operating lease ROU assets |
|
| 56,886 |
|
|
| — |
|
|
| 58,767 |
|
|
| 62,389 |
|
Nonqualified savings plan investments |
|
| 32,165 |
|
|
| 27,967 |
|
|
| 39,026 |
|
|
| 35,744 |
|
Revolving notes issuance costs, net |
|
| 3,859 |
|
|
| 4,568 |
|
|
| 3,387 |
|
|
| 3,623 |
|
Assets held for sale |
|
| 3,650 |
|
|
| 3,650 |
|
|
| 5,413 |
|
|
| 3,650 |
|
Total Intangible and other assets, net |
| $ | 181,315 |
|
| $ | 125,379 |
|
| $ | 186,509 |
|
| $ | 190,322 |
|
Amortization expense was $2.7$2.8 million and $8.2$2.7 million for the three and nine months ended May 31,November 30, 2020 and $1.3 million and $4.6 million for the three and nine months ended May 31, 2019.2019 respectively. Amortization expense for the years ending August 31, 2020, 2021, 2022, 2023, 2024 and 20242025 is expected to be $10.4$11.5 million, $10.4$8.1 million, $7.0$6.7 million, $5.8$6.6 million and $5.8$5.7 million, respectively.
Note 65 – Revolving Notes
Senior secured credit facilities, consisting of 34 components, aggregated to $705.1$738.2 million as of May 31,November 30, 2020.
As of May 31,November 30, 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 availableexisted to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this North
American credit 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 eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.
As of May 31,November 30, 2020, lines of credit totaling $55.1$68.2 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1%1.2% 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 $13.9$28.0 million of facilities which are guaranteed by the Company. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from August 2020June 2021 through July 2021.
September 2022.
As of May 31,November 30, 2020, the Company’s Mexican railcar manufacturing joint ventureoperations had 23 lines of credit totaling $50.0$70.0 million. The first line of credit provides up to $30.0 million.million and matures in June 2024. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%. 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$35.0 million, of which the Company and its joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 3.75%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2021. The third line of credit provides up to $5.0 million and matures in September 2022. Advances under this facility bear interest at LIBOR plus 2.95% and are to be used for working capital needs.
14
THE GREENBRIER COMPANIES, INC.
As of MayNovember 30, 2020, outstanding commitments under the senior secured credit facilities consisted of $28.4 million in letters of credit and $210.0 million in borrowings under the North American credit facility, $36.2 million outstanding under the European credit facilities and $30.0 million outstanding under the Mexican credit facilities. As of November 30, 2020, the Company had an aggregate of $85.3 million available to draw down under committed credit facilities.
As of August 31, 2020, outstanding commitments under the senior secured credit facilities consisted of $28.7$28.7 million in letters of credit and $350.0$275.0 million in borrowings under the North American credit facility, $46.5$46.5 million outstanding under the European credit facilities and $20.0$30.0 million outstanding under the Mexican credit facilities. As of May 31, 2020, the Company had an aggregate of $136.8 million available to draw down under committed 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 76 – Accounts Payable and Accrued Liabilities
(In thousands) |
| May 31, 2020 |
|
| August 31, 2019 |
|
| November 30, 2020 |
|
| August 31, 2020 |
| ||||
Trade payables |
| $ | 161,900 |
|
| $ | 302,009 |
|
| $ | 126,096 |
|
| $ | 148,971 |
|
Other accrued liabilities |
|
| 106,200 |
|
|
| 108,939 |
|
|
| 107,798 |
|
|
| 100,168 |
|
Operating lease liabilities |
|
| 58,158 |
|
|
| — |
|
|
| 61,072 |
|
|
| 64,509 |
|
Accrued payroll and related liabilities |
|
| 100,152 |
|
|
| 106,669 |
|
|
| 93,552 |
|
|
| 105,008 |
|
Accrued warranty |
|
| 47,743 |
|
|
| 46,678 |
|
|
| 45,620 |
|
|
| 45,224 |
|
Income taxes payable |
|
| 14,816 |
|
|
| 4,065 |
| ||||||||
|
| $ | 488,969 |
|
| $ | 568,360 |
|
| $ | 434,138 |
|
| $ | 463,880 |
|
Note 87 – 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 Ended May 31, |
|
| Nine Months Ended May 31, |
|
| Three Months Ended November 30, |
| |||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||
Balance at beginning of period |
| $ | 46,850 |
|
| $ | 24,994 |
|
| $ | 46,678 |
|
| $ | 27,395 |
|
| $ | 45,224 |
|
| $ | 46,678 |
|
Charged to cost of revenue, net |
|
| 2,600 |
|
|
| 1,235 |
|
|
| 5,862 |
|
|
| 4,088 |
|
|
| 1,954 |
|
|
| 2,378 |
|
Payments |
|
| (1,518 | ) |
|
| (2,004 | ) |
|
| (4,653 | ) |
|
| (6,801 | ) |
|
| (1,415 | ) |
|
| (1,999 | ) |
Currency translation effect |
|
| (189 | ) |
|
| (260 | ) |
|
| (144 | ) |
|
| (717 | ) |
|
| (143 | ) |
|
| 53 |
|
Balance at end of period |
| $ | 47,743 |
|
| $ | 23,965 |
|
| $ | 47,743 |
|
| $ | 23,965 |
|
| $ | 45,620 |
|
| $ | 47,110 |
|
15
THE GREENBRIER COMPANIES, INC.
Note 98 – 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 |
|
| 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 | ) | ||||||||||||||||
Balance, August 31, 2020 |
| $ | (11,970 | ) |
| $ | (39,816 | ) |
| $ | (1,031 | ) |
| $ | (52,817 | ) | ||||||||||||||||
Other comprehensive loss before reclassifications |
|
| (7,127 | ) |
|
| (13,306 | ) |
|
| (140 | ) |
|
| (20,573 | ) |
|
| (753 | ) |
|
| 3,870 |
|
|
| 1 |
|
|
| 3,118 |
|
Amounts reclassified from Accumulated other comprehensive loss |
|
| 2,322 |
|
|
| — |
|
|
| — |
|
|
| 2,322 |
|
|
| 1,241 |
|
|
| — |
|
|
| — |
|
|
| 1,241 |
|
Balance, May 31, 2020 |
| $ | (13,646 | ) |
| $ | (47,500 | ) |
| $ | (1,920 | ) |
| $ | (63,066 | ) | ||||||||||||||||
Balance, November 30, 2020 |
| $ | (11,482 | ) |
| $ | (35,946 | ) |
| $ | (1,030 | ) |
| $ | (48,458 | ) |
The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income,Operations, with financial statement caption, were as follows:
|
| Three Months Ended May 31, |
|
|
| |||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| Financial Statement Caption | ||
(Gain) loss on derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
| $ | 1,711 |
|
| $ | 249 |
|
| Revenue and Cost of revenue |
Interest rate swap contracts |
|
| 783 |
|
|
| 142 |
|
| Interest and foreign exchange |
|
|
| 2,494 |
|
|
| 391 |
|
| Total before tax |
|
|
| (649 | ) |
|
| (85 | ) |
| Income tax benefit |
|
| $ | 1,845 |
|
| $ | 306 |
|
| Net of tax |
|
| Nine Months Ended May 31, |
|
|
|
| Three Months Ended November 30, |
|
|
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| Financial Statement Location |
| 2020 |
|
| 2019 |
|
| Financial Statement Caption | ||||
(Gain) loss on derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
| $ | 1,812 |
|
| $ | 1,506 |
|
| Revenue and cost of revenue |
| $ | 1,331 |
|
| $ | 241 |
|
| Revenue and Cost of revenue |
Interest rate swap contracts |
|
| 1,319 |
|
|
| 438 |
|
| Interest and foreign exchange |
|
| 287 |
|
|
| 167 |
|
| Interest and foreign exchange |
|
|
| 3,131 |
|
|
| 1,944 |
|
| Total before tax |
|
| 1,618 |
|
|
| 408 |
|
| Total before tax |
|
|
| (809 | ) |
|
| (468 | ) |
| Income tax benefit |
|
| (377 | ) |
|
| (99 | ) |
| Income tax expense |
|
| $ | 2,322 |
|
| $ | 1,476 |
|
| Net of tax |
| $ | 1,241 |
|
| $ | 309 |
|
| Net of tax |
16
THE GREENBRIER COMPANIES, INC.
Note 109 – Earnings (Loss) Per Share
The shares used in the computation of basic and diluted earnings per common share are reconciled as follows:
|
| Three Months Ended May 31, |
|
| Nine Months Ended May 31, |
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Weighted average basic common shares outstanding (1) |
|
| 32,690 |
|
|
| 32,603 |
|
|
| 32,660 |
|
|
| 32,623 |
|
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) |
|
| 788 |
|
|
| 580 |
|
|
| 754 |
|
|
| 538 |
|
Weighted average diluted common shares outstanding |
|
| 33,478 |
|
|
| 33,183 |
|
|
| 33,414 |
|
|
| 33,161 |
|
|
| Three Months Ended November 30, |
| |||||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Weighted average basic common shares outstanding (1) |
|
| 32,723 |
|
|
| 32,629 |
|
Dilutive effect of 2.875% convertible notes (2)(3) |
|
| 0 |
|
|
| 0 |
|
Dilutive effect of 2.25% convertible notes (2)(4) |
|
| 0 |
|
|
| 0 |
|
Dilutive effect of restricted stock units (2)(5) |
|
| — |
|
|
| 655 |
|
Weighted average diluted common shares outstanding |
|
| 32,723 |
|
|
| 33,284 |
|
(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 common stock equivalents was excluded from the share calculation for the three months ended November 30, 2020 due to a net loss. |
(3) | The dilutive effect of the 2.875% |
|
|
| 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% Convertibleconvertible notes, 2.25% Convertibleconvertible 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 May 31, |
|
| Nine Months Ended May 31, |
|
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| ||||
Net earnings attributable to Greenbrier |
| $ | 27,772 |
|
| $ | 15,248 |
|
| $ | 49,070 |
|
| $ | 35,969 |
|
|
Weighted average diluted common shares outstanding |
|
| 33,478 |
|
|
| 33,183 |
|
|
| 33,414 |
|
|
| 33,161 |
|
|
Diluted earnings per share |
| $ | 0.83 |
|
| $ | 0.46 |
|
| $ | 1.47 |
|
| $ | 1.08 |
|
|
|
| Three Months Ended November 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Net earnings (loss) attributable to Greenbrier |
| $ | (9,972 | ) |
| $ | 7,669 |
|
Weighted average diluted common shares outstanding |
|
| 32,723 |
|
|
| 33,284 |
|
Diluted earnings (loss) per share |
| $ | (0.30 | ) |
| $ | 0.23 |
|
17
THE GREENBRIER COMPANIES, INC.
Note 1110 – 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 unit, restricted stock and phantom stock unit awards.
Stock based compensation expense was $1.0 million and $8.3$4.4 million for the three and nine months ended May 31,November 30, 2020 respectively and $3.5 million and $10.8$3.2 million for the three and nine months ended May 31, 2019, respectively.November 30, 2019. Compensation expense is recorded in Selling and administrative expense and Cost of revenue on the Consolidated Statements of Income.Operations.
Note 1211 – 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 May 31,November 30, 2020 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros and Pound Sterling;Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $37.3$243.7 million. The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when there is a loss, or as Accounts receivable, net when there is a gain. As the contracts mature at various dates through MayAugust 2022, any such gain or loss remaining will be recognized in manufacturing revenue or cost of revenue along with the related transactions. In the event that the underlying transaction does not occur or does not occur in the period designated at the inception of the hedge, the amount classified in accumulated other comprehensive loss would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence. At May 31,November 30, 2020 exchange rates, approximately $1.1$0.7 million would be reclassified to revenue or cost of revenue in the next year.
At May 31,November 30, 2020, an interest rate swap agreement maturing in September 2023 had a notional amount of $106.6$104.6 million and an interest rate swap agreement maturing June 2024 had a notional amount of $146.3$142.5 million. The fair value of the contracts are included on the Consolidated Balance Sheets in Accounts payable and accrued liabilities when there is a loss, or in Accounts receivable, net when there is a gain. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from Accumulated other comprehensive loss and charged or credited to interest expense. At May 31,November 30, 2020 interest rates, approximately $5.0$4.9 million would be reclassified to interest expense in the next year.
Fair Values of Derivative Instruments
|
| Asset Derivatives |
|
| Liability Derivatives |
|
| Asset Derivatives |
|
| Liability Derivatives |
| ||||||||||||||||||||||||||||
|
|
|
| May 31, 2020 |
|
| August 31, 2019 |
|
|
|
| May 31, 2020 |
|
| August 31, 2019 |
|
|
|
| November 30, 2020 |
|
| August 31, 2020 |
|
|
|
| November 30, 2020 |
|
| August 31, 2020 |
| ||||||||
(In thousands) |
| Balance sheet location |
| Fair Value |
|
| Fair Value |
|
| Balance sheet location |
| Fair Value |
|
| Fair Value |
|
| 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 |
| $ | 147 |
|
| $ | 64 |
|
| Accounts payable and accrued liabilities |
| $ | 768 |
|
| $ | 437 |
|
| Accounts receivable, net |
| $ | 112 |
|
| $ | 560 |
|
| Accounts payable and accrued liabilities |
| $ | 389 |
|
| $ | 3 |
|
Interest rate swap contracts |
| Accounts receivable, net |
|
| — |
|
|
| — |
|
| Accounts payable and accrued liabilities |
|
| 16,876 |
|
|
| 10,255 |
|
| Accounts receivable, net |
|
| — |
|
|
| — |
|
| Accounts payable and accrued liabilities |
|
| 14,250 |
|
|
| 15,904 |
|
|
|
|
| $ | 147 |
|
| $ | 64 |
|
|
|
| $ | 17,644 |
|
| $ | 10,692 |
|
|
|
| $ | 112 |
|
| $ | 560 |
|
|
|
| $ | 14,639 |
|
| $ | 15,907 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign forward exchange contracts |
| Accounts receivable, net |
| $ | — |
|
| $ | — |
|
| Accounts payable and accrued liabilities |
| $ | 2 |
|
| $ | 587 |
|
| Accounts receivable, net |
| $ | — |
|
| $ | 22 |
|
| Accounts payable and accrued liabilities |
| $ | — |
|
| $ | — |
|
18
THE GREENBRIER COMPANIES, INC.
The Effect of Derivative Instruments on the Statements of IncomeOperations
Three Months Ended May 31,November 30, 2020 and 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 |
|
| Location of gain (loss) recognized in income on derivatives |
| Gain (loss) recognized in income on derivatives three months ended |
| ||||||||||
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
|
|
|
| November 30, 2020 |
|
| November 30, 2019 |
| ||||
Foreign forward exchange contract |
| Interest and foreign exchange |
| $ | 154 |
|
| $ | — |
|
| Interest and foreign exchange |
| $ | (123 | ) |
| $ | 71 |
|
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 |
| |||||||||||||||
|
| May 31, 2020 |
|
| May 31, 2019 |
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||||||
Foreign forward exchange contracts |
| $ | (599 | ) |
| $ | 330 |
|
| Revenue |
| $ | (485 | ) |
| $ | (68 | ) |
| Revenue |
| $ | 138 |
|
| $ | 264 |
|
Foreign forward exchange contracts |
|
| (2,015 | ) |
|
| 102 |
|
| Cost of revenue |
|
| (1,226 | ) |
|
| (181 | ) |
| Cost of revenue |
|
| 130 |
|
|
| 179 |
|
Interest rate swap contracts |
|
| (5,155 | ) |
|
| (2,704 | ) |
| Interest and foreign exchange |
|
| (783 | ) |
|
| (143 | ) |
| Interest and foreign exchange |
|
| 281 |
|
|
| (163 | ) |
|
| $ | (7,769 | ) |
| $ | (2,272 | ) |
|
|
| $ | (2,494 | ) |
| $ | (392 | ) |
|
|
| $ | 549 |
|
| $ | 280 |
|
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 |
| |||||||||||||||
| November 30, 2020 |
|
| November 30, 2019 |
|
| November 30, 2020 |
|
| November 30, 2019 |
|
| November 30, 2020 |
|
| November 30, 2019 |
| ||||||
Foreign forward exchange contracts | $ | (1,010 | ) |
| $ | 573 |
| Revenue | $ | (246 | ) |
| $ | (166 | ) | Revenue | $ | 148 |
|
| $ | 453 |
|
Foreign forward exchange contracts |
| (61 | ) |
|
| (594 | ) | Cost of revenue |
| (41 | ) |
|
| (75 | ) | Cost of revenue |
| 5 |
|
|
| 134 |
|
Interest rate swap contracts |
| 323 |
|
|
| 2,719 |
| Interest and foreign exchange |
| (1,331 | ) |
|
| (167 | ) | Interest and foreign exchange |
| — |
|
|
| (165 | ) |
| $ | (748 | ) |
| $ | 2,698 |
|
| $ | (1,618 | ) |
| $ | (408 | ) |
| $ | 153 |
|
| $ | 422 |
|
The following table presents the amounts in the Consolidated Statements of IncomeOperations 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 May 31,November 30, 2020 and 2019:
|
| For The Three Months Ended |
|
| Three Months Ended November 30, |
| ||||||||||||||||||||||||||
|
| May 31, 2020 |
|
| May 31, 2019 |
|
| 2020 |
|
| 2019 |
| ||||||||||||||||||||
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
| ||||||||
Revenue |
| $ | 762,557 |
|
| $ | (485 | ) |
| $ | 856,152 |
|
| $ | (68 | ) |
| $ | 402,989 |
|
| $ | (246 | ) |
| $ | 769,359 |
|
| $ | (166 | ) |
Cost of revenue |
|
| 655,026 |
|
|
| (1,226 | ) |
|
| 749,580 |
|
|
| (181 | ) |
|
| 362,318 |
|
|
| (41 | ) |
|
| 677,170 |
|
|
| (75 | ) |
Interest and foreign exchange |
|
| 7,562 |
|
|
| (783 | ) |
|
| 9,770 |
|
|
| (143 | ) |
|
| 11,103 |
|
|
| (1,331 | ) |
|
| 12,852 |
|
|
| (167 | ) |
Nine Months Ended May 31, 2020 and 2019
Derivatives in cash flow hedging relationships |
| Location of gain (loss) recognized in income on derivatives |
| Gain (loss) recognized in income on derivatives nine months ended |
| |||||
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||
Foreign forward exchange contract |
| Interest and foreign exchange |
| $ | 60 |
|
| $ | 495 |
|
Derivatives in cash flow hedging relationships |
| Gain (loss) recognized in OCI on derivatives nine months ended |
|
| Location of gain (loss) reclassified from accumulated OCI into income |
| Gain (loss) reclassified from accumulated OCI into income nine months ended |
|
| Location of gain (loss) on derivative amount excluded from effectiveness testing) |
| Gain (loss) recognized on derivative (amount excluded from effectiveness testing) nine months ended |
| |||||||||||||||||||||||||||
|
| May 31, 2020 |
|
| May 31, 2019 |
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
|
|
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||||||||||||||||||
Foreign forward exchange contracts |
| $ | 164 |
|
| $ | (16 | ) |
| Revenue |
| $ | (584 | ) |
| $ | (735 | ) |
| Revenue |
| $ | 781 |
|
| $ | 1,164 |
| ||||||||||||
Foreign forward exchange contracts |
|
| (2,198 | ) |
|
| (293 | ) |
| Cost of revenue |
|
| (1,228 | ) |
|
| (771 | ) |
| Cost of revenue |
|
| 474 |
|
|
| 857 |
| ||||||||||||
Interest rate swap contracts |
|
| (7,939 | ) |
|
| (6,393 | ) |
| Interest and foreign exchange |
|
| (1,319 | ) |
|
| (438 | ) |
| Interest and foreign exchange |
|
| — |
|
|
| (185 | ) | ||||||||||||
|
| $ | (9,973 | ) |
| $ | (6,702 | ) |
|
|
| $ | (3,131 | ) |
| $ | (1,944 | ) |
|
|
| $ | 1,255 |
|
| $ | 1,836 |
|
19
THE GREENBRIER COMPANIES, INC.
|
| For the Nine Months Ended |
| |||||||||||||||||||||||||||||||||||||
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||||||||||||||||||||||||||||||||||
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
|
| Total |
|
| Amount of gain (loss) on cash flow hedge activity |
| ||||||||||||||||||||||||||||
Revenue |
| $ | 2,155,764 |
|
| $ | (584 | ) |
| $ | 2,119,346 |
|
| $ | (735 | ) | ||||||||||||||||||||||||
Cost of revenue |
|
| 1,869,708 |
|
|
| (1,228 | ) |
|
| 1,886,397 |
|
|
| (771 | ) | ||||||||||||||||||||||||
Interest and foreign exchange |
|
| 33,023 |
|
|
| (1,319 | ) |
|
| 23,411 |
|
|
| (438 | ) |
Note 1312 – Segment Information
The Company operates in 3 reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services.
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 20192020 Annual Report on Form 10-K. Performance is evaluated based on Earnings (loss) from operations. 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. The Company does not allocate Interest and foreign exchange or Income tax expensebenefit (expense) for either external or internal reporting purposes. Intersegment sales and transfers are valued as if the sales or transfers were to third parties. Related revenue and margin are eliminated in consolidation and therefore are not included in consolidated results in the Company’s Consolidated Financial Statements.
The information in the following table is derived directly from the segments’ internal financial reports used for corporate management purposes.
For the three months ended May 31,November 30, 2020:
|
| Revenue |
|
| Earnings (loss) from operations |
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||||||||
Manufacturing |
| $ | 653,007 |
|
| $ | 1,151 |
|
| $ | 654,158 |
|
| $ | 68,445 |
|
| $ | 95 |
|
| $ | 68,540 |
|
| $ | 308,722 |
|
| $ | 20,591 |
|
| $ | 329,313 |
|
| $ | 9,686 |
|
| $ | 2,505 |
|
| $ | 12,191 |
|
Wheels, Repair & Parts |
|
| 82,024 |
|
|
| 1,527 |
|
|
| 83,551 |
|
|
| 3,785 |
|
|
| (393 | ) |
|
| 3,392 |
|
|
| 65,556 |
|
|
| 301 |
|
|
| 65,857 |
|
|
| (200 | ) |
|
| (9 | ) |
|
| (209 | ) |
Leasing & Services |
|
| 27,526 |
|
|
| 14,841 |
|
|
| 42,367 |
|
|
| 11,837 |
|
|
| 14,454 |
|
|
| 26,291 |
|
|
| 28,711 |
|
|
| 4,665 |
|
|
| 33,376 |
|
|
| 5,890 |
|
|
| 4,285 |
|
|
| 10,175 |
|
Eliminations |
|
| — |
|
|
| (17,519 | ) |
|
| (17,519 | ) |
|
| — |
|
|
| (14,156 | ) |
|
| (14,156 | ) |
|
| — |
|
|
| (25,557 | ) |
|
| (25,557 | ) |
|
| — |
|
|
| (6,781 | ) |
|
| (6,781 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,255 | ) |
|
| — |
|
|
| (17,255 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,490 | ) |
|
| — |
|
|
| (17,490 | ) |
|
| $ | 762,557 |
|
| $ | — |
|
| $ | 762,557 |
|
| $ | 66,812 |
|
| $ | — |
|
| $ | 66,812 |
|
| $ | 402,989 |
|
| $ | — |
|
| $ | 402,989 |
|
| $ | (2,114 | ) |
| $ | — |
|
| $ | (2,114 | ) |
For the nine months ended May 31, 2020:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||
Manufacturing |
| $ | 1,800,317 |
|
| $ | 1,269 |
|
| $ | 1,801,586 |
|
| $ | 167,693 |
|
| $ | 73 |
|
| $ | 167,766 |
|
Wheels, Repair & Parts |
|
| 259,857 |
|
|
| 12,511 |
|
|
| 272,368 |
|
|
| 8,219 |
|
|
| (903 | ) |
|
| 7,316 |
|
Leasing & Services |
|
| 95,590 |
|
|
| 31,830 |
|
|
| 127,420 |
|
|
| 34,407 |
|
|
| 30,127 |
|
|
| 64,534 |
|
Eliminations |
|
| — |
|
|
| (45,610 | ) |
|
| (45,610 | ) |
|
| — |
|
|
| (29,297 | ) |
|
| (29,297 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (63,287 | ) |
|
| — |
|
|
| (63,287 | ) |
|
| $ | 2,155,764 |
|
| $ | — |
|
| $ | 2,155,764 |
|
| $ | 147,032 |
|
| $ | — |
|
| $ | 147,032 |
|
20
THE GREENBRIER COMPANIES, INC.
For the three months ended May 31, 2019:
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||
Manufacturing |
| $ | 681,588 |
|
| $ | 29,201 |
|
| $ | 710,789 |
|
| $ | 72,110 |
|
| $ | 2,000 |
|
| $ | 74,110 |
|
Wheels, Repair & Parts |
|
| 124,980 |
|
|
| 11,601 |
|
|
| 136,581 |
|
|
| (8,820 | ) |
|
| 808 |
|
|
| (8,012 | ) |
Leasing & Services |
|
| 49,584 |
|
|
| 5,848 |
|
|
| 55,432 |
|
|
| 15,337 |
|
|
| 4,913 |
|
|
| 20,250 |
|
Eliminations |
|
| — |
|
|
| (46,650 | ) |
|
| (46,650 | ) |
|
| — |
|
|
| (7,721 | ) |
|
| (7,721 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (25,438 | ) |
|
| — |
|
|
| (25,438 | ) |
|
| $ | 856,152 |
|
| $ | — |
|
| $ | 856,152 |
|
| $ | 53,189 |
|
| $ | — |
|
| $ | 53,189 |
|
For the nine months ended May 31,November 30, 2019:
|
| Revenue |
|
| Earnings (loss) from operations |
|
| Revenue |
|
| Earnings (loss) from operations |
| ||||||||||||||||||||||||||||||||||||
(In thousands) |
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
|
| External |
|
| Intersegment |
|
| Total |
| ||||||||||||
Manufacturing |
| $ | 1,629,396 |
|
| $ | 82,257 |
|
| $ | 1,711,653 |
|
| $ | 122,955 |
|
| $ | 4,791 |
|
| $ | 127,746 |
|
| $ | 657,367 |
|
| $ | 97 |
|
| $ | 657,464 |
|
| $ | 53,143 |
|
| $ | (23 | ) |
| $ | 53,120 |
|
Wheels, Repair & Parts |
|
| 358,801 |
|
|
| 36,440 |
|
|
| 395,241 |
|
|
| (2,750 | ) |
|
| 262 |
|
|
| (2,488 | ) |
|
| 86,608 |
|
|
| 5,851 |
|
|
| 92,459 |
|
|
| 1,114 |
|
|
| (342 | ) |
|
| 772 |
|
Leasing & Services |
|
| 131,149 |
|
|
| 14,758 |
|
|
| 145,907 |
|
|
| 53,880 |
|
|
| 12,466 |
|
|
| 66,346 |
|
|
| 25,384 |
|
|
| 1,749 |
|
|
| 27,133 |
|
|
| 9,777 |
|
|
| 1,289 |
|
|
| 11,066 |
|
Eliminations |
|
| — |
|
|
| (133,455 | ) |
|
| (133,455 | ) |
|
| — |
|
|
| (17,519 | ) |
|
| (17,519 | ) |
|
| — |
|
|
| (7,697 | ) |
|
| (7,697 | ) |
|
| — |
|
|
| (924 | ) |
|
| (924 | ) |
Corporate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (66,388 | ) |
|
| — |
|
|
| (66,388 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (22,250 | ) |
|
| — |
|
|
| (22,250 | ) |
|
| $ | 2,119,346 |
|
| $ | — |
|
| $ | 2,119,346 |
|
| $ | 107,697 |
|
| $ | — |
|
| $ | 107,697 |
|
| $ | 769,359 |
|
| $ | — |
|
| $ | 769,359 |
|
| $ | 41,784 |
|
| $ | — |
|
| $ | 41,784 |
|
|
| Total assets |
|
| Total assets |
| ||||||||||
(In thousands) |
| May 31, 2020 |
|
| August 31, 2019 |
|
| November 30, 2020 |
|
| August 31, 2020 |
| ||||
Manufacturing |
| $ | 1,441,052 |
|
| $ | 1,606,571 |
|
| $ | 1,264,616 |
|
| $ | 1,301,715 |
|
Wheels, Repair & Parts |
|
| 296,888 |
|
|
| 306,725 |
|
|
| 274,534 |
|
|
| 271,862 |
|
Leasing & Services |
|
| 777,523 |
|
|
| 708,799 |
|
|
| 758,820 |
|
|
| 739,025 |
|
Unallocated |
|
| 763,568 |
|
|
| 368,542 |
| ||||||||
Unallocated, including cash |
|
| 748,114 |
|
|
| 861,232 |
| ||||||||
|
| $ | 3,279,031 |
|
| $ | 2,990,637 |
|
| $ | 3,046,084 |
|
| $ | 3,173,834 |
|
Reconciliation of Earnings (loss) from operations to Earnings (loss) before income tax and earnings (loss) from unconsolidated affiliates:
|
| Three Months Ended May 31, |
|
| Nine Months Ended May 31, |
|
| Three Months Ended November 30, |
| |||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||
Earnings from operations |
| $ | 66,812 |
|
| $ | 53,189 |
|
| $ | 147,032 |
|
| $ | 107,697 |
| ||||||||
Earnings (loss) from operations |
| $ | (2,114 | ) |
| $ | 41,784 |
| ||||||||||||||||
Interest and foreign exchange |
|
| 7,562 |
|
|
| 9,770 |
|
|
| 33,023 |
|
|
| 23,411 |
|
|
| 11,103 |
|
|
| 12,852 |
|
Earnings before income tax and earnings (loss) from unconsolidated affiliates |
| $ | 59,250 |
|
| $ | 43,419 |
|
| $ | 114,009 |
|
| $ | 84,286 |
| ||||||||
Earnings (loss) before income tax and earnings (loss) from unconsolidated affiliates |
| $ | (13,217 | ) |
| $ | 28,932 |
|
21
THE GREENBRIER COMPANIES, INC.
Note 1413 – Leases
Lessor
Equipment on operating leases is reported net of accumulated depreciation of $31.1$31.5 million and $44.2$33.4 million as of May 31,November 30, 2020 and August 31, 2019,2020, respectively. Depreciation expense was $2.6$3.9 million and $9.2$3.5 million for the three and nine months ended May 31, 2020.November 30, 2020 and 2019. In addition, certain railcar equipment leased-in by the Company on operating leases is subleased to customers under non-cancelable operating leases with lease terms ranging from one to ninefifteen years. Operating lease rental revenues included in the Company’s StatementStatements of IncomeOperations for the three and nine months ended May 31,November 30, 2020 and 2019 was $9.0$11.8 million and $30.2$11.4 million, which included $2.8$3.6 million and $9.3$3.7 million, respectively, of revenue as a result of daily, monthly or car hire utilization arrangements.
Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases at May 31,November 30, 2020, will mature as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Remaining three months of 2020 |
| $ | 7,579 |
| ||||
2021 |
|
| 28,249 |
| ||||
Remaining nine months of 2021 |
| $ | 34,031 |
| ||||
2022 |
|
| 26,044 |
|
|
| 31,217 |
|
2023 |
|
| 20,567 |
|
|
| 26,558 |
|
2024 |
|
| 16,984 |
|
|
| 23,535 |
|
2025 |
|
| 12,458 |
| ||||
Thereafter |
|
| 24,203 |
|
|
| 27,112 |
|
|
| $ | 123,626 |
|
| $ | 154,911 |
|
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 nine months ended May 31,November 30, 2020 and 2019, finance leases were not a material component of the Company's lease portfolio. The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 78 years, with some including options to extend up to 15 years. The Company recognizes a lease liability and corresponding right-of-use (ROU) asset based on the present value of lease payments. To determine the present value of lease payments, as most of its leases do not provide a readily determinable implicit rate, the Company’s incremental borrowing rate is used to discount the lease payments based on information available at lease commencement date. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when estimating its incremental borrowing rate.
The components of operating lease costs were as follows:
(in thousands) |
| Three months ended May 31, 2020 |
|
| Nine months ended May 31, 2020 |
|
| Three Months Ended November 30, |
| |||||||
|
|
|
|
|
|
|
|
|
| 2020 |
|
| 2019 |
| ||
Operating lease expense |
| $ | 4,388 |
|
| $ | 11,238 |
|
| $ | 3,848 |
|
| $ | 3,422 |
|
Short-term lease expense |
|
| 1,707 |
|
|
| 6,437 |
|
|
| 1,326 |
|
|
| 1,406 |
|
Total |
| $ | 6,095 |
|
| $ | 17,675 |
|
| $ | 5,174 |
|
| $ | 4,828 |
|
22
THE GREENBRIER COMPANIES, INC.
Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at May 31,November 30, 2020 will mature as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Remaining three months of 2020 |
| $ | 3,935 |
| ||||
2021 |
|
| 13,977 |
| ||||
Remaining nine months of 2021 |
| $ | 10,118 |
| ||||
2022 |
|
| 10,722 |
|
|
| 12,404 |
|
2023 |
|
| 10,231 |
|
|
| 11,980 |
|
2024 |
|
| 8,754 |
|
|
| 10,712 |
|
2025 |
|
| 6,248 |
| ||||
Thereafter |
|
| 18,640 |
|
|
| 17,385 |
|
Total lease payments |
| $ | 66,259 |
|
| $ | 68,847 |
|
Less: Imputed interest |
|
| (8,101 | ) |
|
| (7,775 | ) |
Total lease obligations |
| $ | 58,158 |
|
| $ | 61,072 |
|
The table below presents additional information related to the Company’s leases:
Weighted average remaining lease |
|
|
|
|
Operating leases |
|
|
| |
|
|
|
|
|
Weighted average discount |
|
|
|
|
Operating leases |
|
|
| % |
Supplemental cash flow information related to leases were as follows:
(in thousands) |
| Nine months ended May 31, 2020 |
|
| Three months ended November 30, 2020 |
| ||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
| ||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
| ||||
Operating cash flows from operating leases |
| $ | 12,121 |
|
| $ | 3,700 |
|
ROU assets obtained in exchange for new operating lease liabilities |
| $ | 26,372 |
|
| $ | (197 | ) |
23
THE GREENBRIER COMPANIES, INC.
Note 1514 – Commitments and Contingencies
Portland Harbor Superfund Site
The Company'sCompany’s Portland, Oregon manufacturing facility (the Portland Property) 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 Priority List" or "Superfund" site due to sediment contamination (the Portland Harbor Site). The Company and more than 140 other parties have received a "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 may be joint and several with other potentially responsible parties) as well as for natural resource damages resulting from releases of hazardous substances to the site. Ten private and public entities, including the Company (the Lower Willamette Group or LWG), signed an Administrative Order on Consent (AOC) to perform a remedial investigation/feasibility study (RI/FS) of the Portland Harbor Site under EPA oversight, and several additional entities havedid not signedsign such consent, but nevertheless contributed moneyfinancially to the effort. The EPA-mandated RI/FS was produced by the LWG and cost over $110 million during a 17-year period. The Company bore a percentage of the total costs incurred by the LWG in connection with the investigation. The Company'sCompany’s aggregate expenditure during the 17-year period was not material. Some or all of any such outlay may be recoverable from other responsible parties. The EPA issued its Record of Decision (ROD) for the Portland Harbor Site on January 6, 2017 and accordingly on October 26, 2017, the AOC was terminated.
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 a non-judicial mediation process to try to allocate costs associated with remediation of the Portland Harbor site.Site. Approximately 110 additional parties signed tolling agreements related to such allocations. On April 23, 2009, the Company and the other AOC signatories filed suit against 69 other parties due to a possible limitations period for some such claims; Arkema Inc. et al v. A & C Foundry Products, Inc. et al, U.S. District Court, District of Oregon, Case #3:09-cv-453-PK. All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has been stayed by the court until January 14, 2022.
The EPA's January 6, 2017 ROD identifies a clean-up remedy that the EPA estimates will take 13 years of active remediation, followed by 30 years of monitoring with an estimated undiscounted cost of $1.7 billion. The EPA typically expects its cost estimates to be accurate within a range of -30% to +50%, but this ROD states that changes in costs are likely to occur as a result of new data it wants to collectcollected over a 2-year period prior to final remedy design. The ROD identifies 13 Sediment Decision Units. One of the units, RM9W, includes the nearshore area of the river sediments offshore of the Company's Portland Oregon manufacturing facilityProperty as well as upstream and downstream of the facility. It also includes a portion of the Company'sCompany’s riverbank. The ROD does not break down total remediation costs by Sediment Decision Unit. The EPA's ROD concluded that more data was needed to better define clean-up scope and cost. On December 8, 2017, the EPA announced that Portland Harbor is one of 21 Superfund sites targeted for greater attention. On December 19, 2017, the EPA announced that it had entered a new AOC with a group of four potentially responsible parties to conduct additional sampling during 2018 and 2019 to provide more certainty about clean-up costs and aid the mediation process to allocate those costs. The parties to the mediation, including the Company, agreed to help fund the additional sampling, which is now complete. The EPA requested that potentially responsible parties enter AOCs during 2019 agreeing to conduct remedial design studies. Some parties have signed AOCs, including one party with respect to RM9W which includes the area offshore of the Company’s manufacturing facility. The Company has not signed an AOC in connection with remedial design, but will potentially be directly or indirectly responsible for conducting or funding a portion of such RM9W remedial design. The allocation process is continuing in parallel with the process to define the remedial design.
The ROD does not address responsibility for the costs of clean-up, nor does it allocate such costs among the potentially responsible parties. Responsibility for funding and implementing the EPA's selected cleanup remedy will be determined at an unspecified later date. Based on the investigation to date, the Company believes that it did not contribute in any material way to contamination in the river sediments or the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to its property precedes itsthe Company’s ownership of the Portland Oregon manufacturing facility.Property. Because these environmental investigations are still underway, including the collection of new pre-remedial design sampling data by EPA, sufficient information is currently not available to determine the Company'sCompany’s liability, if any, for the cost of any required remediation or
24
THE GREENBRIER COMPANIES, INC.
restoration of the Portland Harbor Site or to estimate a range of potential loss. Based on the results of the pending investigations and future assessments of natural resource damages, the Company may be required to incur costs associated with additional phases of investigation or remedial action, and may be liable for damages to natural resources. In addition, the Company may be required to perform periodic maintenance dredging in order to continue to launch vessels from its launch ways in Portland, Oregon, on the Willamette River, and the river's classification as a Superfund site could result in some limitations on future dredging and launch activities. Any of these matters could adversely affect the Company'sCompany’s business and Consolidated Financial Statements, or the value of itsthe Portland property.Property.
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. Confederated Tribes and Bands of the Yakama Nation v. Air Liquide America Corp., et al., United States Court for the District of Oregon Case No. 3i17-CV-00164-SB. The complaint does not specify the amount of damages the plaintiff will seek. The case has been stayed until January 14, 2022.
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 propertyProperty 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 Companyit 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,American Railcar Industries, Inc. (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's Consolidated Financial Statements.
As of May 31,November 30, 2020, the Company had outstanding letters of credit aggregating to $28.7$28.4 million associated with performance guarantees, facility leases and workers compensation insurance.
As of May 31,November 30, 2020, the Company had a $4.5 million note receivable from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a $3.9 million note receivable from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. TheseThis note receivables arereceivable is included on the Consolidated Balance Sheet in Accounts receivable, net.In the future, the Company may make loans to or provide guarantees for Greenbrier-Maxion or Amsted-Maxion Cruzeiro, or Greenbrier-Maxion, itsthe Company’s unconsolidated Brazilian railcarcastings and components manufacturer.
25
THE GREENBRIER COMPANIES, INC.
Note 1615 – 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 - observable inputs such as unadjusted quoted prices in active markets for identical instruments;
Level 2 - inputs, other than the quoted market prices in active markets for similar instruments, which are observable, either directly or indirectly; and
Level 3 - unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.
Assets and liabilities measured at fair value on a recurring basis as of May 31,November 30, 2020 were:
(In thousands) |
| Total |
|
| Level 1 |
|
| Level 2 (1) |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 (1) |
|
| Level 3 |
| ||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 147 |
|
| $ | — |
|
| $ | 147 |
|
| $ | — |
|
| $ | 112 |
|
| $ | — |
|
| $ | 112 |
|
| $ | — |
|
Nonqualified savings plan investments |
|
| 32,165 |
|
|
| 32,165 |
|
|
| — |
|
|
| — |
|
|
| 39,026 |
|
|
| 39,026 |
|
|
| — |
|
|
| — |
|
Cash equivalents |
|
| 203,301 |
|
|
| 203,301 |
|
|
| — |
|
|
| — |
|
|
| 203,643 |
|
|
| 203,643 |
|
|
| — |
|
|
| — |
|
|
| $ | 235,613 |
|
| $ | 235,466 |
|
| $ | 147 |
|
| $ | — |
|
| $ | 242,781 |
|
| $ | 242,669 |
|
| $ | 112 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 17,646 |
|
| $ | — |
|
| $ | 17,646 |
|
| $ | — |
|
| $ | 14,639 |
|
| $ | — |
|
| $ | 14,639 |
|
| $ | — |
|
| (1) | Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note |
Assets and liabilities measured at fair value on a recurring basis as of August 31, 20192020 were:
(In thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 (1) |
|
| Level 3 |
| ||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 64 |
|
| $ | — |
|
| $ | 64 |
|
| $ | — |
|
| $ | 582 |
|
| $ | — |
|
| $ | 582 |
|
| $ | — |
|
Nonqualified savings plan investments |
|
| 27,967 |
|
|
| 27,967 |
|
|
| — |
|
|
| — |
|
|
| 35,744 |
|
|
| 35,744 |
|
|
| — |
|
|
| — |
|
Cash equivalents |
|
| 68,100 |
|
|
| 68,100 |
|
|
| — |
|
|
| — |
|
|
| 203,509 |
|
|
| 203,509 |
|
|
| — |
|
|
| — |
|
|
| $ | 96,131 |
|
| $ | 96,067 |
|
| $ | 64 |
|
| $ | — |
|
| $ | 239,835 |
|
| $ | 239,253 |
|
| $ | 582 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
| $ | 11,279 |
|
| $ | — |
|
| $ | 11,279 |
|
| $ | — |
|
| $ | 15,907 |
|
| $ | — |
|
| $ | 15,907 |
|
| $ | — |
|
26
THE GREENBRIER COMPANIES, INC.
Note 1716 – Related Party Transactions
The Company has a 41.9% interest in Axis, LLC (Axis), a joint venture. The Company purchased $3.8 million and $4.0 million of railcar components from Axis for the three months ended November 30, 2020 and 2019, respectively.
In June 2017,As of November 30, 2020, the Company purchasedhad a $3.9 million note receivable from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. This note receivable is included on the Consolidated Balance Sheet in Accounts receivable, net.
The Company has 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 May 31,November 30, 2020, the carrying amount of the investment was $4.7$3.5 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. There were 0 sales to or from this entity during the three and nine months ended May 31, 2020. The Company recognized $18.2 million in revenue associated with railcars sold into the leasing warehouse during the nine months ended May 31, 2019. The Company also recognized $5.6 million in revenue associated with railcars sold out of the leasing warehouse during the nine months ended May 31,November 30, 2020 and 2019. The Company also provides administrative and remarketing services to this entity and earns management fees for these services which were immaterial for the nine months ended May 31, 2020 and May 31, 2019.
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 nine months ended May 31, 2020, the Company purchased $4.3 million and $11.5 million of railcar components from Axis.
In November 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 re-payment to the Company of $1.5 million which was used to acquire the additional 5% ownership interest. As of May 31, 2020, the Company had a remaining $4.5 million note receivable due from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a $3.9 million note receivable from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. These note receivables are included on the Consolidated Balance Sheet in Accounts receivable, net.
In May 2020, the Company and its manufacturing partner Grupo Industrial Monclova, S.A. (GIMSA) amended its joint venture agreement for its joint ventures in Monclova, Mexico. In addition to certain temporary changes to the existing fee arrangements, the joint ventures also paid dividends of $22.5 million to each of the joint venture partners during the three months ended MayNovember 30, 2020 and 2019.
Note 17 – Subsequent Events
The Board of Directors has authorized the Company to repurchase shares of its common stock. In January 2021, the expiration date of this share repurchase program was extended from March 31, 2021 to January 31, 2023. The amount remaining for repurchase is $100 million as of November 30, 2020. 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.
27
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 8,8008,400 railcars and provides management services for approximately 391,000407,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America as of May 31,November 30, 2020. Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in BrazilBrazil.
The financial results for the three months ended November 30, 2020 are representative of the challenges of the current market conditions. The decrease in operating profits compared to the same period in the prior year is primarily attributable to the cyclical decrease in economic activity in the freight rail equipment market which began prior to the emergence of COVID-19 (“Cyclical Downturn”). The Cyclical Downturn has intensified due to the COVID-19 Events. Despite the challenging environment, our continued focus on liquidity has helped to sustain high levels of cash and liquidity. We continue to take measures to strengthen our financial position through increasing our borrowing capacity and strategic spending reductions which included reducing our selling and administrative expense by $10.7 million during the quarter compared to the prior comparable period. Even though we incurred a lease financing warehouse.net loss during the three months ended November 30, 2020, we generated positive cash flow from operations. In addition, our backlog remains strong which includes railcar orders with deliveries into 2024 and marine orders with deliveries into 2022.
Our total manufacturing backlog of railcar units for direct sale or lease to a third party, as of May 31,November 30, 2020 was approximately 26,700 units23,900 with an estimated value of $2.67$2.35 billion. Approximately 8%11% of backlog units and 5%8% of estimated backlog value as of May 31,November 30, 2020 werewas associated with our Brazilian manufacturing operations which areis 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 common in thea part of rail industry.industry practice. A portion of the orders included in backlog reflects an assumed product mix. Under the terms of suchthe orders, the exact mix and pricing will be determined in the future, which may impact backlog. Marine backlog as of May 31,November 30, 2020 was $37$66 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. 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.
COVID-19 and the Downturn in Global Economic Activity
We are closely monitoringcontinue to actively monitor and managingmanage the impacts on our business of the COVID-19 coronavirus pandemic, the significant decline in global economic activity and governmental reactions to these historic events (“COVID-19 Events”).
All of ourOur manufacturing and service facilities continue regular operations. We function as an essential infrastructure business under guidance issued by the Department of Homeland Security. Similar guidelines and authorities exist in other nations where we operate. Since the emergence of COVID-19, our manufacturing plants, repair shops, and wheel shopsfacilities in the United States have been permitted to continue to operate subject to enhanced safety protocols, both voluntary and government mandated, that aim to protect the health of our workforce and the residents of the communities in which our facilities are located. The situation is similar in our manufacturing plants and shopsfacilities in Mexico, Europe, Brazil and Turkey which also have been permitted by applicable governmental authorities to operate subject to enhanced health and safety protocols.
During the quarter ended May 31, 2020, our consolidated financial condition and results of operations were not materially impacted by COVID-19 Events. Certain of our businesses recorded a decrease in operating profits compared against the fiscal quarter ended May 31, 2019 which we attribute primarily to the cyclical decrease in economic activity in the freight rail equipment market which began prior to the emergence of COVID-19 (“Cyclical Downturn”). The Cyclical Downturn has intensified as a result of the COVID-19 Events. Our liquidity position strengthened in the quarter ended May 31, 2020 due to cash flow from operations, spending reductions and increased borrowing capacity.
28
THE GREENBRIER COMPANIES, INC.
As described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, COVID-19 Events may have a material negative impact on our business, liquidity, results of operations, and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude COVID-19 Events, in combination with the Cyclical Downturn, will negatively impact our business due to numerous uncertainties, including the duration of the COVID-19 pandemic, the duration of the global decline in economic activity, the impact of those events to our customers, suppliers and employees, and actions that may be taken by governmental authorities, including potentially preventing or curtailing the operations of our plants and/or shops, and other consequences.business.
29
THE GREENBRIER COMPANIES, INC.
Three Months Ended May 31,November 30, 2020 Compared to the Three Months Ended May 31,November 30, 2019
Overview
Revenue, cost of revenue, margin and Earnings (loss) from operations (operating profit)profit or loss) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
|
| Three Months Ended May 31, |
|
| Three Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
| ||||||||||
(In thousands, except per share amounts) |
| 2020 |
|
| 2019 |
| ||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 653,007 |
|
| $ | 681,588 |
|
| $ | 308,722 |
|
| $ | 657,367 |
|
Wheels, Repair & Parts |
|
| 82,024 |
|
|
| 124,980 |
|
|
| 65,556 |
|
|
| 86,608 |
|
Leasing & Services |
|
| 27,526 |
|
|
| 49,584 |
|
|
| 28,711 |
|
|
| 25,384 |
|
|
|
| 762,557 |
|
|
| 856,152 |
|
|
| 402,989 |
|
|
| 769,359 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
| 562,793 |
|
|
| 590,788 |
|
|
| 280,890 |
|
|
| 581,912 |
|
Wheels, Repair & Parts |
|
| 75,001 |
|
|
| 119,821 |
|
|
| 62,984 |
|
|
| 81,892 |
|
Leasing & Services |
|
| 17,232 |
|
|
| 38,971 |
|
|
| 18,444 |
|
|
| 13,366 |
|
|
|
| 655,026 |
|
|
| 749,580 |
|
|
| 362,318 |
|
|
| 677,170 |
|
Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
| 90,214 |
|
|
| 90,800 |
|
|
| 27,832 |
|
|
| 75,455 |
|
Wheels, Repair & Parts |
|
| 7,023 |
|
|
| 5,159 |
|
|
| 2,572 |
|
|
| 4,716 |
|
Leasing & Services |
|
| 10,294 |
|
|
| 10,613 |
|
|
| 10,267 |
|
|
| 12,018 |
|
|
|
| 107,531 |
|
|
| 106,572 |
|
|
| 40,671 |
|
|
| 92,189 |
|
Selling and administrative |
|
| 49,494 |
|
|
| 54,377 |
|
|
| 43,707 |
|
|
| 54,364 |
|
Net gain on disposition of equipment |
|
| (8,775 | ) |
|
| (11,019 | ) |
|
| (922 | ) |
|
| (3,959 | ) |
Goodwill impairment |
|
| — |
|
|
| 10,025 |
| ||||||||
Earnings from operations |
|
| 66,812 |
|
|
| 53,189 |
| ||||||||
Earnings (loss) from operations |
|
| (2,114 | ) |
|
| 41,784 |
| ||||||||
Interest and foreign exchange |
|
| 7,562 |
|
|
| 9,770 |
|
|
| 11,103 |
|
|
| 12,852 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
|
| 59,250 |
|
|
| 43,419 |
| ||||||||
Income tax expense |
|
| (24,421 | ) |
|
| (13,008 | ) | ||||||||
Earnings before earnings (loss) from unconsolidated affiliates |
|
| 34,829 |
|
|
| 30,411 |
| ||||||||
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
|
| (13,217 | ) |
|
| 28,932 |
| ||||||||
Income tax benefit (expense) |
|
| 7,332 |
|
|
| (5,994 | ) | ||||||||
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
|
| (5,885 | ) |
|
| 22,938 |
| ||||||||
Earnings (loss) from unconsolidated affiliates |
|
| 1,040 |
|
|
| (4,564 | ) |
|
| (744 | ) |
|
| 1,073 |
|
Net earnings |
|
| 35,869 |
|
|
| 25,847 |
| ||||||||
Net earnings (loss) |
|
| (6,629 | ) |
|
| 24,011 |
| ||||||||
Net earnings attributable to noncontrolling interest |
|
| (8,097 | ) |
|
| (10,599 | ) |
|
| (3,343 | ) |
|
| (16,342 | ) |
Net earnings attributable to Greenbrier |
| $ | 27,772 |
|
| $ | 15,248 |
| ||||||||
Diluted earnings per common share |
| $ | 0.83 |
|
| $ | 0.46 |
| ||||||||
Net earnings (loss) attributable to Greenbrier |
| $ | (9,972 | ) |
| $ | 7,669 |
| ||||||||
Diluted earnings (loss) per common share |
| $ | (0.30 | ) |
| $ | 0.23 |
|
Performance for our segments is evaluated based on operating profit.profit or loss. 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 May 31, |
|
| Three Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 68,445 |
|
| $ | 72,110 |
|
| $ | 9,686 |
|
| $ | 53,143 |
|
Wheels, Repair & Parts |
|
| 3,785 |
|
|
| (8,820 | ) |
|
| (200 | ) |
|
| 1,114 |
|
Leasing & Services |
|
| 11,837 |
|
|
| 15,337 |
|
|
| 5,890 |
|
|
| 9,777 |
|
Corporate |
|
| (17,255 | ) |
|
| (25,438 | ) |
|
| (17,490 | ) |
|
| (22,250 | ) |
|
| $ | 66,812 |
|
| $ | 53,189 |
|
| $ | (2,114 | ) |
| $ | 41,784 |
|
30
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
| Three Months Ended May 31, |
|
| Increase |
|
| % |
|
| Three Months Ended November 30, |
|
| Increase |
|
| % |
| ||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
|
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||||||
Revenue |
| $ | 762,557 |
|
| $ | 856,152 |
|
| $ | (93,595 | ) |
|
| (10.9 | %) |
| $ | 402,989 |
|
| $ | 769,359 |
|
| $ | (366,370 | ) |
|
| (47.6 | %) |
Cost of revenue |
| $ | 655,026 |
|
| $ | 749,580 |
|
| $ | (94,554 | ) |
|
| (12.6 | %) |
| $ | 362,318 |
|
| $ | 677,170 |
|
| $ | (314,852 | ) |
|
| (46.5 | %) |
Margin (%) |
|
| 14.1 | % |
|
| 12.4 | % |
|
| 1.7 | % |
| * |
|
|
| 10.1 | % |
|
| 12.0 | % |
|
| (1.9 | %) |
| * |
| ||
Net earnings attributable to Greenbrier |
| $ | 27,772 |
|
| $ | 15,248 |
|
| $ | 12,524 |
|
|
| 82.1 | % | ||||||||||||||||
Net earnings (loss) attributable to Greenbrier |
| $ | (9,972 | ) |
| $ | 7,669 |
|
| $ | (17,641 | ) |
|
| (230.0 | %) |
* | Not meaningful |
Beginning July 26, 2019, the consolidated results included the results of the manufacturing business of ARI which were additive to revenue and cost of revenue for the three months ended May 31, 2020.
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 10.9%47.6% decrease in revenue for the three months ended May 31,November 30, 2020 as compared to the three months ended May 31,November 30, 2019 was primarily due to a 34.4%53.0% decrease in Manufacturing revenue. The decrease in Manufacturing revenue was primarily attributed to a 54.2% decrease in railcar deliveries. The decrease in revenue was also due to a 24.3% decrease in Wheels, Repair & Parts revenue fromprimarily due to lower wheelset, component and parts volumes due to lower demand, lower repair revenue primarily from four fewer shops in the current period and a decrease in scrap metal pricing and volume. The decrease in revenue was also due to a 4.2% decrease in Manufacturing revenue primarily attributed to a 16.9% decrease in railcar deliveries and a 44.5% decrease in Leasing & Services revenue primarily attributed to a decrease in the sale of railcars which we had purchased from third parties with the intent to resell.demand.
The 12.6%46.5% decrease in cost of revenue for the three months ended May 31,November 30, 2020 as compared to the three months ended May 31,November 30, 2019 was primarily due to a 37.4%51.7% decrease in Manufacturing cost of revenue. The decrease in Manufacturing cost of revenue was primarily attributed to a 54.2% decrease in railcar deliveries. The decrease in cost of revenue was also due to a 23.1% decrease in Wheels, Repair & Parts cost of revenue fromprimarily due to 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% decrease in Manufacturing cost of revenue primarily attributed to a 16.9% decrease in the volume of railcar deliveries and a 55.8% decrease in Leasing & Services cost of revenue from a decrease in the volume of railcars sold that we purchased from third parties.volumes.
Margin as a percentage of revenue was 14.1%10.1% and 12.4%12.0% for the three months ended May 31,November 30, 2020 and 2019, respectively. The overall margin as a percentage of revenue was positivelynegatively impacted by an increasea decrease in Manufacturing margin to 13.8%9.0% from 13.3%11.5% primarily attributed to higheroperating at lower volumes and increased costs associated with operating our manufacturing facilities in the COVID-19 pandemic during the three months ended November 30, 2020.
Net earnings (loss) attributable to Greenbrier is impacted by our operating activities and noncontrolling interest associated with our 50% joint ventures at certain of newour Mexican railcar sales with leases attachedmanufacturing facilities and our 75% interest in Greenbrier-Astra Rail, both of which typically resultwe consolidate for financial reporting purposes. The $17.6 million decrease in enhanced sales prices and margins and a change in product mix.
The $12.5 million increase in Netnet earnings attributable to Greenbrier for the three months ended May 31,November 30, 2020 as compared to the three months ended May 31,November 30, 2019 was primarily attributable to a $10.0 million goodwill impairment charge recognized duringdecrease in the three months ended May 31, 2019.after-tax margin due to a reduction in railcar deliveries. This was partially offset by a higher effective tax rate for the three months ended May 31, 2020 compared to the three months ended May 31, 2019 primarilydecrease in Selling and administrative expense and a decrease in Net earnings attributable to noncontrolling interest, which is deducted from net unfavorable discrete items relatedearnings. Net earnings attributable to changes in foreign currency exchange rates fornoncontrolling interest represents our U.S. Dollar denominated foreign operationsjoint venture partner's share in the current quarter.results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.
Manufacturing Segment
|
| Three Months Ended May 31, |
|
| Increase |
|
| % |
|
| Three Months Ended November 30, |
|
| Increase |
|
| % |
| ||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||||||||||||||||||
(In thousands, except railcar deliveries) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||||||||||||||||||
Revenue |
| $ | 653,007 |
|
| $ | 681,588 |
|
| $ | (28,581 | ) |
|
| (4.2 | %) |
| $ | 308,722 |
|
| $ | 657,367 |
|
| $ | (348,645 | ) |
|
| (53.0 | %) |
Cost of revenue |
| $ | 562,793 |
|
| $ | 590,788 |
|
| $ | (27,995 | ) |
|
| (4.7 | %) |
| $ | 280,890 |
|
| $ | 581,912 |
|
| $ | (301,022 | ) |
|
| (51.7 | %) |
Margin (%) |
|
| 13.8 | % |
|
| 13.3 | % |
|
| 0.5 | % |
| * |
|
|
| 9.0 | % |
|
| 11.5 | % |
|
| (2.5 | %) |
| * |
| ||
Operating profit ($) |
| $ | 68,445 |
|
| $ | 72,110 |
|
| $ | (3,665 | ) |
|
| (5.1 | %) |
| $ | 9,686 |
|
| $ | 53,143 |
|
| $ | (43,457 | ) |
|
| (81.8 | %) |
Operating profit (%) |
|
| 10.5 | % |
|
| 10.6 | % |
|
| (0.1 | %) |
| * |
|
|
| 3.1 | % |
|
| 8.1 | % |
|
| (5.0 | %) |
| * |
| ||
Deliveries |
|
| 5,400 |
|
|
| 6,500 |
|
|
| (1,100 | ) |
|
| (16.9 | %) |
|
| 2,700 |
|
|
| 5,900 |
|
|
| (3,200 | ) |
|
| (54.2 | %) |
31
THE GREENBRIER COMPANIES, INC.
* | Not meaningful |
Beginning July 26, 2019, the Manufacturing segment included the results of the manufacturing business of ARI which were additive to
Manufacturing revenue and cost of revenuedecreased $348.6 million or 53.0% for the three months ended May 31, 2020.
Manufacturing revenue decreased $28.6 million or 4.2% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The decrease in revenue was primarily attributed to a 16.9%54.2% decrease in railcar deliveries partially offset by $128.0 million in additional revenue for the three months ended May 31, 2020 associated with the acquired manufacturing business of ARI and a change in product mix.deliveries.
Manufacturing cost of revenue decreased $28.0$301.0 million or 4.7%51.7% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The decrease in cost of revenue was primarily attributed to a 16.9%54.2% decrease in the volume of railcar deliveries partially offset by $115.7 million in additional cost of revenue for the three months ended May 31, 2020 associated with the acquired manufacturing business of ARI and a change in product mix.deliveries.
Manufacturing margin as a percentage of revenue increased 0.5%decreased 2.5% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The increasedecrease in margin percentage was primarily attributed to higheroperating at lower volumes of newand increased costs associated with operating our manufacturing facilities in the COVID-19 pandemic during the three months ended November 30, 2020.
Manufacturing operating profit decreased $43.5 million or 81.8% for the three months ended November 30, 2020 compared to the three months ended November 30, 2019. The decrease in operating profit was primarily attributed to a decrease in railcar sales with leases attached which typically result in enhanced sales prices and margins and a change in product mix. These were partially offset by $4.5 million in severance expensedeliveries and increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the three months ended May 31,November 30, 2020.
Manufacturing operating profit decreased $3.7 million or 5.1% for the three months ended May 31, 2020 compared to the three months ended May 31, 2019. The decrease in operating profit was primarily attributed to a decrease in railcar deliveries, severance expense and increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the three months ended May 31, 2020.
32
THE GREENBRIER COMPANIES, INC.
Wheels, Repair & Parts Segment
|
| Three Months Ended May 31, |
|
| Increase |
|
| % |
|
| Three Months Ended November 30, |
|
| Increase |
|
| % |
| ||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
|
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||||||
Revenue |
| $ | 82,024 |
|
| $ | 124,980 |
|
| $ | (42,956 | ) |
|
| (34.4 | %) |
| $ | 65,556 |
|
| $ | 86,608 |
|
| $ | (21,052 | ) |
|
| (24.3 | %) |
Cost of revenue |
| $ | 75,001 |
|
| $ | 119,821 |
|
| $ | (44,820 | ) |
|
| (37.4 | %) |
| $ | 62,984 |
|
| $ | 81,892 |
|
| $ | (18,908 | ) |
|
| (23.1 | %) |
Margin (%) |
|
| 8.6 | % |
|
| 4.1 | % |
|
| 4.5 | % |
| * |
|
|
| 3.9 | % |
|
| 5.4 | % |
|
| (1.5 | %) |
| * |
| ||
Operating profit ($) |
| $ | 3,785 |
|
| $ | (8,820 | ) |
| $ | 12,605 |
|
| * |
| |||||||||||||||||
Operating profit (%) |
|
| 4.6 | % |
|
| (7.1 | %) |
|
| 11.7 | % |
| * |
| |||||||||||||||||
Operating profit (loss) ($) |
| $ | (200 | ) |
| $ | 1,114 |
|
| $ | (1,314 | ) |
| * |
| |||||||||||||||||
Operating profit (loss) (%) |
|
| (0.3 | %) |
|
| 1.3 | % |
|
| (1.6 | %) |
| * |
|
* | Not meaningful |
Wheels, Repair & Parts revenue decreased $43.0$21.1 million or 34.4%24.3% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 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 period and a decreasedemand. This was partially offset by an increase in scrap metal pricing and volume.pricing.
Wheels, Repair & Parts cost of revenue decreased $44.8$18.9 million or 37.4%23.1% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 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.volumes.
Wheels, Repair & Parts margin as a percentage of revenue increased 4.5%decreased 1.5% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The increasedecrease in margin percentage was primarily attributed to efficienciesoperating at our repair shops in the current period. In addition, the three months ended May 31, 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 pricinglower volumes and increased costs associated with operating our facilities during the COVID-19 pandemic during the three months ended May 31,November 30, 2020. This was partially offset by an increase in scrap metal pricing.
Wheels, Repair & Parts had an operating profit increased $12.6 million forloss during the three months ended May 31,November 30, 2020 compared to an operating profit during the prior comparable period. The three months ended May 31, 2019November 30, 2019. The decrease in profitability in the current period was negatively impacted byprimarily due to a $10.0 million goodwill impairmentreduction in volumes and increased costs associated with closing sites inoperating our repair network.facilities during the COVID-19 pandemic.
33
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
| Three Months Ended May 31, |
|
| Increase |
|
| % |
|
| Three Months Ended November 30, |
|
| Increase |
|
| % |
| ||||||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
|
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||||||
Revenue |
| $ | 27,526 |
|
| $ | 49,584 |
|
| $ | (22,058 | ) |
|
| (44.5 | %) |
| $ | 28,711 |
|
| $ | 25,384 |
|
| $ | 3,327 |
|
|
| 13.1 | % |
Cost of revenue |
| $ | 17,232 |
|
| $ | 38,971 |
|
| $ | (21,739 | ) |
|
| (55.8 | %) |
| $ | 18,444 |
|
| $ | 13,366 |
|
| $ | 5,078 |
|
|
| 38.0 | % |
Margin (%) |
|
| 37.4 | % |
|
| 21.4 | % |
|
| 16.0 | % |
| * |
|
|
| 35.8 | % |
|
| 47.3 | % |
|
| (11.5 | %) |
| * |
| ||
Operating profit ($) |
| $ | 11,837 |
|
| $ | 15,337 |
|
| $ | (3,500 | ) |
|
| (22.8 | %) |
| $ | 5,890 |
|
| $ | 9,777 |
|
| $ | (3,887 | ) |
|
| (39.8 | %) |
Operating profit (%) |
|
| 43.0 | % |
|
| 30.9 | % |
|
| 12.1 | % |
| * |
|
|
| 20.5 | % |
|
| 38.5 | % |
|
| (18.0 | %) |
| * |
|
* | 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 $22.1increased $3.3 million or 44.5%13.1% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The decreaseincrease was primarily attributed to a decreasean increase 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-producinglower interim rent on leased railcars for syndication.syndication during the three months ended November 30, 2020.
Leasing & Services cost of revenue decreased $21.7increased $5.1 million or 55.8%38.0% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The decreaseincrease was primarily due to a decreasean increase in the volume of railcars sold that we purchased from third parties partially offset by higher storagelower transportation costs.
Leasing & Services margin as a percentage of revenue increased 16.0%decreased 11.5% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. Margin as a percentage of revenue for the three months ended May 31,November 30, 2020 benefited from fewerwas negatively impacted by higher sales of railcars that we purchased from third parties which have lower margin percentages. The increasedecrease in margin as a percentage of revenue was also due to a higher average volume of rent-producinglower interim rent on leased railcars for syndication. These were partially offset by $4.3 million in negative impacts during the three months ended May 31, 2020 related to disruptions and restructurings in the North American sand car market.
Leasing & Services operating profit decreased $3.5$3.9 million or 22.8%39.8% for the three months ended May 31,November 30, 2020 compared to the three months ended May 31,November 30, 2019. The decrease was primarily attributed to $4.3a $3.0 million in negative impacts during the three months ended May 31, 2020 related to disruptions and restructurings in the North American sand car market and a $2.4 million decreasereduction in net gain on disposition of equipment.equipment and lower interim rent on leased railcars for syndication.
34
THE GREENBRIER COMPANIES, INC.
Selling and Administrative Expense
|
| Three Months Ended |
|
|
|
|
|
|
|
|
|
| Three Months Ended November 30, |
|
|
|
|
|
|
|
|
| ||||||||||
(In thousands) |
| May 31, 2020 |
|
| May 31, 2019 |
|
| Increase (Decrease) |
|
| % Change |
|
| 2020 |
|
| 2019 |
|
| Increase (Decrease) |
|
| % Change |
| ||||||||
Selling and administrative expense |
| $ | 49,494 |
|
| $ | 54,377 |
|
| $ | (4,883 | ) |
|
| (9.0 | %) |
| $ | 43,707 |
|
| $ | 54,364 |
|
| $ | (10,657 | ) |
|
| (19.6 | %) |
Selling and administrative expense was $49.5$43.7 million or 6.5%10.8% of revenue for the three months ended May 31,November 30, 2020 compared to $54.4 million or 6.4%7.1% of revenue for the prior comparable period. The $4.9$10.7 million decrease was primarily attributed to $5.8 million in transaction related costs incurred during the three months ended May 31, 2019. The decrease was also attributed to a $3.2 million reductiondecline in employee related costs resulting from headcount reductions and a decrease in the current year partially offset by $2.8 million from the additionother controllable spending categories as part of the manufacturing business of ARI sellingour strategic cost control and administrative costs during the three months ended May 31, 2020.liquidity initiatives.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $8.8$0.9 million for the three months ended May 31,November 30, 2020 compared to $11.0$4.0 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 conditionsaccommodate customer demand and to manage risk and liquidity; and disposition of property, plant and equipment.
Goodwill Impairment
We performed our annual goodwill impairment test during the third quarter of 2020 and we concluded that goodwill was not impaired. Based on the results of our annual impairment test during the third quarter of 2019, a non-cash impairment charge of $10.0 million was recorded during the three months ended May 31, 2019 related to our Wheels, Repair & Parts segment.
Other Costs
Interest and foreign exchange expense was composed of the following:
|
| Three Months Ended May 31, |
|
|
|
|
|
| Three Months Ended November 30, |
|
|
|
|
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| Increase (Decrease) |
|
| 2020 |
|
| 2019 |
|
| Increase (Decrease) |
| ||||||
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
| $ | 10,698 |
|
| $ | 8,243 |
|
| $ | 2,455 |
|
| $ | 10,500 |
|
| $ | 10,239 |
|
| $ | 261 |
|
Foreign exchange (gain) loss |
|
| (3,136 | ) |
|
| 1,527 |
|
|
| (4,663 | ) | ||||||||||||
Foreign exchange loss |
|
| 603 |
|
|
| 2,613 |
|
|
| (2,010 | ) | ||||||||||||
|
| $ | 7,562 |
|
| $ | 9,770 |
|
| $ | (2,208 | ) |
| $ | 11,103 |
|
| $ | 12,852 |
|
| $ | (1,749 | ) |
35
THE GREENBRIER COMPANIES, INC.
The $2.2$1.7 million decrease in interest and foreign exchange expense from the prior comparable period was primarily attributed to the change in the Mexican Peso relative to the U.S. Dollar. This was partially offset by interest expense associated with our $300 million of senior term debt issued in July 2019 and an increase in revolving notes borrowings.
Income Tax
For the three months ended November 30, 2020, we had an income tax benefit of $7.3 million on a pre-tax loss of $13.2 million. The effective tax ratebenefit for the three months ended May 31,November 30, 2020 was 41.2% compared to 30.0% for the three months ended May 31, 2019. The increase in the effective rate from the prior year was primarily attributable toincluded net unfavorablefavorable discrete itemstax benefits related to changes in foreign currency exchange rates for our U.S. Dollar denominated foreign operations inoperations.
For the current quarter compared to net favorable discrete items in the prior comparable period. Early indications are that the effectivethree months ended November 30, 2019, we had an income tax rate may be lower during the fourth quarterexpense of 2020 based$6.0 million on currency exchange rates. As a result, the year to datepre-tax income of $28.9 million for an effective tax rate of 33.2% may be lower based on less volatile currency exchange rates in the fourth quarter of 2020. Excluding the impact of discrete items in both periods, the effective20.7%. The tax rate was 23.6% for the three months ended May 31, 2020 compared to 24.3% in the prior comparable period. The decrease from the 24.3% to the 23.6%November 30, 2019 included net favorable discrete tax rate was primarily due to the geographic mix of earnings.
benefits.
The effective tax rate can fluctuate year-to-year due to discrete items and changes in the mix of foreign and domestic pre-tax earnings.earnings or losses. It can also fluctuate with changes in the proportion of pre-tax earnings or losses 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 or losses are included in Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.benefit (expense).
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.Brazil. We record the after-tax results from these unconsolidated affiliates.
EarningsLoss from unconsolidated affiliates was $1.0$0.7 million for the three months ended May 31,November 30, 2020 compared to a lossearnings from unconsolidated affiliates of $4.6$1.1 million for the three months ended May 31,November 30, 2019. The increasedecrease in earnings from unconsolidated affiliates was primarily related to an increase in earningsa loss at our Brazil operations and a decrease in 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 $8.1$3.3 million for the three months ended May 31,November 30, 2020 compared to $10.6$16.3 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,ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.
36
THE GREENBRIER COMPANIES, INC.
Nine Months Ended May 31, 2020 Compared to the Nine Months Ended May 31, 2019
Overview
Revenue, cost of revenue, margin and Earnings from operations (operating profit) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
|
| Nine Months Ended May 31, |
| |||||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 1,800,317 |
|
| $ | 1,629,396 |
|
Wheels, Repair & Parts |
|
| 259,857 |
|
|
| 358,801 |
|
Leasing & Services |
|
| 95,590 |
|
|
| 131,149 |
|
|
|
| 2,155,764 |
|
|
| 2,119,346 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 1,567,014 |
|
|
| 1,451,589 |
|
Wheels, Repair & Parts |
|
| 241,266 |
|
|
| 339,254 |
|
Leasing & Services |
|
| 61,428 |
|
|
| 95,554 |
|
|
|
| 1,869,708 |
|
|
| 1,886,397 |
|
Margin: |
|
|
|
|
|
|
|
|
Manufacturing |
|
| 233,303 |
|
|
| 177,807 |
|
Wheels, Repair & Parts |
|
| 18,591 |
|
|
| 19,547 |
|
Leasing & Services |
|
| 34,162 |
|
|
| 35,595 |
|
|
|
| 286,056 |
|
|
| 232,949 |
|
Selling and administrative |
|
| 158,455 |
|
|
| 152,701 |
|
Net gain on disposition of equipment |
|
| (19,431 | ) |
|
| (37,474 | ) |
Goodwill impairment |
|
| — |
|
|
| 10,025 |
|
Earnings from operations |
|
| 147,032 |
|
|
| 107,697 |
|
Interest and foreign exchange |
|
| 33,023 |
|
|
| 23,411 |
|
Earnings before income taxes and earnings (loss) from unconsolidated affiliates |
|
| 114,009 |
|
|
| 84,286 |
|
Income tax expense |
|
| (37,878 | ) |
|
| (24,391 | ) |
Earnings before earnings (loss) from unconsolidated affiliates |
|
| 76,131 |
|
|
| 59,895 |
|
Earnings (loss) from unconsolidated affiliates |
|
| 3,764 |
|
|
| (4,883 | ) |
Net earnings |
|
| 79,895 |
|
|
| 55,012 |
|
Net earnings attributable to noncontrolling interest |
|
| (30,825 | ) |
|
| (19,043 | ) |
Net earnings attributable to Greenbrier |
| $ | 49,070 |
|
| $ | 35,969 |
|
Diluted earnings per common share |
| $ | 1.47 |
|
| $ | 1.08 |
|
Performance for our segments is evaluated based on 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.
|
| Nine Months Ended May 31, |
| |||||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Operating profit (loss): |
|
|
|
|
|
|
|
|
Manufacturing |
| $ | 167,693 |
|
| $ | 122,955 |
|
Wheels, Repair & Parts |
|
| 8,219 |
|
|
| (2,750 | ) |
Leasing & Services |
|
| 34,407 |
|
|
| 53,880 |
|
Corporate |
|
| (63,287 | ) |
|
| (66,388 | ) |
|
| $ | 147,032 |
|
| $ | 107,697 |
|
37
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
| Nine Months Ended May 31, |
|
| Increase |
|
| % |
| |||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||
Revenue |
| $ | 2,155,764 |
|
| $ | 2,119,346 |
|
| $ | 36,418 |
|
|
| 1.7 | % |
Cost of revenue |
| $ | 1,869,708 |
|
| $ | 1,886,397 |
|
| $ | (16,689 | ) |
|
| (0.9 | %) |
Margin (%) |
|
| 13.3 | % |
|
| 11.0 | % |
|
| 2.3 | % |
| * |
| |
Net earnings attributable to Greenbrier |
| $ | 49,070 |
|
| $ | 35,969 |
|
| $ | 13,101 |
|
|
| 36.4 | % |
|
|
Beginning July 26, 2019, the consolidated results included the results of the manufacturing business of ARI which were additive to revenue and cost of revenue for the nine months ended May 31, 2020.
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 1.7% increase in revenue for the nine months ended May 31, 2020 as compared to the nine months ended May 31, 2019 was primarily due to a 10.5% increase in Manufacturing revenue from the additional revenue associated with the acquired manufacturing business of ARI and a change in product mix. This was partially offset by a 27.6% 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 and volume.
The 0.9% decrease in cost of revenue for the nine months ended May 31, 2020 as compared to the nine months ended May 31, 2019 was primarily due to a 28.9% 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 year. The decrease was also due to a 35.7% decrease in Leasing & Services cost of revenue primarily due to a decrease in the volume of railcars sold that we purchased from third parties. These were partially offset by an 8.0% increase in Manufacturing cost of revenue primarily attributed to the additional cost of revenue associated with the acquired manufacturing business of ARI and a change in product mix.
Margin as a percentage of revenue was 13.3% and 11.0% for the nine months ended May 31, 2020 and 2019, respectively. The overall margin as a percentage of revenue was positively impacted by an increase in Manufacturing margin to 13.0% from 10.9% primarily attributed to a change in product mix.
The $13.1 million increase in Net earnings attributable to Greenbrier for the nine months ended May 31, 2020 as compared to the prior comparable period was primarily attributable to an increase in margin, net of tax, due to a change in Manufacturing product mix. This was partially offset by a reduction in Net gain on disposition of equipment in the current year.
38
THE GREENBRIER COMPANIES, INC.
Manufacturing Segment
|
| Nine Months Ended May 31, |
|
| Increase |
|
| % |
| |||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||
Revenue |
| $ | 1,800,317 |
|
| $ | 1,629,396 |
|
| $ | 170,921 |
|
|
| 10.5 | % |
Cost of revenue |
| $ | 1,567,014 |
|
| $ | 1,451,589 |
|
| $ | 115,425 |
|
|
| 8.0 | % |
Margin (%) |
|
| 13.0 | % |
|
| 10.9 | % |
|
| 2.1 | % |
| * |
| |
Operating profit ($) |
| $ | 167,693 |
|
| $ | 122,955 |
|
| $ | 44,738 |
|
|
| 36.4 | % |
Operating profit (%) |
|
| 9.3 | % |
|
| 7.5 | % |
|
| 1.8 | % |
| * |
| |
Deliveries |
|
| 15,000 |
|
|
| 15,200 |
|
|
| (200 | ) |
|
| (1.3 | %) |
|
|
Beginning July 26, 2019, the Manufacturing segment included the results of the manufacturing business of ARI which were additive to Manufacturing revenue and cost of revenue for the nine months ended May 31, 2020.
Manufacturing revenue increased $170.9 million or 10.5% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. The increase in revenue was primarily attributed to $337.2 million in additional revenue for the nine months ended May 31, 2020 associated with the acquired manufacturing business of ARI and a change in product mix partially offset by a 1.3% decrease in railcar deliveries.
Manufacturing cost of revenue increased $115.4 million or 8.0% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. The increase in cost of revenue was primarily attributed to $326.8 million in additional cost of revenue for the nine months ended May 31, 2020 associated with the acquired manufacturing business of ARI and a change in product mix partially offset by a 1.3% decrease in the volume of railcar deliveries.
Manufacturing margin as a percentage of revenue increased 2.1% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 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 second quarter of 2020. These were partially offset by $4.5 million in severance expense and increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the nine months ended May 31, 2020.
Manufacturing operating profit increased $44.7 million or 36.4% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. The increase was primarily attributed to a change in product mix and a customer order contract modification fee received during the second quarter of, 2020. These were partially offset by severance expense and increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the nine months ended May 31, 2020.
39
THE GREENBRIER COMPANIES, INC.
Wheels, Repair & Parts Segment
|
| Nine Months Ended May 31, |
|
| Increase |
|
| % |
| |||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||
Revenue |
| $ | 259,857 |
|
| $ | 358,801 |
|
| $ | (98,944 | ) |
|
| (27.6 | %) |
Cost of revenue |
| $ | 241,266 |
|
| $ | 339,254 |
|
| $ | (97,988 | ) |
|
| (28.9 | %) |
Margin (%) |
|
| 7.2 | % |
|
| 5.4 | % |
|
| 1.8 | % |
| * |
| |
Operating profit ($) |
| $ | 8,219 |
|
| $ | (2,750 | ) |
| $ | 10,969 |
|
| * |
| |
Operating profit (%) |
|
| 3.2 | % |
|
| (0.8 | %) |
|
| 4.0 | % |
| * |
|
|
|
Wheels, Repair & Parts revenue decreased $98.9 million or 27.6% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 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 and volume.
Wheels, Repair & Parts cost of revenue decreased $98.0 million or 28.9% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 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 year.
Wheels, Repair & Parts margin as a percentage of revenue increased 1.8% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. The increase was primarily attributed to efficiencies at our repair shops in the current year. In addition, the nine months ended May 31, 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 and increased costs associated with operating our facilities during the COVID-19 pandemic during the nine months ended May 31, 2020.
Wheels, Repair & Parts operating profit increased $11.0 million for the nine months ended May 31, 2020 compared to the prior comparable period. The nine months ended May 31, 2019 was negatively impacted by a $10.0 million goodwill impairment and costs associated with closing sites in our repair network.
40
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
| Nine Months Ended May 31, |
|
| Increase |
|
| % |
| |||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||
Revenue |
| $ | 95,590 |
|
| $ | 131,149 |
|
| $ | (35,559 | ) |
|
| (27.1 | %) |
Cost of revenue |
| $ | 61,428 |
|
| $ | 95,554 |
|
| $ | (34,126 | ) |
|
| (35.7 | %) |
Margin (%) |
|
| 35.7 | % |
|
| 27.1 | % |
|
| 8.6 | % |
| * |
| |
Operating profit ($) |
| $ | 34,407 |
|
| $ | 53,880 |
|
| $ | (19,473 | ) |
|
| (36.1 | %) |
Operating profit (%) |
|
| 36.0 | % |
|
| 41.1 | % |
|
| (5.1 | %) |
| * |
|
|
|
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 $35.6 million or 27.1% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 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 $34.1 million or 35.7% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 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 storage costs.
Leasing & Services margin as a percentage of revenue increased 8.6% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. Margin as a percentage of revenue for the nine months ended May 31, 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. These were partially offset by $4.3 million in negative impacts during the nine months ended May 31, 2020 related to disruptions and restructurings in the North American sand car market.
Leasing & Services operating profit decreased $19.5 million or 36.1% for the nine months ended May 31, 2020 compared to the nine months ended May 31, 2019. The decrease was primarily attributed to a $15.3 million decrease in net gain on disposition of equipment and $4.3 million in negative impacts during the nine months ended May 31, 2020 related to disruptions and restructurings in the North American sand car market.
41
THE GREENBRIER COMPANIES, INC.
Selling and Administrative Expense
|
| Nine Months Ended May 31, |
|
| Increase |
|
| % |
| |||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
|
| Change |
| ||||
Selling and administrative expense |
| $ | 158,455 |
|
| $ | 152,701 |
|
| $ | 5,754 |
|
|
| 3.8 | % |
Selling and administrative expense was $158.5 million or 7.4% of revenue for the nine months ended May 31, 2020 compared to $152.7 million or 7.2% of revenue for the prior comparable period. The $5.8 million increase was primarily attributed to $8.7 million from the addition of the manufacturing business of ARI selling and administrative costs and a $3.1 million increase in employee related costs. These were partially offset by $5.8 million in transaction related costs incurred during nine months ended May 31, 2019.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $19.4 million for the nine months ended May 31, 2020 compared to $37.5 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.
Goodwill Impairment
We performed our annual goodwill impairment test during the third quarter of 2020 and we concluded that goodwill was not impaired. Based on the results of our annual impairment test during the third quarter of 2019, a non-cash impairment charge of $10.0 million was recorded during the nine months ended May 31, 2019 related to our Wheels, Repair & Parts segment.
Other Costs
Interest and foreign exchange expense was composed of the following:
|
| Nine Months Ended May 31, |
|
| Increase |
| ||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| (Decrease) |
| |||
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
| $ | 31,266 |
|
| $ | 23,025 |
|
| $ | 8,241 |
|
Foreign exchange loss |
|
| 1,757 |
|
|
| 386 |
|
|
| 1,371 |
|
|
| $ | 33,023 |
|
| $ | 23,411 |
|
| $ | 9,612 |
|
The $9.6 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 and an increase in revolving notes borrowings.
Income Tax
The effective tax rate for the nine months ended May 31, 2020 was 33.2% compared to 28.9% for the nine months ended May 31, 2019. The increase in the effective rate from the prior year was primarily attributable to higher net unfavorable discrete items related to changes in foreign currency exchange rates for our U.S. Dollar denominated foreign operations for the nine months ended May 31, 2020 compared to a lower amount of net unfavorable discrete items in the prior comparable period. Excluding the impact of discrete items in both periods, the effective tax rate was 24.1% for the nine months ended May 31, 2020 compared to 28.7% in the prior comparable period which decreased primarily due to the geographic mix of earnings.
42
THE GREENBRIER COMPANIES, INC.
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.
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 $3.8 million for the nine months ended May 31, 2020 compared to a loss from unconsolidated affiliates of $4.9 million for the nine months ended May 31, 2019. The increase in earnings from unconsolidated affiliates was primarily related to an increase in earnings at our Brazil operations and 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 $30.8 million for the nine months ended May 31, 2020 compared to $19.0 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.
43
THE GREENBRIER COMPANIES, INC.
Liquidity and Capital Resources
|
| Nine Months Ended May 31, |
|
| Three Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Net cash provided by (used in) operating activities |
| $ | 89,032 |
|
| $ | (94,123 | ) |
| $ | 8,671 |
|
| $ | (70,319 | ) |
Net cash provided by (used in) investing activities |
|
| 32,968 |
|
|
| (58,622 | ) |
|
| (24,899 | ) |
|
| 7,199 |
|
Net cash provided by (used in) financing activities |
|
| 301,168 |
|
|
| (2,767 | ) | ||||||||
Net cash used in financing activities |
|
| (97,973 | ) |
|
| (14,098 | ) | ||||||||
Effect of exchange rate changes |
|
| (17,693 | ) |
|
| (2,866 | ) |
|
| 5,208 |
|
|
| 981 |
|
Increase (decrease) in cash and cash equivalents and restricted cash |
| $ | 405,475 |
|
| $ | (158,378 | ) | ||||||||
Decrease in cash and cash equivalents and restricted cash |
| $ | (108,993 | ) |
| $ | (76,237 | ) |
We have been financed through cash generated from operations and borrowings. At May 31,November 30, 2020, cash and cash equivalents and restricted cash were $744.0$733.1 million, an increasea decrease of $405.5$109.0 million from $338.5$842.1 million at August 31, 2019. The increase in cash and cash equivalents included drawing on available credit facilities in response to uncertainties from the COVID-19 coronavirus pandemic and the decline in global economic activity.2020.
The change in cash provided by (used in) operating activities for the ninethree months ended May 31,November 30, 2020 compared to the ninethree months ended May 31,November 30, 2019 was primarily due to an increase in net earnings and a favorable net change in working capital.capital partially offset by a net loss during the current quarter due to lower volumes of operating activities.
Cash provided by (used in) investing activities primarily related to capital expenditures net of proceeds from the sale of assets and investment activity with our unconsolidated affiliates. The change in cash provided by (used in) investing activities for the ninethree months ended May 31,November 30, 2020 compared to the ninethree months ended May 31,November 30, 2019 was primarily attributable to a decreasean increase in capital expenditures.expenditures and a reduction in proceeds from the sale of assets.
Capital expenditures totaled $55.3$38.6 million and $149.9$23.2 million for the ninethree months ended May 31, 2020 and 2019, respectively. As part of our focus on liquidity in response to the COVID-19 coronavirus pandemic and the decline in global economic activity, capital expenditures have been reduced to only essential safety and other necessary projects. Manufacturing capital expenditures were approximately $40.3 million and $60.8 million for the nine months ended May 31,November 30, 2020 and 2019, respectively. Capital expenditures for Manufacturing are expected to be approximately $50 million in 2020 and2021 primarily relate to enhancementsopportunistic additions to our lease fleet and continued investments into the safety and productivity of our existing manufacturing facilities. Wheels, Repair & Parts capital expenditures were approximately $8.4 million and $5.1 million for the nine months ended May 31, 2020 and 2019, respectively. Capital expenditures for Wheels, Repair & Parts are expected to be approximately $10 million in 2020 for enhancements of our existing facilities. Leasing & Services and corporate capital expenditures were approximately $6.6$32.0 million and $84.0$2.9 million for the ninethree months ended May 31,November 30, 2020 and 2019, respectively. Leasing & Services and corporateManufacturing capital expenditures for 2020 are expected to bewere approximately $25 million. Proceeds from sales of leased railcar equipment are expected to be $90$5.5 million and $18.8 million for 2020. Assets from our lease fleet are periodically sold in the normal course of business in order to take advantage of market conditionsthree months ended November 30, 2020 and to manage risk2019, respectively. Wheels, Repair & Parts capital expenditures were approximately $1.1 million and liquidity. $1.5 million for the three months ended November 30, 2020 and 2019, respectively.
Proceeds from the sale of assets, which primarily related to sales of railcars from our lease fleet within Leasing & Services, were approximately $78.5$8.7 million and $100.7$27.5 million for the ninethree months ended May 31,November 30, 2020 and May 31,November 30, 2019, respectively. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity.
The change in cash provided by (used in)used in financing activities for the ninethree months ended May 31,November 30, 2020 compared to the ninethree months ended May 31,November 30, 2019 was primarily attributed to an increase in the proceedsrepayments of debt, net of repayments and a change in the net activities with joint venture partners.proceeds.
A quarterly dividend of $0.27 per share was declared on July 8, 2020.January 6, 2021.
The Board of Directors has authorized our company to repurchase shares of our common stock. In January 2019,2021, the expiration date of this share repurchase program was extended from March 31, 20192021 to MarchJanuary 31, 2021 and the2023. The amount remaining for repurchase was increased from $88is $100 million to $100 million.as of November 30, 2020. 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
44
THE GREENBRIER COMPANIES, INC.
period. There were no shares repurchased under the share repurchase program during the ninethree months ended May 31,November 30, 2020 and 2019.
Senior secured credit facilities, consisting of threefour components, aggregated to $705.1$738.2 million as of May 31,November 30, 2020. We had an aggregate of $136.8$85.3 million available to draw down under committed credit facilities as of May 31,November 30, 2020. This amount consists of $98.2$13.3 million available on the North American credit facility, $8.7$32.0 million on the European credit facilities, and $29.9$35.0 million on the Mexican railcar manufacturing joint venture credit facilities.facilities and $5.0 million available on the Mexican railcar manufacturing operations credit facility.
As of May 31,November 30, 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 eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.
As of May 31,November 30, 2020, lines of credit totaling $55.1$68.2 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1%1.2% 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 $13.9$28.0 million facilityof facilities which isare guaranteed by us. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from August 2020June 2021 through July 2021.September 2022.
As of May 31,November 30, 2020, our Mexican railcar manufacturing joint ventureoperations had twothree lines of credit totaling $50.0$70.0 million. The first line of credit provides up to $30.0 million.million and matures in June 2024. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%. 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$35.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 3.75%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2021. The third line of credit provides up to $5.0 million and matures in September 2022. Advances under this facility bear interest at LIBOR plus 2.95% and are to be used for working capital needs.
As of May 31,November 30, 2020, outstanding commitments under the senior secured credit facilities consisted of $28.7$28.4 million in letters of credit and $350.0$210.0 million in borrowings under the North American credit facility, $46.5$36.2 million outstanding under the European credit facilities and $20.0$30.0 million outstanding under the Mexican credit facilities. As of May 31, 2020, the Company had an aggregate of $136.8 million available to draw down under committed 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 financing 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 May 31,November 30, 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.
45
THE GREENBRIER COMPANIES, INC.
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 non-performance.
As of May 31,November 30, 2020, we had a $4.5 million note receivable from Amsted-Maxion Cruzeiro, our unconsolidated Brazilian castings and components manufacturer and a $3.9 million note receivable from Greenbrier-Maxion, our unconsolidated Brazilian railcar manufacturer. TheseThis note receivables arereceivable is included on ourthe Consolidated Balance Sheet in Accounts receivable, net.In the future, we may make loans to or provide guarantees for Greenbrier-Maxion or Amsted-Maxion Cruzeiro, or Greenbrier-Maxion, our unconsolidated Brazilian railcarcastings and components manufacturer.
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 Sheet Arrangements
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 - The asset and liability method is used to account for income taxes. We are required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for each tax jurisdiction to determine the amount of deferred tax assets and liabilities. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. We recognize liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit. It is inherently difficult and subjective to estimate such amounts, as this requires us to estimate the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. Changes in tax law or court interpretations may result in the recognition of a tax benefit or an additional charge to the tax provision.
Warranty accruals - Warranty costs to cover a defined warranty period are estimated and charged to operations. The estimated warranty cost is based on historical 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. These estimates are inherently uncertain as they are based on historical data for existing products and judgment for new products. If warranty claims are made in the current period for issues that have not historically been the subject of warranty claims and were not taken into consideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense may exceed the accrual for that particular product. Conversely, there is the possibility that claims may be lower than estimates. The warranty accrual is periodically reviewed and updated based on warranty trends. However, as we cannot predict future claims, the potential exists for the difference in any one reporting period to be material.
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THE GREENBRIER COMPANIES, INC.
Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information. If further developments in or resolution of an environmental matter result in facts and circumstances that are significantly different than the assumptions used to develop these reserves, the accrual for environmental remediation could be materially understated or overstated. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which reserves are established are made. Due to the uncertain nature of environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us.
Revenue recognition - We measure revenue at the amounts that reflect the consideration to which we expect to be entitled in exchange for transferring control of goods and services to customers. We recognize revenue either at the point in time or over the period of time that performance obligations to customers are satisfied. Payment terms vary by segment and product type and are generally due within normal commercial terms. Our contracts with customers
may include multiple performance obligations (e.g. railcars, maintenance, management services, etc.). For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price. We have disaggregated revenue from contracts with customers into categories which describe the principal activities from which we generate our revenues.
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 606.606: Contracts with Customers (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 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.
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THE GREENBRIER COMPANIES, INC.
Impairment of long-lived assets - When changes in circumstances indicate the carrying amount of certain long-lived assets may not be recoverable, the assets are evaluated for impairment. If the forecast of undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reduce the carrying value of the assets to fair value would be recognized in the current period. These estimates are based on the best information available at the time of the impairment and could be materially different if circumstances change. If the forecast of undiscounted future cash flows exceeds the carrying amount of the assets it would indicate that the assets were not impaired.
Goodwill and acquired intangible assets - We periodically acquire businesses in purchase transactions in which the allocation of the purchase price may result in the recognition of goodwill and other intangible assets. The determination of the value of such intangible assets requires management to make estimates and assumptions. These estimates affect the amount of future period amortization and possible impairment charges.
Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third quarter. The provisions of ASC 350 Intangibles – Goodwill and Other, require that we perform this test by comparing the fair value of each reporting unit with its carrying value. We determine the fair value of our reporting units based on a weighting of income and market approaches. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows which incorporates expected revenue and marginsforecasted revenues, long-term growth rate, gross margin percentages, operating expenses, short-term net working capital changes, other cash flows and the use of discount rates. Under the market approach, we estimate the fair value based on observed market multiples for
comparable businesses. An impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value. An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit. Goodwill and indefinite-lived intangible assets are also tested more frequently if changes in circumstances or the occurrence of events indicates that a potential impairment exists. When changes in circumstances, such as a decline in the market price of our common stock, changes in demand or in the numerous variables associated with the judgments, assumptions and estimates made in assessing the appropriate valuation of goodwill indicate the carrying amount of certain indefinite lived assets may not be recoverable, the assets are evaluated for impairment.
We performed our annual goodwill impairment test during the third quarter of 2020 and we concluded that goodwill was not impaired. The estimated fair value of goodwill in both the Europe Manufacturing and Wheels & Parts reporting units exceeded its carrying value by approximately 5% and 9%, respectively. Since the estimated fair values were not substantially in excess of their carrying values, we may be at risk for an impairment loss in the future if expected profitability trends assumed in the fair value calculation are not realized.
OurAs of November 30, 2020, our goodwill balance was $130.0$130.3 million as of May 31, 2020 of which $86.7$87.0 million related to our Manufacturing segment and $43.3 million related to our Wheels, Repair & Parts segment. Our Manufacturing segment includes the North America Manufacturing reporting unit with a goodwill balance of $56.6 million; and the Europe Manufacturing reporting unit with a goodwill balance of $30.4 million.
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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 forecastforecasted foreign currency sales and expenses. At May 31,November 30, 2020 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros and Pound Sterling;Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $37.3$243.7 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 of 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 May 31,November 30, 2020, net assets of foreign subsidiaries aggregated $150.6$160.5 million and a 10% strengthening of the U.S. Dollar relative to the foreign currencies would result in a decrease in equity of $15.1$16.0 million, or 1.2%1.3% 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 $252.8$247.1 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 May 31,November 30, 2020, 46%54% of our outstanding debt had fixed rates and 54%46% had variable rates. At May 31,November 30, 2020, a uniform 10% increase in variable interest rates would result in approximately $1.3$0.8 million of additional annual interest expense.
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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 13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended May 31,November 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There is hereby incorporated by reference the information disclosed in Note 1514 to Consolidated Financial Statements, Part I of this quarterly report.
Item 1A. Risk Factors
This Form 10-Q should be read in conjunction with Part I Item 1A “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended August 31, 2019 and Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended February 28, 2020 which are incorporated herein by reference.2020. Except as set forth below, there have been no material changes in the Risk Factors described in our most recent Annual Report on Form 10-K, and our subsequent Quarterly Report on Form 10-Q.10-K.
The COVID-19 coronavirus pandemic, the governmental reaction to COVID-19,the pandemic, and the related significant global decline in general economic activity most likely will have a material negativedisruptions could negatively 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 continues to present risks to our business. While the approval in certain jurisdictions of one or more COVID-19 vaccinations has been categorized as a global pandemic by the World Health Organization. Asoccurred, in many geographies, human mortality and morbidity increasehas surged in numbersrecent months and expand geographically,economic activity has decreased. The 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. Several of the COVID-19 pandemic and related governmental responses have been wide ranging and multi-faceted including historically steep and rapid declinescountries in consumer, industrial, and investing activity in the geographic markets wherewhich 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.continue to be significantly negatively impacted by COVID-19.
The COVID-19 pandemic and related events are unprecedented in living memory. We are unable to predict when, how, or with what magnitude COVID-19 and related events will negatively impact our business. We currently identify the following factors as the most significant risks to our business due to numerous uncertainties, including the duration of the COVID-19, pandemic, the duration of the global decline ingovernmental actions, and economic activity, the impact of those events to our customers, suppliers and employees, and actions that may be taken by governmental authorities, including preventing or curtailing the operations of our plants and/or shops, and other consequences.
COVID-19, the global decline in economic activity 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:conditions.
| • | 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. |
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| We function as an essential infrastructure business under guidance issued by the Department of Homeland Security. Similar guidelines and authorities exist in other nations where we operate. If our current status |
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THE GREENBRIER COMPANIES, INC.
| • | The operations of our customers may be disrupted, thereby increasing the likelihood that our customers may attempt to delay, defer or cancel orders, |
| • | 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 |
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| 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. |
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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 would be adversely impacted.
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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 Company announced on October 26, 2018 that The Board of Directors hadhas authorized the Company to repurchase shares of the Company’s common stock. TheIn January 2021, the expiration date of this share repurchase program has an expiration date ofwas extended from March 31, 2021 and theto January 31, 2023. The amount remaining for repurchase is $100 million. Under the share repurchase program, sharesmillion as 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.
November 30, 2020. There were no shares repurchased under the share repurchase program during the three months ended May 31,November 30, 2020.
Period |
| Total Number of Shares Purchased |
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| Average Price Paid Per Share (Including Commissions) |
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| Total Number of Shares Purchased as Part of Publically Announced Plans or Programs |
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March 1, 2020 – March 31, 2020 |
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April 1, 2020 – April 30, 2020 |
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THE GREENBRIER COMPANIES, INC.
Item 6. Exhibits
(a) | List of Exhibits: |
31.1 |
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31.2 |
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32.1 |
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32.2 |
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101.INS |
| Inline XBRL Instance Document. |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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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.
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| THE GREENBRIER COMPANIES, INC. | |
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Date: |
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| By: | /s/ Adrian J. Downes |
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| Adrian J. Downes |
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| Senior Vice President, |
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| Chief Financial Officer and Chief Accounting Officer |
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| (Principal Financial Officer and Principal Accounting Officer) |
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