GBX - Earnings call transcript Q2 2018 | The Greenbrier Companies, Inc.

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Operator

Hello, and welcome to The Greenbrier Companies Second Quarter of Fiscal Year 2018 Earnings Conference Call.

Following today's presentation, we will conduct a question-and-answer session. Each analyst should limit themselves to only two questions. Until that time, all lines will be in listen-only mode. At the request of The Greenbrier Companies, this conference call is being recorded for instant replay purposes. would turn I to conference time, Mr. this like the to over At

President Roberts, Treasurer. Roberts, and Justin Vice Mr. you begin. may

Justin Roberts

will fiscal XXXX Angelica. and Chairman you, and of our call, the the Good everyone. am conference and quarter I And today's for call. Vice and by rest CEO, Tekorius, Bill for the Thank CFO. results joined provide On They Executive outlook welcome discuss XXXX. morning, Lorie an second Greenbrier's to President Furman quarter will

our up Following we call the open prepared will remarks, for questions.

call differ release Litigation to results Securities some the describe cause the Private in meaning the our this addition Throughout today information on of Act XXXX In made include Greenbrier. financial the presentation in XXXX. site. of by conference in and slide we metrics press on forward-looking on found and from Greenbrier’s issued Reform be statements discussion behalf that Web or will morning, section IR today, to discussed of any our can forward-looking important within materially could additional the actual those statements factors expressed posted key Matters a of of beyond today’s

three Bill call. key call, to from for challenged the take me you to Before messages identify today's

secondly, noise. I've As by aside the driven the strong challenge, always are all I'm year, guidance setting up Greenbrier to for for of for going exceed the quarter, our creativity employees; identified has business our first, four; we a tax meet operating the focus units performance or in and

from of outside for XX% with growth capital. originating expansion of orders and our is finally, international Next, traction year-to-date respect nearly gaining North America; Greenbrier's

the that the to manner continue a Bill, yours. to the with are long-term. in efficient Company is going We grow capital call over

Bill Furman

Well, my you, of good some just soon. deliver framing our things fiscal able be Thank did Greenbrier sustain hearing from to this morning momentum more might the a in job big Justin. XXXX. That's a quarter commentary fact moving second in you quarter. positive good We of pretty be you, everyone. should the

and North strategy strong led in markets protecting to while of internationally Our diversification, enhancing expanding core has growth and performance. for Greenbrier's America,

Industry to annual forecast Greenbrier forecasters more. Leading approximately their ranges railcar XX,XXX XX,XXX Railcar analysts annual delivery is a As mentioned loadings will increased, economy North XX% XXXX the customers, linear. to in originates Greenbrier's Revenues international rate, America. in total global orders come of and positive. and of Similar fiscal and international railcars have track has half at sustained published market, from from deliveries revisions release, between on with tax trajectory the its lower achieve will not railcar and report outside combined are and levels all North earnings upward $X this but indicators to high activity far news full-year of share. have targets continue today's overtime and momentum. expand American utilization American per to and some XXXX almost recently on even within a about bit the be backlog North remain

in Although, market. the used view direction. continued are these and this pressures And lease on credence optimistic in a headed the new remain, more rates to railcar lends right

balance is ventures, Rail industrial in comes car railcar sheet solid Europe industrial to a federal growth our current and the to growing market and in Europe not liquidity program industrial Brazil working powerful platform strengthening and activities billion but an the in activity future. fiscal export Greenbrier address economy Greenbrier’s tax in Europe view strong uptick years. June the political a growth. participating probably of the This stages there Recent Gulf to since very loading of is concessions well joint is in also a over a coming Greenbrier also events of countries. parts provides the demand. markets in in us to factories signal also enjoying Brazil coupled dollars with the U.S. are this renewal well that cooperation Greenbrier remain for railcar Europe Competition particularly will in Western long-term does Brazil it approach railcar prospects in Greenbrier-Maxion our in year the progressing of of produce and Additionally, business cycles the North performance used also new international be Brazilian the Brazil railroad of forecast formation. and railcar balance next decade. pass, elections. that that as disciplined and factory solid upcoming of the enables resurgent Eurasia. is and is in largest United XXXX on market, simply is into will railcar in supports And economic for take by renewal Eurasia. its America. act to infrastructure approach freight stability enables integration truly infrastructure during Astro by also the long-term soon It in encouraged robust, produced Through States and builder the for well-positioned and earlier presence our platform a $XX if in produce investment

strength The tariff our more enjoys. recent recent very activity. has in been clear trade renegotiation on currently next months of to region make on the than it Eurasia. to a Africa, and in considerable driver this has Turkey there infrastructure over And and NAFTA and We an Greenbrier to been active U.S. U.S. programs the but in positive includes throughout sent two The recently policy I'd and is for recent of for the a expand show the Greenbrier. buy position in trade freight We U.S. regional interest years, technology facilities in also from a there expect is network several and including several just years. those extended economy region the rail nations like team export global as things.

renegotiation is successful NAFTA business Greenbrier's model a NAFTA, likely supports that a outcome. First

and we mentioned Greenbrier and others unfair in is along However, platform progress to state-owned in industrial as NAFTA. in a in in Times, law. the issues in adapt successfully Dumping finished for the sourcing recently competition Mexico New on the The in drives practices that. many by free is the Company that an aggressively recently even States, administration by particularly on some companies is trade to prepared article agriculture We policies. and trade, tariffs following sector Tuesday United administration surprised products changes the and tariffs needed throughout Union subsidized doing that are with trade States. also reset this. engaged that its of Nobody steel. free We're our from working a We, which navigate sources the closely Tariffs the result be wisely be I will overly a U.S. administration materials of through position announced on And from The with between We by from controlled, global to be United similarly requirements Brazil, trading is should China clearly stances enterprises across long products lastly parties finished investments moving Pacific, comes a trade the and need in Trump tariffs suppliers. partners. including the we also to north-south Southern had can amount the to Trump York advocacy railroad, NAFTA. Most for need given right content, on step KCS, area. to aggressive need very gain dumping impacted particular model in U.S. customers to Class from trade, state-owned effective advantage. Ross proactive City has relationships range nimble including Kansas also subsidized a like manage and Secretary own. our address United are rail mechanism railroads, direction its with but like fair doing commend leader actively which Greenbrier and not are sourcing unfair industries, suppliers tremendous as been States into China. stating supports unfair and these flexible,

the its ahead, and building to managers. key target run. strong talent senior we Greenbrier and potential also ROIC Accordingly, about for growth to over of good few a from investments days a a also confident and a is investment offer the confirmed we return has Looking and cycle Greenbrier of long for just the pursue mandate, in expect pipeline that generation just for returns strong in to course ROIC capital ago short succession Board operations. had run, course will from on cash not mandate, maximize redeploy Directors but

to service which has and shareholders. evidenced the in approved we and our community a measure ability to commitment a to generate to return Board our commitment diversity to of capital of Greenbrier’s customers and strong in recently positive Board communities also the involvement. by operations return and to another Directors affirmed confidence The operate, cash flow, As

half entering first well. fiscal year of good second has our The momentum Greenbrier the very has year. gone the of half

Greenbrier of geopolitical a award Assuming is in and winning you you military will shocks service world and is the business force, I both of the some previous and with With economic Greenbrier potential fiscal better XXXX and to different holding Lorie, to been the now an over to offerings, its a operationally sphere, from commentary. good company, constant and continued in for political excellent that or continues goals global disciplined work and capabilities dedicated combined Directors manufacturing expect distinct expansion and around products, market, can Board financial it achieve performance poised unique approach financially has turn us. beyond. cycles.

Lorie Tekorius

Good us. Thank for Thank you, Justin. you Bill. Thank you, everyone. joining morning,

fiscal guidance, first to positioned Bill nicely our testament the are expanding of mentioned, achieve half results finish to enhancing we strategy our North did with American year while business XXXX and internationally. our strong our of a As

and share to deliveries. $X.XX million For diluted Operationally, X,XXX to per December share act consisted the included enacted Highlights results units international the we quarter on quarter about which earnings of in for revenue of EBITDA tax second share quarter. of or benefit gross were of XXXX. million related we per in XX% diluted the realized $XX.X These The second of margin first million. earnings and adjusted pieces. of the quarter $X.XX delivered $XXX.X revenue, quarter, tax include two per the $XX.X higher compared primarily

fiscal partially per in sheet, And reinvested taxes on benefit. our fiscal the balance of offset generated then for which a XXXX the income XX% XXXX. of benefit rate a the earnings. year the benefit is from our by First, This of on previous rate in U.S. lower re-measurement a ends per rate of foreign approximately generated because We’ll year tax transition $X.XX of items full XX, an these reduction the a receive tax our XX%. share is additional XX%, two The August quarter. one-time share blended the rate the net U.S. in deferred $XX of tax

that The of of of intermodal North benefit quarter to flat of types, comprise higher the flow other rail orders These Order million. business North competitive value and to for a non-linear. earnings future international proportion Backlog orders broad being quarter cars. prices. demonstrates X, which through in including indicator continues and key be year-to-date hoppers types, of units totaled generation. Second remains the railcar intermodal, have markets market a lower and activity XXX of tank ordered with outside over and in the order units cash geographically valued diversifying nearly cars, average American The a X,XXX half $XXX our included America. car range expansion the quarter car and sales

XXXX units clear end us gives $X.X quarter pricing was and billion. backlog visibility production in through on beyond, environment. with diversified allows Our this into us our and rate, of XXXX value an to current discipline exercise estimated and backlog XX,XXX Based competitive

gross rebalancing ample management to margin interim our fees margin quarterly the second activity. sale margin the XX.X% of leasing quarter and and same the gain Wheel $X.X to attributable balance end In equipment our available and million shift in strong. quarter, increased XX.X%, improved of is activity. driven flexibility business rents. million, and business sheet Greenbrier's by and primarily net cash balances providing At debt historic was of the in business continues grow all $XXX of operating achieved cash was our the Now, services aggregate and parts including reflects syndication lease And credit Quarterly gross optionality our to was at on rate X%, fiscal to million. units volume margin was Greenbrier funded XX% and segment, business. the efficiencies. manufacturing mix margin $XXX of Greenbrier's be turning are lows, on facilities higher reflecting continued nearly and with borrowings increased product showing gross segments. activity.

cash on employed remains capital strategy long-term allocation Our value. shareholder and flow creating on return capital generation, focused

with of X% generation is Our flow July share. the of fifth long-term confidence evidenced in $X.XX cash in strong Greenbrier's the XXXX. increase we per This since growth dividend increase and is by and the reinstated quarterly dividend dividends

mentioned were for as deliveries XX% from second of billion and of the quarter a base conversion will XX,XXX EPS revenue diluted X.X% guidance of driven our one-time have half equity As which which been we're EPS included part substantial XX,XXX current just at increasing lower years a $X.X ago. Based our had end, $XXX total $X.XX billion, increase would approximately $X.X an approximately by in deliveries subsequent conversion trends occurred billion Brazil; in to a that we're full quarter primarily confirming calculations impact follows; is XXXX and short million press on of Greenbrier-Maxion increase revenue $X and billion and already quarter on guidance the the be for asset will per end, schedules, in tax been $X.X and our as production converted of in a to have $X.XX fiscal about convertible $X.X business from share on for into second year to units, If the release, rate share; XXXX. benefit shares notes expected. this full be in of diluted The the equity of guidance. or per the few the was to

earnings aside have capital gross volume one-time weighted setting on leased of as higher expenditures million estimated based rebalancing range are rebalance to our As amortization of at and we expected the our of lease and depreciation sale proceeds to of from production is still $XXX act. activity; our continue operations is the the fleet; and and million; guided, tax previously and million the be from million again, with be $XX be affiliates from deliveries of cadence modestly the schedules for Further, year; the $XXX we to assets; primarily unconsolidated that not of results operations. from Brazilian earnings share the half will to expected G&A and our consolidated, reflect $XX GBW benefit as between second result on year tax current we fleet sale gains $XX $XXX to expect about million a the be

to in We second although the Brazil, remain this in by closer challenges are expecting GBW. to earnings encouraged the recent At results half we're at the year. point, be from unconsolidated of breakeven affiliates

interest We expect $XX million. to to XXXX million earnings attributable $XX non-controlling to be

we non-controlling operations. fully and of As interest rail results Jensen Mexico our these that results are of of share the represents not two The a Greenbrier-Astra significant in consolidated reminder, partner owned, in Europe. operations

Our to consolidated XX%. tax expected the second rate of XXXX for half is be around

to due mix may As our earnings. rate a fluctuate reminder, geographic of

XXXX. it up higher And questions. higher in earnings XXXX summarizing few we’ll just and for now words; So deliveries, increased into a revenues open

Operator

from Sir, open. line question your from Instructions] Elkott is First [Operator Matt Cowen. comes

Matt Elkott

calendar at about I American you backlog. your this the XXXX, XX% of this orders markets. came that So orders between me this. and American the received. about you far be the aggressive And why of this year, of the American help the understand discrepancy XX% North this Help to exist? correctly, less trying pursuing XX% market market? imply Does thinking orders understand your of Are If are guys backlog far of am year end the in had North you that mentioned can from me you orders just fiscal your the in as international thus thus North share

Bill Furman

math, the from fallen it think have am not sure slightly while is suggest. I because success may order our financial what follow you to people. than defer XXXX higher I I to I have

factories not over able of are that ROIC. to our of competitive market very been course. order We market and we We’ve couple to strengthen, opportunities high prefer maintain very allocate past the and the margins given discipline And trying high perhaps mix to frankly expect we total exert the share. of is get market that follow still years expect in has for you specific our The affected and to to may and because expect margin opportunities the market them half. up, We orders share to you back and in grow really in marginal opportunities we can be on want though -- description fill we second share strategy. our our specific if market more to of

Matt Elkott

the half are front, margin And than the year? the half gross the on second outlook suggesting of year you the the first staying for could be margin of actually that better

Bill Furman

don’t I I comment. am to think prepared

in at and the issue United some that for you orders competitors prospect not the losing all In transaction trying between that. below particular and we is demand States is one the each just margin replacement production year, following many in car factories I get they competitor to total there look actually the to car pricing side a North a avoid cases, that pricing on building that’s book. contribution average if situation, in are Regrettably, have capacity having capacity to and the competitors their think to America of of running. XX,XXX that and long-term kinds is drive market keep we’re threat. exceeds sustainable This

given book been we really would you need part think not recognize in capacity, the not addressed attractive. coming. I that Many market have they builders chase that and issues think the time is customers most that capacity the the have markets will economy the is where to the pricing where over overtime cycle that is stronger attention as behavior. I of pay and world, And see prefer the this things orders all So this to strengthen, we those

Matt Elkott

question, final one just Bill. And

the internationally on are what’s and half it fiscal the your into American more out we’re in year going discipline growth, is than you margin is what’s and front, now you on and target? a pricing look plausible seeing When earnings your to that North the XXXX, freight XXXX. Given market, revenue way front

Bill Furman

As in you of our know, it maybe premature about us a XXXX. cycle to little talk

tackling. tell watching do and recent one accounts of know then you than much as some the guys market elements a can of are if and and other it's folks bullish the I more as do I probably the read it reports, you you the accurate the If read just we as future blocking and as quite the far little

shock in parts as of All secular other adjusted. the very issues see America, worry economy have Europe Latin out, The of world South strong will about us is to currencies global economy. the trade to the we global America sort

I we So however, before. but were probably said year. this optimistic, be will of per continue to accused optimistic skeptics exceeded of into I've many make I course of when we the expectations been target listening we would share $X the you of call remind who being this

track We as benefit tax rate. the on also you even noise you are the achieve to and pretty as about on and see, tax firm builds that And of it. we're we if take take the certainly will can out again

very environment therefore I optimistic. -- taken But probably account. you issues if guys I'm would basic have a into So it's environment that be you economic say all positive know to geopolitical

Matt Elkott

you So to current 'XX? markets could potentially and markets any North of on freight fiscal international the advancing. get borrowing how way of in improving Do the pace American major changes anything on XXXX, like see are

Bill Furman

the see us and for. more many orders orders is really established to It's If this up got we've should years. me well. at look could see We've and And negatives. in many that products those America, those variety regretting North got coming looks international you in many stronger at some much future. several big base great We we of not we competition to as but very who for to fill and investments. flavor it's We've this been out more to We They’re and in it. there tell respond able it time positives get tell be out our what. working way, things North an the continents be opportunities with plans working on we see point. get and see get we’ll would momentum I So hard the of and reasons, to cheap that American, like pricing, and

or is I'm building about management We future sound job a play XXXX, opportunities my to this XXXX, to on is sound very better foundation very optimistic whatever the a great car order be to foundation team. very one-o-one it and and has role XXXX this my just couldn’t very a leave and round basic shape directors company goal good in present with in So got Greenbrier. a themselves. the

Operator

you. Thank

Next Long Stephens. from is Justin

is line Your open.

Justin Long

But with by the average that up following can on pricing Maybe compares seeing and just in say I you what at car were ago? vary America you today would you commentary. some industry, pricing a lot to new look of start if know railcar type. a in the quarter North that to pricing how blended

Bill Furman

its mix. I don’t think mix, differentiate, it’s mix, that

to have remind a a constantly is not We car. not railcar, even members rail a our railcar that board is

market, strategy in worse. and all blocking of tactics getting terms are say I'd this. very to Our pure not on is strengthening relevant space things But

So were that and last that days cross section a of quarter than see this report think I they're that they came of that basic couple you'll just I with and entire agree Read out report an ago. basically that quarter. temperature better

Justin Long

How the progression margins higher a you railcar then RPU piece, book. orders towards of updated piece from here? international you mix. thinking that’s shifting of provide international and on some just the on going the orders updated some give thoughts to will international these also commentary mentioned then And just order weighting Could And affect about how forward? a you're maybe becoming bigger

Bill Furman

it, clarify But international our to will. you for strategy. to going am you to I and ask more answer I come that not clarification let me directly, question if me back tell hold try want I'll and So about

wheel on picture the North of in car the to car building States back the particularly overcapacity euphoria years and to turns the car hand either builder in and then United building America, very clear favor of in then Over go. markets my one customer and railcar seen grace, in where come the the the have business, other. a this We is

The of a investing international We're arenas operating are future must in We of world, longer the dependent be short-term of over if company, income North long time and off in but cognizant is in like large our do we paying view the beyond. not, fact we’d presuming thinking long-term out of XXXX, in our the is the for margins be really We we it's of they're a American future and play. for are the be so game. XXXX, to that business. What GCC, the platform income ’XX a and a on taking in streams Where and around term have won't to very free XXXX. in the trade will economy. products life

our goal Board that's the Directors. goal of and of So that's the

like. -- can if ask specific follow me you let you'd Now just on

Justin Long

helpful orders. And into guess on commentary maybe be this anticipating then of what you're and over and just more in would I international the getting XXXX any into from book mix back the half year order impact the

Bill Furman

balance fiscal covered for all year, Well, of guidance. looking XX,XXX under We're cars pretty XX,XXX much to through I markets. at the this our think it’s

we individual reasons, competitive to For don't breakdown countries. like

Brazil, there. contribution from the great But proud we've the We of have on going mentioned and also of had world. progress other we're parts Europe because

not you've but piece and address international all in your it the quarter-by-quarter. So of able run I short not is of might on can But quarters that creating pricing given question. our that I'm consistent it's one in orders. all for the think you certainly all to that our calculate and or it, what North guidance not I the imply and focus and in mix actual been think America pace of is with value the

Lorie Tekorius

non-linear. the any going ‘XX. we the North fiscal a is America. I you what got don't of of I second great backlog what before to rhythm said international maybe any I orders the more that jurisdictions expanded expansion add, have have We’ve to into into in these And play. think we’ve long-term normality And is our see just half Bill. can think It than don’t of

really for full So into we’re is our lines are booking XXXX now production XXXX. out

Bill Furman

the out Brazil. already exception around the probably of We are world booked in XXXX with

can that never reach of advantage world, is for wrong, purposes. advantage is seen you excited not want how America that North I international It’s but I think be these potential markets and we platform could optionality, profitability and take is duplicate that profitability don't microcosm operations around very the before of optionality incredibly competitive of overseas. But to value platform because to the granularity give and a of am of that. me -- the get good the about just you of that the and places valuable reach we’ve in footprint international can these

Operator

Thank you.

Next question Merrill Bank Lynch. Hoexter is from from of Ken America

is line open. Your

Ken Hoexter

some that? international talking the just the number? maybe you the But commentary impacts is -- maybe, more? you’re Saudi there side, Can just just internationally, you And about business, appreciate the more about answer dig that’s completely Bill, done talking little now order the I So when you or that on international talk talking sticking dumping competition, to right? your holistic bit then into before. dig within full into railcar into a Were steel were you about getting China

Bill Furman

Yes, we’re least And at be order clear into the year first my business. for full our comments Saudi through carries in let tariffs. soliciting holistic the and particular XXXX. me our But about more into, other quarter about fiscal and orders

continue in I allow at dump it. our China that they footprints senior are so. form And targeted policies transparent North dumping you two in the agree have state-owned about for people what I quite nationally-owned of fabricated They’re the companies. China dumping establishing reason. Board might and are concerned seen, can’t you of Trump And are and They products we these seen their been are do by we to America steel fairly China In steel. market been about subsidized in policies investments. China were to steel in in United and with administration. aggressively States. have will have the concerns sweep and are Directors. companies. sector, States United These probably around not prevented They levels think good from you They’ve on know, at commerce, doing and these As recall,

of we subsidies. of secure by they have policies are markets products. world dumping aggressive conditions that an very and kind build throughout the they environment in compete conditions Their great get country And have for see policy then the attacking is However, franchise advantage and deal are a through to States. China one operating of huge and as they to that to out subsidies the a they offer cash, United of hard physical American and buying it. companies of awarded infrastructure we It’s to

think wise complex not in this it's lot I United company But it's of allow happen, threatened. been we've be to and you is fully of and domestic simply a about the very here much the we see States. seen can administration topic industries that in transparent And concerned if to of it's general, establishment very course. quite

would So on commentary my that your question. be

Ken Hoexter

subject. guess, I on just different completely Bill, to follow-up a

a the by have particularly the overly sector obviously and rebounding more expending discussion of crude lot We need cars and congestion, heard rail capital about dynamics. for that and on rail hearing the how auto maybe rail throw types the again, may but important auto is and business you the thoughts profitability and some mix into disappear. to getting yield pricing and not But it and if necessarily is shifting can on given car tank cars

Your demand the on side thoughts tank and now, for on auto side? railcars focus

Bill Furman

is pipeline surprising in them forward rail. of out potential of a our all mean by I for a -- of amount particular surprising it's number cars, however go not tank pipeline, orders our And looking

the oil think levels the the positive. all times ago that of the America oil year I by prices are and in given and increasing and right industry strength over the oil rail of

on commentators who are little a agree with complex Auto those reporting both and affected policies to Conference of quite policies, I lot think pricing cars shippers. It because more strength two are and areas. So we was the is FDA, what more will in subject. an attended a and by talk we policies, allow National complex, rails. service acquisition just they kinds to railroads between interesting on and very shippers they this railroads their Freight

shippers cars of very types going or pay and some allow a service Some railroads safety lot are it, provide even they pressures are the railroads aggressive for bigger lot upon that putting will about won't a service. of they in being of they in and the types cars, and to of those provide to they the are

it's on turmoil around railroads, think we lot other bear to safe So cargo. were not finally and it’s that going of We there active that's early safety, and for fruit. on tanks movement is hazardous just going railcar the a in

equipment is Velocity shippers so all with very on. certainly when the We find know also going that's accommodations runs we that the slower railroads. believe service needed, will train the design, more strong, and are

Operator

you. Thank

Next from Seaport Milby Willard question from Securities. is Global

open. is line Your

Willard Milby

seeing ask pricing parts about be might to you’re can and benefit from the you Wanted pricing business scrap higher on you benefits the wheel and out other scraps if areas. in seeing maybe other and all parse any

Bill Furman

it When network builders we in there's caught flexible clear can that here pricing even a know hedging it the of trap the there’s temporarily we Board side it. First by It's This report United manufacturing than hedge has going because and that, meeting the of exciting least in margins, in fixed prices the so all, pricing, of we business position somewhat in a get show to have increases. market do some sourcing in that materials quarter wheels. that aren't protect just had we'll the we're of all tricky role. a even who still drives as suggested customers believe we and at of our as trades do top pricing our natural there's steel we exists for to trap it’s States. higher all natural as scrap volatile. you pressure to that on of to of for even recent But generate and quite a course global we pricing. tariffs scrap just for is down received climate are fixed guru, if amazing on promotion We where sourcing And operations passing a on We're that fixed our a in special for rail of pricing. up margins pricing back-to-back this can We ask and will of falling our are global pricing throughout one Whitehall, like in time the having supply reflected add those are where chain. said Directors opportunity in his amount

Lorie Tekorius

add crew just would I volume that that on about to our in year. actually wheel increase And this saw XX

pricing benefiting gross efficiencies in driving as just not their was volume. And scrap they've well. also it's margin that So higher higher that segment but very improvement on been focused

Willard Milby

think versus help that what's about XX-XX increases, is pricing good margin split to I look and there there? scrap driving like XX-XX any When a volume at

Lorie Tekorius

into would get it a We I No, down just specifics two. combination it's out the the that… like of say or splitting don't

Unidentified Company Representative

market that X% the gone to organizing on units, reflected and strengthening, some the getting in levels allocating have business think are to out our for it’s ROICs that for capital and in of that pretty that's of business. to factories efficiencies the also respectable margin margin I the job, for with also respect we’re up good XX% capital,

Willard Milby

to I you'll in somewhat similar manufacturing call, call I and those gross made back been 'XX, mid could deliveries of could was surrounding that sustainable if range. some that If couple be margin similar the that thinking changes back fiscal a if there look and And arena? to were shift if has thoughts margin year comments it again. was this, wondering 'XX teen I still last in

Lorie Tekorius

fiscal said we I what fourth will release. earlier, quarter when to defer our back be earnings guidance giving 'XX Bill we'll do our

on manufacturing commercial of a generating our work hard margin we and growth based company the we group and efficiencies our our mix what group, driving broad all about within excited the and have seen do and are leasing services maintaining discipline. We and product pricing have the group between

XXXX. But are XXXX, specific positive the for any guidance We this have we we're at don't optimistic time. about outlook

Bill Furman

and be the better downside have to build asking of detail as more going the granularity. goal least do, world or course different and always you're worry we protect a we lot at it we'll the things. have that good If got around exciting ways as we're for our of we We've potential and tremendous about, building is have to we that that's course happen things make of some year, and this base. There's platforms different

Willard Milby

of would one looking if to guidance in one could And America order talk you book I North the versus the for I Europe be forward general necessarily if right profile general, willing But in. about margin now. the in on the curious orders margin sneak just was you’re or the on and America? orders margin booking of last operations North versus that European

Bill Furman

can’t on to and going don’t and tell I I I there’s to there question. your But question. know am comment further answer the you. and going I’m to maybe ways other. like know and Well, to know I back three get you one not I

thank for the you So question.

Operator

you. Thank

KeyBanc. Next question from Barger from is Steve

Your open. line is

Steve Barger

just any international see margin quarter, what But take would just in the now you answered our Bill, we skew were last that I at think just another Would and question. than are dilutive right accretive mix. running to understand can that’s half? models, about lower the more say If you going or gross price I in to international that all stab result in way first that in half production XXXX. average so the than that car am towards you to be

Lorie Tekorius

in comments we’ve here will America both I I since base. -- a we’ve expanded doubling jump the our am and of our would and broader But in sure I add. some Bill got have with Europe North to product say base will footprint, European

to international broad that was overall. mix. skewing a say shift hard such have deliveries we So in It’s that

North We’re with in very how how Europe. we’re as well we’re here in operating as America, pleased operating

Bill Furman

for a margin give answer in year’s and I Europe, you which lift anticipation. generally next positive should So in is a there can the general market be

real with the plus. are The in business, pleased the that of partners very actively integration we’ve involved Europe. during We’re acquired acquisition it’s a

and number of responsibility factories Similarly XX% manufacturing a the Brazil, market have very now market. able attractive pricing over to improving we’re we constantly should that be the obtain footprint. of in We in

And We’re to margins United they pleased maybe measure are good the going don’t I it’s down know, as what’s are I with not. future. and there. States the the think hard in

pretty and relevantly footprint. just So we XXXX and to orders in multi-year about international the solid more have get And XXXX we’re orders XXXX. optimistic for

Steve Barger

That’s So of per it’s last the than not mix? sequentially lower just quarter quarter. revenue lower car Europe function was ordered or a Brazil, car structurally prices this in

Lorie Tekorius

Exactly, in prior we it as is order United up that you And that can quarters proportion have spikes ASP. the a intermodal know intermodal mix, orders activity States. down the because whenever here from larger bring

Bill Furman

are engineered and general in in specialized highly Brazil. over is Europe, sometimes than similar the ASP greater standard And wagons they the because here, in

at about average probably the modeling, get kind this year higher useful affect granular price. mix for model the more give some the be the do guidance All we the optimism we’ll this to as okay. your we’ll might in sales would know of get being would to We factors year of you what works and This But are, orders, last concerns equal stuff. do have particularly so you European more just me. affect mix. end And and

Steve Barger

a big flow operating cash would quick expect And positive last 'XX? first last saw FY cash and last year running flow year you one we operating higher is than this back like below expect Should half. we swing year's one, in half the

Lorie Tekorius

little I expect the it would say second do half. we in a that bit to turn

flow balance second help shows or major half in cash have be increased see the beneficial the cars cash accretive modestly railcars improved flow. half. we 'XX. that as with as expect shift 'XX I you operating to in first that expect that anything some in to don’t to balance has be Again, any sheet on of sheet, operating and would earnings, to between and we it we've the syndicated the year we built As on noticed syndication balance the

Operator

Thank you.

Research. from Matt Brooklier Next Buckingham from comes question

line Your open. is

Matt Brooklier

you maybe more of things. little sounds terms of your was the to and It end think Any change in think talked been for just there on maybe lower this of year? change call, Astra's towards I'm $X.XX to any like has on it that. range the I expectations accretion positive I international year? you’re if thoughts to contribution this your side last Astra in $X.XX curious

Bill Furman

Let a I have then and me take shot Lorie.

In quarter. about to next Rail. much from pretty get as talked XXXX, Astra we've and I'll still a I think we speak for -- should you let this Lorie get lift year it

factories I more now little was as and looking they’re think we the three integration Romania, together sluggish integrating factories all lifting team act getting certainly the really up. Poland is in market backward -- a always in that and their is two market have

done we're there, am doesn’t give now over want guidance me I've to for she I XXXX. Rail. think any Astra expecting it So about I optimistic pretty

results I them. think from we're great a really good some see team going and got we’ve to

Lorie Tekorius

about think a last the you we sluggish and change said spot is I of Astra more of quarter wouldn’t I contribution a No, what market. anything was the said it that Greenbrier said still overall I bit on. the from to

beneficial. We that improvement expect be are we that in to activity seeing

Matt Brooklier

on orders the then the the any closing, North And post point? color within or to provide quarter at American car this rail market inquires

Bill Furman

but had order the very the not orders after continued North world. America disclosed levels we've had during time of flow, it, meaningful and in in quarter this We closed rest strong of performance

Matt Brooklier

would if try maybe think was change have you of terms rising. of noticeable I'm get Any expectations change market. could just curious through through the be that of steel customers there tariff any car incremental announcement, guys the pass I and in noticed ahead post costs new those potentially here the that to pricing

Bill Furman

looking kinds for wait always or customers, ones to there're those very get bargains. who and enlightened to to the of Well, bargains last two minute try their

I source are of love They So customers. value. all our

that too waited think long the making wave. some catch have -- I are to

population, all first up. to the we're steel think, pricing when hand order those do to starting half they catch folks we parsing those of very car right been has are in on the will and go other see there the these best We're in general, steel to that an they prices and think who going can orders I now. folks see group enlightened trying the

the America. the folks financial of conference Freight, us, a economy, And upbeat there's year the in positive here clearly. tone for North American at on plus in North our going reports all stuff upbeat around which and the So other is than world at lot read desert National tone I in last attend, had think more the we it's just up the

So we're pretty optimistic.

Operator

Thank you.

Fargo. Next Poliniak Wells from Allison from is

open. is line Your

Allison Poliniak

some you comments find that I'm of your like capital in on effort. there area your So maybe, not of expand you want with are opportunity market, you? deployment as that's and international, very internationally sounds to you expand would the interesting And if to Could it an for positive. but through Where sort region wanted to set interest would the you to. you just familiar

Bill Furman

I Ukraine, global and borrowing policies in sales we build leasing sense I these the our connecting Well, part that capacity, a consider and looking We Eastern engineering opportunities, -- if all are focusing projects, at are and think Turkey is global of to toward we seem love platforms includes single to have we a Eurasia, Ukraine Levant, facilitate a But the products you on of probably at footprints we in is looking includes massive Romania. from changed. now expand at measured way use, Europe we prudent we so all without that have amount capital, pieces course allocate the Eurasia together of Greenbrier footprint, it market. in one railcars internationally way footprint. company more are goals the that for don't a but know is we targets in putting it and would a looking

attention business all that Greenbrier and doing paying making We be probably focus And leasing, we the our responsive to America. investments operations and those North parts so require are that I countries rules. that local in business to will we'll think really going for be manufacturing, content on bigger are local wheels. our commercial, core content to is core still

Allison Poliniak

little in there's some it assume of incrementals early And throughput are still still I operational off I there. increase GBW, side? you of But we I obviously expect know seeing that or And that in challenges. general volume terms is would on would incrementals higher just a mean on

Bill Furman

is that GBW say I'd improving.

likes very than GBW. Watco little run things to It’s Webb Watco a true I we've our differently different the businessman. running got he’s Rick company, runs but who had He public bought think two fully in at is it. partner with a managements some policies.

make to as core. used be core. we going money, business be it’s that As concerned, not If going not to are to far it’s

our will with to going good we’re parties. think we an as working them be work going we’re out and with So arrangement to that we’re both partner earlier, for

Lorie Tekorius

Justin with So will attention this great any and time questions. today. listening to We if our I chat to later And appreciate be afternoon and a you thank have you, Thanks of and and some weekend. everyone. further comments everyone’s have you

Bill Furman

Thank you very much. Bye-bye.

Operator

today’s joining. Thank conference. That speakers. for concludes you, Thank you

disconnect. now may You

The Greenbrier Companies, Inc. (GBX) 6 Apr 182018 Q2 Earnings call transcript