Greenbrier Reports Fourth Quarter and Fiscal Year Results

LAKE OSWEGO, Ore., Oct. 26, 2021 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) ("Greenbrier"), a leading international supplier of equipment and services to global freight transportation markets, today reported financial results for its fourth fiscal quarter and year ended August 31, 2021.

Today, Greenbrier separately announced the appointment of Lorie Tekorius as the Company's next CEO and President, effective March 1, 2022.  Bill Furman will step into the newly created position of Executive Chair on the same date, and as earlier announced, will retire in September 2022, while remaining a member of the Board of Directors into 2024.

Fourth Quarter Highlights

• New railcar orders for 6,700 units valued at $665 million and deliveries of 4,500 units, resulted in a 1.5x book-to-bill, the third consecutive quarter with a book-to-bill over 1.0x.
• Diversified new railcar backlog as of August 31, 2021 was 26,600 units with an estimated value of $2.8 billion.
• Ended the quarter with liquidity of $835 million, including $647 million in cash and $188 million of available borrowing capacity.
• Operating cash flow exceeded $80 million.
• Net earnings attributable to Greenbrier for the quarter were $32 million, or $0.95 per diluted share, on revenue of nearly $600 million.  Net earnings included $1.2 million ($0.03 per share), of loss on extinguishment of debt, net of tax.
• Adjusted net earnings attributable to Greenbrier were $33 million, or $0.98 per diluted share, and EBITDA for the quarter was $70 million.
• Contributed nearly $70 million of assets into GBX Leasing. GBX Leasing is funded with a combination of equity and non-recourse debt. It is consolidated in Greenbrier's financial statements; see supplemental information in this release.
• Board declares a quarterly dividend of $0.27 per share, payable on December 2, 2021 to shareholders of record as of November 11, 2021 representing Greenbrier's 30^th consecutive quarterly dividend.

Fiscal Year 2021 Highlights

• Diversified new railcar orders of 17,200 units valued at $1.8 billion and deliveries of 13,000 units resulted in 1.3x book-to-bill.
• COVID-19 related expenses for the year totaled nearly $10 million (pre-tax).
• Net earnings attributable to Greenbrier for the year were $32 million, or $0.96 per diluted share, on revenue of $1.7 billion.  Net earnings included $5 million ($0.14 per share), of loss on extinguishment of debt, net of tax, associated with refinancing of the Company's debt.
• Completed nearly $1.5 billion of debt refinancing effectively doubling the maturity profile of Greenbrier's debt.
• Adjusted net earnings attributable to Greenbrier were $37 million, or $1.10 per diluted share, excluding the loss on extinguishment of debt.
• GBX Leasing was formed in April 2021 to create stable, tax-advantaged cash flows.  Nearly $200 million of railcars were contributed in fiscal 2021 which were levered 3:1 utilizing a $300 million non-recourse warehouse credit facility secured at formation.  Subsequent to year end, Greenbrier acquired a portfolio of 3,600 railcars, accelerating its enhanced railcar leasing strategy.
• Under a provision of the CARES Act, Greenbrier invested in our lease fleets which created net operating losses for tax purposes that were carried back to prior years with higher federal tax rates.  This activity resulted in tax benefits that generated $1.09 per diluted share of earnings over the course of fiscal 2021.
• EBITDA was $145 million, or 8.3% of revenue.

William A. Furman, Chairman & CEO commented, "Greenbrier continued to build momentum during our fourth fiscal quarter as the recovery in the North American railcar market progresses.  We achieved our fifth sequential quarterly increase in new orders during the quarter with new orders totaling 6,700 units valued at $665 million.  Greenbrier also completed a comprehensive $1.5 billion refinancing plan that extended maturities into 2026 and beyond.  Combined with the $300 million GBX Leasing warehouse credit facility, Greenbrier completed $1.8 billion of financings in fiscal 2021.  Our strong financial position and $2.8 billion backlog supports Greenbrier's proven ability to adjust production capacity in response to growing demand.  It also uniquely positions Greenbrier to participate meaningfully in the post-pandemic recovery. Momentum continues to build in our international markets with approximately 30% of our backlog for delivery in Europe and Brazil."

Furman added, "Our strategic focus remains unchanged as we enter fiscal 2022, particularly given challenges brought about by inflationary pressures, labor shortages and supply chain issues.  The market recovery will not be linear, and for this reason, we are pleased to have recently increased the scale of our lease fleet through our GBX Leasing joint venture.  Our lease fleet investment provides Greenbrier tax-advantaged cash flows and reduces our exposure to the inherent cyclicality of freight transportation equipment manufacturing.  All factors considered, Greenbrier is extremely well-positioned to continue to grow and deliver value to our shareholders."

Business Update & Outlook

Greenbrier's strategy during the fourth fiscal quarter produced strong operating performance while balancing economic and labor volatility. Since March 2020, Greenbrier has practiced disciplined management to meet the challenges created by the COVID-19 pandemic.  Greenbrier's near-term strategic focus continues to be:

1. Maintain a strong liquidity base and balance sheet.
2. Navigate the COVID-19 pandemic and economic crisis by safely operating our factories while generating cash.
3. Prepare for economic recovery and forward momentum in our markets. Greenbrier is well-positioned to navigate the challenges of increasing production rates safely, while ensuring labor and supply chain continuity.

Based on current trends and production schedules, Greenbrier expects:

• Deliveries will be 16,000 – 18,000 units including approximately 1,500 units in Greenbrier-Maxion (Brazil).
• Selling & administrative expense to be $200 - $210 million.
• Capital expenditures will consist of $275 million in Leasing & Service, $55 million in Manufacturing and $10 million in Wheels, Repair & Parts.

We will provide additional operating color during the earnings call.

Financial Summary

Segment Summary

Conference Call

Greenbrier will host a teleconference to discuss its fourth quarter 2021 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. 
Teleconference details are as follows:

• October 26, 2021
• 8:00 a.m. Pacific Daylight Time
• Phone: 1-888-317-6003 (Toll Free) 1-412-317-6061 (International), Entry Number "1560183"
• Real-time Audio Access:  ("Newsroom" at http://www.gbrx.com)

Please access the site 10-15 minutes prior to the start time. 

About Greenbrier

Greenbrier, headquartered in Lake Oswego, Oregon, is a leading international supplier of equipment and services to global freight transportation markets. Through its wholly-owned subsidiaries and joint ventures, Greenbrier designs, builds and markets freight railcars and marine barges in North America, Europe and Brazil. We are a leading provider of freight railcar wheel services, parts, maintenance and retrofitting services in North America through our rail services business unit. Greenbrier manages 444,000 railcars and offers railcar management, regulatory compliance services and leasing services to railroads and other railcars owners in North America. GBX Leasing (GBXL) is a special purpose subsidiary that owns and manages a portfolio of leased railcars that originate primarily from Greenbrier's manufacturing operations. As of September 30, 2021, GBXL and Greenbrier own a lease fleet of nearly 12,500 railcars.  Learn more about Greenbrier at www.gbrx.com.

Supplemental Leasing Information

(In thousands, except owned and managed fleet, unaudited)

GBX Leasing (GBXL) was formed in April 2021 as a joint venture with The Longwood Group to own and manage a portfolio of leased railcars primarily built by Greenbrier.  Greenbrier owns approximately 95% of GBXL and consolidates it in Greenbrier's financial statements in the Leasing & Services segment.  GBXL provides an additional "go to market" element to Greenbrier's Commercial strategy of direct sales, partnerships with operating leasing companies, origination of leases for syndication partners as well as providing a platform for further growth at scale.  GBXL will produce strong tax-advantaged cash flows.  The goal is to add at least $200 million in railcar assets annually at about 3:1 debt to equity (or 75%) based on the fair market value of assets.  GBX Leasing will observe Greenbrier's established portfolio standards including investing in strong credits with a diverse equipment mix and staggered maturity ladders.

During fiscal 2021, $197 million in fair market value of assets were acquired from Greenbrier's transaction flow and $147 million was drawn on the $300 million non-recourse railcar credit facility.  Subsequent to year end, Greenbrier acquired a portfolio of 3,600 railcars, a portion of which will be held in GBX Leasing.  Combined with Greenbrier built cars from lease originations, GBX Leasing's portfolio's value is $350 million as of September 30.  Over time the entity is expected to grow by at least $200 million in assets annually with a five-year target of $1 billion of assets.  Reflecting the strong momentum achieved since inception, GBX Leasing expects to use the asset-backed securities market to refinance the warehouse facility and to convert to long term financing in fiscal 2022.  Investing in leasing assets reduces Greenbrier's Manufacturing revenue and margin in the short-term but provides considerable tax benefits and longer-term earnings and cash flow stability.

Key information for the consolidated Leasing & Services segment

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:  This press release may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words, and variations of words, such as  "adjust," "allow,"  "believe", "continue,"  "expect," "goal," "maintain," "outlook," "position,"  "reduce," "will," and similar expressions to identify forward-looking statements. These forward-looking statements include, without limitation, statements about backlog, leasing performance, financing, future liquidity,  cash flow, our ability to grow market share and deliver future value to our shareholders and  other information regarding future performance and strategies and appear throughout this press release including in the headlines and the sections titled "Fourth Quarter Highlights," "Fiscal Year 2021 Highlights" and "Business Update & Outlook."  These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following: We are unable to predict when, how, or with what magnitude COVID-19, variants thereof, and governmental reaction thereto, and related economic disruptions (including, among other factors, supply disruptions and sectoral inflation) will negatively impact our business  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 which may not occur. More information on potential factors that could cause our results to differ from our forward-looking statements is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed periodic report on Form 10-K and subsequent reports on 10-Q. Except as otherwise required by law, the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof.

Adjusted Financial Metric Definitions

EBITDA, Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS are not financial measures under generally accepted accounting principles (GAAP). These metrics are performance measurement tools used by rail supply companies and Greenbrier. You should not consider these metrics in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because these metrics are not a measure of financial performance under GAAP and are susceptible to varying calculations, the measures presented may differ from and may not be comparable to similarly titled measures used by other companies.

We define EBITDA as Net earnings (loss) before Interest and foreign exchange, Income tax benefit (expense), Depreciation and amortization and Net loss on extinguishment of debt. We believe the presentation of EBITDA provides useful information as it excludes the impact of financing, foreign exchange, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company's core business. We believe this assists in comparing our performance across reporting periods.

Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS excludes the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe this assists in comparing our performance across reporting periods.

SOURCE Greenbrier Companies, Inc.