QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State of Incorporation) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
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• | the cyclical nature of our business, economic downturns and a rising interest rate environment; |
• | changes in our product mix due to shifts in demand or fluctuations in commodity and energy prices; |
• | a decline in performance or demand of the rail freight industry; |
• | an oversupply or increase in efficiency in the rail freight industry; |
• | difficulty integrating acquired businesses or joint ventures; |
• | our inability to convert backlog to future revenues; |
• | risks related to our operations outside of the U.S., including anti-bribery violations; |
• | governmental policy changes impacting international trade and corporate tax; |
• | the loss of or reduction of business from one or more of our of our limited number of customers; |
• | inability to lease railcars at satisfactory rates, or realize expected residual values on sale of railcars at the end of a lease; |
• | shortages of skilled labor, increased labor costs, or failure to maintain good relations with our workforce; |
• | equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities; |
• | inability to compete successfully; |
• | suitable joint ventures, acquisition opportunities and new business endeavors may not be identified or concluded; |
• | inability to complete capital expenditure projects efficiently or to cause capital expenditure projects to operate as anticipated; |
• | inability to design or manufacture products or technologies or to achieve timely certification or market acceptance of new products or technologies; |
• | unsuccessful relationships with our joint venture partners; |
• | environmental liabilities, including the Portland Harbor Superfund Site; |
• | the timing of our asset sales and related revenue recognition may result in comparisons between fiscal periods not being accurate indicators of future performance; |
• | attrition within our management team or unsuccessful succession planning for members of our senior management team and other key employees who are at or nearing retirement age; |
• | changes in the credit markets and the financial services industry; |
• | volatility in the global financial markets; |
• | our actual results differing from our announced expectations; |
• | fluctuations in the availability and price of energy, freight transportation, steel and other raw materials; |
• | inability to procure specialty components or services on commercially reasonable terms or on a timely basis from a limited number of suppliers; |
• | existing indebtedness may limit our ability to borrow additional amounts in the future, may expose us to increasing interest rates, and may expose us to a material adverse effect on our business if we are unable to service our debt or obtain additional financing; |
• | train derailments or other accidents or claims; |
• | changes in or failure to comply with legal and regulatory requirements; |
• | an adverse outcome in any pending or future litigation or investigation; |
• | potential misconduct by employees; |
• | labor strikes or work stoppages; |
• | the volatility of our stock price; |
• | dilution to investors resulting from raising additional capital or due to other reasons; |
• | product and service warranty claims; |
• | misuse of our products by third parties; |
• | write-downs of goodwill or intangibles in future periods; |
• | conversion at our option of our outstanding convertible notes resulting in dilution to our then-current stockholders; |
• | as a holding company with no operations, our reliance on our subsidiaries and joint ventures and their ability to make distributions to us; |
• | governing documents, the terms of our convertible notes, and Oregon law could make a change of control or acquisition of our business by a third party difficult; |
• | the discretion of our Board of Directors to pay or not pay dividends on our common stock; |
• | fluctuations in foreign currency exchange rates; |
• | inability to raise additional capital to operate our business and achieve our business objectives; |
• | shareholder activism could cause us to incur significance expense, impact our stock price, and hinder execution of our business strategy; |
• | cybersecurity risks; |
• | updates or changes to our information technology systems resulting in problems; |
• | inability to protect our intellectual property and prevent its improper use by third parties; |
• | claims by third parties that our products or services infringe their intellectual property rights; |
• | liability for physical damage, business interruption or product liability claims that exceed our insurance coverage; |
• | inability to procure adequate insurance on a cost-effective basis; |
• | changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; |
• | fires, natural disasters, severe weather conditions or public health crises; |
• | unusual weather conditions which reduce demand for our wheel-related parts and repair services; |
• | business, regulatory, and legal developments regarding climate change which may affect the demand for our products or the ability of our critical suppliers to meet our needs; |
• | repercussions from terrorist activities or armed conflict; |
• | unanticipated changes in our tax provisions or exposure to additional income tax liabilities; |
• | the inability of certain of our customers to utilize tax benefits or tax credits; and |
• | suspension or termination of our share repurchase program. |
Item 1. |
Condensed Financial Statements |
November 30, 2019 |
August 31, 2019 |
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Assets |
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Cash and cash equivalents |
$ | |
$ | |
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Restricted cash |
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Accounts receivable, net |
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Inventories |
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Leased railcars for syndication |
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Equipment on operating leases, net |
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Property, plant and equipment, net |
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Investment in unconsolidated affiliates |
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Intangibles and other assets, net |
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Goodwill |
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$ | |
$ | |
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Liabilities and Equity |
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Revolving notes |
$ | |
$ | |
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Accounts payable and accrued liabilities |
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Deferred income taxes |
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Deferred revenue |
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Notes payable, net |
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Commitments and contingencies (Note 15) |
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Contingently redeemable noncontrolling interest |
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Equity: |
||||||||
Greenbrier |
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Preferred stock |
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— |
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Common stock |
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— |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total equity – Greenbrier |
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Noncontrolling interest |
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Total equity |
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$ | |
$ | |
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Three Months Ended November 30, |
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2019 |
2018 |
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Revenue |
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Manufacturing |
$ | |
$ | |
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Wheels, Repair & Parts |
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Leasing & Services |
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Cost of revenue |
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Manufacturing |
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Wheels, Repair & Parts |
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Leasing & Services |
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Margin |
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Selling and administrative expense |
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Net gain on disposition of equipment |
( |
) | ( |
) | ||||
Earnings from operations |
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Other costs |
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Interest and foreign exchange |
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Earnings before income taxes and earnings from unconsolidated affiliates |
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Income tax expense |
( |
) | ( |
) | ||||
Earnings before earnings from unconsolidated affiliates |
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Earnings from unconsolidated affiliates |
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Net earnings |
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Net earnings attributable to noncontrolling interest |
( |
) | ( |
) | ||||
Net earnings attributable to Greenbrier |
$ | |
$ | |
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Basic earnings per common share |
$ | |
$ | |
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Diluted earnings per common share |
$ | |
$ | |
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Weighted average common shares: |
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Basic |
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Diluted |
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Dividends declared per common share |
$ | |
$ | |
Three Months Ended November 30, |
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2019 |
2018 |
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Net earnings |
$ | |
$ | |
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Other comprehensive income |
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Translation adjustment |
( |
) | ( |
) | ||||
Reclassification of derivative financial instruments recognized in net earnings 1 |
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Unrealized gain (loss) on derivative financial instruments 2 |
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( |
) | |||||
Other (net of tax effect) |
( |
) | ( |
) | ||||
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( |
) | ||||||
Comprehensive income |
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Comprehensive income attributable to noncontrolling interest |
( |
) | ( |
) | ||||
Comprehensive income attributable to Greenbrier |
$ | |
$ | |
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1 |
Net of tax effect of $ |
2 |
Net of tax effect of $ ( $) for the three months ended November 30, 2019 and 2018. |
Attributable to Greenbrier |
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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 |
$ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
Cumulative effect adjustment due to adoption of ASU 2016-02 (See Note 1) |
— |
— |
— |
— |
— |
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Net earnings |
— |
— |
— |
|||||||||||||||||||||||||||||
Other comprehensive income (loss), net |
— |
— |
— |
( |
) | — |
||||||||||||||||||||||||||
Noncontrolling interest adjustments |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Joint venture partner distribution declared |
— |
— |
— |
— |
— |
( |
) | ( |
) | — |
||||||||||||||||||||||
Consolidation of joint venture |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Restricted stock awards (net of cancellations) |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Unamortized restricted stock |
— |
( |
) | — |
— |
( |
) | — |
( |
) | — |
|||||||||||||||||||||
Restricted stock amortization |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||
Cash dividends ($ |
— |
— |
( |
) | — |
( |
) | — |
( |
) | — |
|||||||||||||||||||||
Balance November 30, 2019 |
$ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
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 |
$ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
Cumulative effect adjustment due to adoption ASU 2014-09 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||
Net earnings |
— |
— |
— |
( |
) | |||||||||||||||||||||||||||
Other comprehensive loss , net |
— |
— |
— |
( |
) | ( |
) | ( |
) | ( |
) | — |
||||||||||||||||||||
Noncontrolling interest adjustments |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Joint venture partner distribution declared |
— |
— |
— |
— |
— |
( |
) | ( |
) | — |
||||||||||||||||||||||
Restricted stock awards (net of cancellations) |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Unamortized restricted stock |
— |
( |
) | — |
— |
( |
) | — |
( |
) | — |
|||||||||||||||||||||
Restricted stock amortization |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||
Cash dividends ($ |
— |
— |
( |
) | — |
( |
) | — |
( |
) | — |
|||||||||||||||||||||
Balance November 30, 2018 |
$ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
Three Months Ended November 30, |
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2019 |
2018 |
|||||||
Cash flows from operating activities |
||||||||
Net earnings |
$ | $ | ||||||
Adjustments to reconcile net earnings to net cash used in operating activities: |
||||||||
Deferred income taxes |
( |
) | ( |
) | ||||
Depreciation and amortization |
||||||||
Net gain on disposition of equipment |
( |
) | ( |
) | ||||
Accretion of debt discount |
||||||||
Stock based compensation expense |
||||||||
Noncontrolling interest adjustments |
||||||||
Other |
( |
) | ||||||
Decrease (increase) in assets: |
||||||||
Accounts receivable, net |
||||||||
Inventories |
( |
) | ( |
) | ||||
Leased railcars for syndication |
( |
) | ( |
) | ||||
Other |
( |
) | ( |
) | ||||
Increase (decrease) in liabilities: |
||||||||
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||
Deferred revenue |
( |
) | ||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Proceeds from sales of assets |
||||||||
Capital expenditures |
( |
) | ( |
) | ||||
Investment in and advances to unconsolidated affiliates |
( |
) | ( |
) | ||||
Cash distribution from unconsolidated affiliates and other |
||||||||
Net cash provided by (used in) investing activities |
( |
) | ||||||
Cash flows from financing activities |
||||||||
Net change in revolving notes with maturities of 90 days or less |
( |
) | ||||||
Proceeds from issuance of notes payable |
— |
|||||||
Repayments of notes payable |
( |
) | ( |
) | ||||
Debt issuance costs |
( |
) | ( |
) | ||||
Dividends |
( |
) | ( |
) | ||||
Cash distribution to joint venture partner |
( |
) | ( |
) | ||||
Tax payments for net share settlement of restricted stock |
( |
) | ( |
) | ||||
Net cash provided by ( used in) financing activities |
( |
) | ||||||
Effect of exchange rate changes |
( |
) | ||||||
Decrease in cash and cash equivalents and restricted cash |
( |
) | ( |
) | ||||
Cash and cash equivalents and restricted cash |
||||||||
Beginning of period |
||||||||
End of period |
$ | $ | ||||||
Balance Sheet Reconciliation: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Total cash and cash equivalents and restricted cash as presented above |
$ | $ | ||||||
Interest |
$ | $ | ||||||
Income taxes, net |
$ | $ | ||||||
Non-cash activity |
||||||||
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net |
$ | $ | ||||||
Capital expenditures accrued in Accounts payable and accrued liabilities |
$ | $ | ||||||
Change in Accounts payable and accrued liabilities associated with dividends declared |
$ | $ | ||||||
Conversion of unconsolidated affiliate note receivable to Investment in unconsolidated affiliates |
$ |
$ |
— |
|||||
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner |
$ | $ | — |
(in thousands) |
Balance sheet |
November 30 , 2019 |
August 31 , 2019 |
$ change |
||||||||||||
Contract assets |
Inventories |
$ | $ | $ | ( |
) | ||||||||||
Contract liabilities 1 |
Deferred revenue |
$ | $ | $ | ( |
) |
1 |
Contract liabilities balance includes deferred revenue within the scope of Topic 606 . |
(in millions) |
November 30, 2019 |
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Revenue type : |
||||
Manufacturing – Railcar sales |
$ | |||
Manufacturing – Marine |
$ |
|||
Services |
$ | |||
Other |
$ | |||
Manufacturing – Railcars intended for syndication 1 |
$ |
1 |
Not a performance obligation as defined in Topic 606: Contracts with Customers |
(in thousands) |
||||
Accounts receivable, net |
|
|||
Inventories |
|
|||
Property, plant and equipment, net |
|
|||
Investments in unconsolidated affiliates |
|
|||
Intangibles and other assets, net |
|
|||
Goodwill |
|
|||
Total assets acquired |
|
|||
Total liabilities assumed |
|
|||
Net assets acquired |
$ | |
||
(in thousands) |
Fair value |
Weighted average estimated (in years) |
||||||
Trademarks and patents |
$ |
|
|
|||||
Customer and supplier relationships |
|
|
||||||
Identified intangible assets subject to amortization |
|
|||||||
Other identified intangible assets not subject to amortization |
|
|||||||
Total identified intangible assets |
$ |
|
||||||
(In thousands) |
November 30, 2019 |
August 31, 2019 |
||||||
Manufacturing supplies and raw materials |
$ | |
$ | |
||||
Work-in-process |
|
|
||||||
Finished goods |
|
|
||||||
Excess and obsolete adjustment |
( |
) | ( |
) | ||||
$ | |
$ | |
|||||
(In thousands) |
November 30, 2019 |
August 31, 2019 |
||||||
Intangible assets subject to amortization: |
||||||||
Customer relationships |
$ | |
$ | |
||||
Accumulated amortization |
( |
) | ( |
) | ||||
Other intangibles |
|
|
||||||
Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|||||||
Intangible assets not subject to amortization |
|
|
||||||
Prepaid and other assets |
|
|
||||||
Operating lease ROU assets |
|
|
|
|
|
— |
| |
Nonqualified savings plan investments |
|
|
||||||
Revolving notes issuance costs, net |
|
|
||||||
Assets held for sale |
|
|
||||||
Total Intangible and other assets, net |
$ | |
$ | |
||||
(In thousands) |
November 30, 2019 |
August 31, 2019 |
||||||
Trade payables |
$ | |
$ | |
||||
Other accrued liabilities |
|
|
||||||
Operating lease liabilities |
|
|
|
|
|
|
— |
|
Accrued payroll and related liabilities |
|
|
||||||
Accrued warranty |
|
|
||||||
Income taxes payable |
|
|
||||||
$ | |
$ | |
|||||
Three Months Ended November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Balance at beginning of period |
$ | |
$ | |
||||
Charged to cost of revenue, net |
|
|
||||||
Payments |
( |
) | ( |
) | ||||
Currency translation effect |
|
( |
) | |||||
Balance at end of period |
$ | |
$ | |
||||
(In thousands) |
Unrealized Gain ( L oss) onDerivative Financial Instruments |
Foreign Currency Translation Adjustment |
Other |
Accumulated Other Comprehensive Loss |
||||||||||||
Balance, August 31, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive gain (loss) before reclassifications |
|
( |
) | ( |
) | |
||||||||||
Amounts reclassified from Accumulated other comprehensive loss |
|
— |
— |
|
||||||||||||
Balance, November 30, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Three Months November 30, |
||||||||||
(In thousands) |
2019 |
2018 |
Financial Statement Caption | |||||||
(Gain) loss on derivative financial instruments: |
||||||||||
Foreign exchange contracts |
$ | |
$ |
|
Revenue and Cost | |||||
Interest rate swap contracts |
|
|
Interest and foreign exchange | |||||||
|
|
Total before tax | ||||||||
( |
) | ( |
) | Income tax expense | ||||||
$ |
|
$ |
|
Net of tax | ||||||
Three Months November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Weighted average basic common shares outstanding (1) |
||||||||
Dilut i ve effect of 2.875% Convertible notes (2) |
||||||||
Dilutive effect of 2.25% Convertible notes (3) |
n/a |
|||||||
Dilutive effect of restricted stock units (4) |
||||||||
Weighted average diluted common shares outstanding |
||||||||
(1) |
Restricted stock grants and restricted stock units that are considered participating securities, including some grants subject to certain performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position. |
(2) |
The dilutive effect of the |
(3) |
The 2.25 % Convertible notes were issued in July 2019. The dilutive effect of the |
(4) |
Restricted stock units that are not considered participating securities and restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved, are included in weighted average diluted common shares outstanding when the Company is in a net earnings position. |
Three Months Ended November 30, |
||||||||
2019 |
2018 |
|||||||
Net earnings attributable to Greenbrier |
$ | $ | ||||||
Weighted average diluted common shares outstanding |
||||||||
Diluted earnings per share |
$ |
$ |
Asset Derivatives |
Liability Derivatives |
|||||||||||||||||||
November 30, 2019 |
August 31, 2019 |
November 30, 2019 |
August 31, 2019 |
|||||||||||||||||
(In thousands) |
Balance sheet location |
Fair Value |
Fair Value |
Balance sheet location |
Fair Value |
Fair Value |
||||||||||||||
Derivatives designated as hedging instruments |
||||||||||||||||||||
Foreign forward exchange contracts |
Accounts receivable, net |
$ | $ | Accounts payable accrued liabilities |
$ | $ | ||||||||||||||
Interest rate swap contracts |
Accounts receivable, net |
Accounts payable and accrued liabilities |
||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||
Derivatives not designated as hedging instruments |
||||||||||||||||||||
Foreign forward exchange contracts |
Accounts receivable, net |
$ | $ | Accounts payable and accrued liabilities |
$ | $ |
Derivatives in cash flow hedging relationships |
Location of gain (loss) recognized in income on derivatives |
Gain (loss) recognized in income on derivatives three months ended November 30, |
||||||||
2019 |
2018 |
|||||||||
Foreign forward exchange contract |
Interest and foreign exchange |
$ | |
$ | |
Derivatives in cash flow hedging relationships |
Gain (loss) recognized in OCI on derivatives three months ended November 30, |
Location of gain (loss) reclassified from accumulated OCI into income |
Gain (loss) reclassified from accumulated OCI into income three months ended November 30, |
Location of gain (loss) on derivative (amount excluded from effectiveness testing) |
Gain (loss) recognized on derivative (amount excluded from effectiveness testing) three months ended November 30, |
|||||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||||||||
Foreign forward exchange contracts |
$ | |
$ | |
Revenue |
$ | ( |
) | $ | ( |
Revenue |
$ | |
$ | |
|||||||||||||
Foreign forward exchange contracts |
( |
) | ( |
) | Cost of revenue |
( |
) | ( |
) | Cost of revenue |
|
|
||||||||||||||||
Interest rate swap contracts |
|
( |
) | Interest and foreign exchange |
( |
) | ( |
) | Interest and foreign exchange |
( |
) | ( |
) | |||||||||||||||
$ | |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||
For the Three Months Ended November 30, |
||||||||||||||||
2019 |
2018 |
|||||||||||||||
Total |
Amount of (loss) on cash flow hedge activity |
Total |
Amount of (loss) on cash flow hedge activity |
|||||||||||||
Revenue |
$ |
|
$ |
( |
) |
$ |
|
$ |
( |
) | ||||||
Cost of revenue |
|
( |
) |
|
( |
) | ||||||||||
Interest and foreign exchange |
|
( |
) |
|
( |
) |
Revenue |
Earnings (loss) from operations |
|||||||||||||||||||||||
(In thousands) |
External |
Intersegment |
Total |
External |
Intersegment |
Total |
||||||||||||||||||
Manufacturing |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
Wheels, Repair & Parts |
|
|
|
|
( |
) | |
|||||||||||||||||
Leasing & Services |
|
|
|
|
|
|
||||||||||||||||||
Eliminations |
— |
( |
) |
( |
) |
— |
( |
) |
( |
) | ||||||||||||||
Corporate |
|
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
$ | |
$ | — |
$ | |
$ | |
$ | — |
$ | |
|||||||||||||
Revenue |
Earnings (loss) from operations |
|||||||||||||||||||||||
(In thousands) |
External |
Intersegment |
Total |
External |
Intersegment |
Total |
||||||||||||||||||
Manufacturing |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Wheels, Repair & Parts |
|
|
|
|
|
|
||||||||||||||||||
Leasing & Services |
|
|
|
|
|
|
||||||||||||||||||
Eliminations |
— |
( |
) | ( |
) | — |
( |
) | ( |
) | ||||||||||||||
Corporate |
|
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
$ | |
$ | — |
$ | |
$ | |
$ | — |
$ | |
|||||||||||||
Total assets |
||||||||
(In thousands) |
November 30, |
August 31, |
||||||
Manufacturing |
$ | |
$ | |
||||
Wheels, Repair & Parts |
|
|
||||||
Leasing & Services |
|
|
||||||
Unallocated |
|
|
||||||
$ | |
$ | |
|||||
Three Months Ended November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Earnings from operations |
$ | |
$ | |
||||
Interest and foreign exchange |
|
|
||||||
Earnings before income tax and earnings from unconsolidated affiliates |
$ | |
$ | |
||||
(in thousands) |
||||
Remaining nine months of 2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
Thereafter |
|
|||
$ |
|
|||
(in thousands) |
Three months ended November 30, 2019 |
|||
Operating lease expense |
$ |
|
||
Short-term lease expense |
|
|||
Total |
$ |
|
||
(in thousands) |
||||
Remaining nine months of 2020 |
$ |
|
||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
Thereafter |
|
|||
Total lease payments |
$ |
|
||
Less: Imputed interest |
( |
) | ||
Total lease obligations |
$ |
|
||
Weighted average remaining lease term |
||||
Operating leases |
||||
Weighted average discount rate |
||||
Operating leases |
% |
(in thousands) |
Three months ended November 30, 2019 |
|||
Cash paid for amounts included in the measurement of lease liabilities |
||||
Operating cash flows from operating leases |
$ |
(In thousands) |
Total |
Level 1 |
Level 2 (1) |
Level 3 |
||||||||||||
Assets: |
||||||||||||||||
Derivative financial instruments |
$ | |
$ | — |
$ | |
$ | — |
||||||||
Nonqualified savings plan investments |
|
|
— |
— |
||||||||||||
Cash equivalents |
|
|
— |
— |
||||||||||||
$ | |
$ | |
$ | |
$ | — |
|||||||||
Liabilities: |
||||||||||||||||
Derivative financial instruments |
$ | |
$ | — |
$ | |
$ | |
(1) |
Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 12 – Derivative Instruments for further discussion. |
(In thousands) |
Total |
Level 1 |
Level 2 |
Level 3 |
||||||||||||
Assets: |
||||||||||||||||
Derivative financial instruments |
$ | |
$ | — |
$ | |
$ | — |
||||||||
Nonqualified savings plan investments |
|
|
— |
— |
||||||||||||
Cash equivalents |
|
|
— |
— |
||||||||||||
$ | |
$ | |
$ | |
$ | — |
|||||||||
Liabilities: |
||||||||||||||||
Derivative financial instruments |
$ | |
$ | — |
$ | |
$ | — |
Three Months Ended November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Revenue: |
||||||||
Manufacturing |
$ | 657,367 |
$ | 471,789 |
||||
Wheels, Repair & Parts |
86,608 |
108,543 |
||||||
Leasing & Services |
25,384 |
24,191 |
||||||
769,359 |
604,523 |
|||||||
Cost of revenue: |
||||||||
Manufacturing |
581,912 |
417,805 |
||||||
Wheels, Repair & Parts |
81,892 |
100,978 |
||||||
Leasing & Services |
13,366 |
13,207 |
||||||
677,170 |
531,990 |
|||||||
Margin: |
||||||||
Manufacturing |
75,455 |
53,984 |
||||||
Wheels, Repair & Parts |
4,716 |
7,565 |
||||||
Leasing & Services |
12,018 |
10,984 |
||||||
92,189 |
72,533 |
|||||||
Selling and administrative |
54,364 |
50,432 |
||||||
Net gain on disposition of equipment |
(3,959 |
) | (14,353 |
) | ||||
Earnings from operations |
41,784 |
36,454 |
||||||
Interest and foreign exchange |
12,852 |
4,404 |
||||||
Earnings before income taxes and earnings from unconsolidated affiliates |
28,932 |
32,050 |
||||||
Income tax expense |
(5,994 |
) | (9,135 |
) | ||||
Earnings before earnings from unconsolidated affiliates |
22,938 |
22,915 |
||||||
Earnings from unconsolidated affiliates |
1,073 |
467 |
||||||
Net earnings |
24,011 |
23,382 |
||||||
Net earnings attributable to noncontrolling interest |
(16,342 |
) | (5,426 |
) | ||||
Net earnings attributable to Greenbrier |
$ | 7,669 |
$ | 17,956 |
||||
Diluted earnings per common share |
$ | 0.23 |
$ | 0.54 |
Three Months Ended November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Operating profit (loss): |
||||||||
Manufacturing |
$ | 53,143 |
$ | 36,855 |
||||
Wheels, Repair & Parts |
1,114 |
3,247 |
||||||
Leasing & Services |
9,777 |
17,513 |
||||||
Corporate |
(22,250 |
) | (21,161 |
) | ||||
$41,784 |
$36,454 |
|||||||
Three Months Ended November 30, |
Increase |
% |
||||||||||||||
(In thousands) |
2019 |
2018 |
(Decrease) |
Change |
||||||||||||
Revenue |
$ | 769,359 |
$ | 604,523 |
$ | 164,836 |
27.3 |
% | ||||||||
Cost of revenue |
$ | 677,170 |
$ | 531,990 |
$ | 145,180 |
27.3 |
% | ||||||||
Margin (%) |
12.0 |
% | 12.0 |
% | — |
* |
||||||||||
Net earnings attributable to Greenbrier |
$ | 7,669 |
$ | 17,956 |
$ | (10,287 |
) | (57.3 |
%) |
* | Not meaningful |
Three Months Ended November 30, |
Increase |
% |
||||||||||||||
(In thousands) |
2019 |
2018 |
(Decrease) |
Change |
||||||||||||
Revenue |
$ | 657,367 |
$ | 471,789 |
$ | 185,578 |
39.3 |
% | ||||||||
Cost of revenue |
$ | 581,912 |
$ | 417,805 |
$ | 164,107 |
39.3 |
% | ||||||||
Margin (%) |
11.5 |
% | 11.4 |
% | 0.1 |
% | * |
|||||||||
Operating profit ($) |
$ | 53,143 |
$ | 36,855 |
$ | 16,288 |
44.2 |
% | ||||||||
Operating profit (%) |
8.1 |
% | 7.8 |
% | 0.3 |
% | * |
|||||||||
Deliveries |
5,900 |
4,200 |
1,700 |
40.5 |
% |
* | Not meaningful |
Three Months Ended November 30, |
Increase (Decrease) |
% Change |
||||||||||||||
(In thousands) |
2019 |
2018 |
||||||||||||||
Revenue |
$ | 86,608 |
$ | 108,543 |
$ | (21,935 |
) | (20.2 |
%) | |||||||
Cost of revenue |
$ | 81,892 |
$ | 100,978 |
$ | (19,086 |
) | (18.9 |
%) | |||||||
Margin (%) |
5.4 |
% | 7.0 |
% | (1.6 |
%) | * |
|||||||||
Operating profit ($) |
$ | 1,114 |
$ | 3,247 |
$ | (2,133 |
) | (65.7 |
%) | |||||||
Operating profit (%) |
1.3 |
% | 3.0 |
% | (1.7 |
%) | * |
* | Not meaningful |
Three Months Ended November 30, |
Increase (Decrease) |
% Change |
||||||||||||||
(In thousands) |
2019 |
2018 |
||||||||||||||
Revenue |
$ | 25,384 |
$ | 24,191 |
$ | 1,193 |
4.9 |
% | ||||||||
Cost of revenue |
$ | 13,366 |
$ | 13,207 |
$ | 159 |
1.2 |
% | ||||||||
Margin (%) |
47.3 |
% | 45.4 |
% | 1.9 |
% | * |
|||||||||
Operating profit ($) |
$ | 9,777 |
$ | 17,513 |
$ | (7,736 |
) | (44.2 |
%) | |||||||
Operating profit (%) |
38.5 |
% | 72.4 |
% | (33.9 |
%) | * |
* | Not meaningful |
Three Months Ended November 30, |
Increase (Decrease) |
% Change |
||||||||||||||
(In thousands) |
2019 |
2018 |
||||||||||||||
Selling and administrative expense |
$ | 54,364 |
$ | 50,432 |
$ | 3,932 |
7.8 |
% |
Three Months Ended November 30, |
Increase (Decrease) |
|||||||||||
(In thousands) |
2019 |
2018 |
||||||||||
Interest and foreign exchange: |
||||||||||||
Interest and other expense |
$ | 10,239 |
$ | 7,165 |
$ | 3,074 |
||||||
Foreign exchange (gain) loss |
2,613 |
(2,761 |
) | 5,374 |
||||||||
$ | 12,852 |
$ | 4,404 |
$ | 8,448 |
|||||||
Three Months Ended November 30, |
||||||||
(In thousands) |
2019 |
2018 |
||||||
Net cash used in operating activities |
$ | (70,319 |
) | $ | (97,119 |
) | ||
Net cash provided by (used in) investing activities |
7,199 |
(3,789 |
) | |||||
Net cash provided by (used in) financing activities |
(14,098 |
) | 35,542 |
|||||
Effect of exchange rate changes |
981 |
(2,439 |
) | |||||
Decrease in cash and cash equivalents and restricted cash |
$ | (76,237 |
) | $ | (67,805 |
) | ||
Period |
Total Number of Shares Purchased |
Average Price Paid Per Share (Including Commissions) |
Total Number of Shares Purchased as Part of Publically Announced Plans or Programs |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
September 1, 2019 – September 30, 2019 |
— |
— |
— |
$ | 100,000,000 |
|||||||||||
October 1, 2019 – October 31, 2019 |
— |
— |
— |
$ | 100,000,000 |
|||||||||||
November 1, 2019 – November 30, 2019 |
— |
— |
— |
$ | 100,000,000 |
|||||||||||
— |
— |
|||||||||||||||
(a) | List of Exhibits: |
31.1 |
||||
31.2 |
||||
32.1 |
||||
32.2 |
||||
101.INS |
Inline XBRL Instance Document. | |||
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 |
Cover Page Interactive Data File (Formatted as inline XBRL and contained in Exhibit 101). |
THE GREENBRIER COMPANIES, INC. | ||||||||
Date: |
January 8, 2020 |
By: |
/s/ Adrian J. Downes | |||||
Adrian J. Downes | ||||||||
Senior Vice President, | ||||||||
Chief Financial Officer and Chief Accounting Officer | ||||||||
(Principal Financial Officer and Principal Accounting Officer) |
THE GREENBRIER COMPANIES, INC.
Exhibit 31.1
CERTIFICATIONS
I, William A. Furman, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of The Greenbrier Companies, Inc. for the quarterly period ended November 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: January 8, 2020
|
/s/ William A. Furman | |
William A. Furman Chief Executive Officer |
44
THE GREENBRIER COMPANIES, INC.
Exhibit 31.2
CERTIFICATIONS (contd)
I, Adrian J. Downes, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of The Greenbrier Companies, Inc. for the quarterly period ended November 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: January 8, 2020
/s/ Adrian J. Downes | ||
Adrian J. Downes Senior Vice President, Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) |
45
THE GREENBRIER COMPANIES, INC.
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of The Greenbrier Companies, Inc. (the Company) on Form 10-Q for the quarterly period ended November 30, 2019, as filed with the Securities and Exchange Commission on the date therein specified (the Report), I, William A. Furman, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: January 8, 2020
/s/ William A. Furman | ||
William A. Furman Chief Executive Officer |
46
THE GREENBRIER COMPANIES, INC.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of The Greenbrier Companies, Inc. (the Company) on Form 10-Q for the quarterly period ended November 30, 2019, as filed with the Securities and Exchange Commission on the date therein specified (the Report), I, Adrian J. Downes, Senior Vice President, Chief Financial Officer and Chief Accounting Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: January 8, 2020
/s/ Adrian J. Downes | ||
Adrian J. Downes Senior Vice President, Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) |
47
Earnings Per Share - Approach to Calculate Diluted Earning Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2019 |
Nov. 30, 2018 |
|
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Net earnings attributable to Greenbrier | $ 7,669 | $ 17,956 |
Weighted average diluted common shares outstanding | 33,284 | 33,093 |
Diluted earnings per share | $ 0.23 | $ 0.54 |
Leases - Supplemental Cash Flow Information Related To Operating Leases (Detail) $ in Thousands |
3 Months Ended |
---|---|
Nov. 30, 2019
USD ($)
| |
Cash Flow, Operating Activities, Lessee [Abstract] | |
Operating cash flows from operating leases | $ 3,641 |
Intangibles and Other Assets, net |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangibles and Other Assets, net | Note 5 – Intangibles and Other Assets, net Intangible assets that are determined to have finite lives are amortized over their useful lives. Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment . The following table summarizes the Company’s identifiable intangible and other assets balance:
Amortization expense was $2.7 million and $1.9 million for the three months ended November 30, 2019 and 2018 respectively. Amortization expense for the years ending August 31, 2020, 2021, 2022, 2023 and 2024 is expected to be $10.9 million, $10.9 million, $7.6 million, $6.3 million and $6.3 million, respectively. |
Interim Financial Statements |
3 Months Ended |
---|---|
Nov. 30, 2019 | |
Interim Financial Statements | Note 1 – Interim Financial Statements The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and its subsidiaries (Greenbrier or the Company) as of November 30, 2019 and for the three months ended November 30, 201 9 and 2018 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 months ended November 30, 2019 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2020. 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 2019 Annual Report on Form 10-K. Management Estimates – Initial Adoption of Accounting Standards Lease accounting On September 1, 2019, the Company adopted Accounting Standards Update 2016-02, Leases 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 Topic 606: Contracts with Customers The Company adopted the provisions of the new standard using the modified retrospective adoption method, utilizing the simplified transition option available which allows entities to continue to apply the legacy guidance in Topic 840 in the comparative periods presented in the year of adoption. The Company elected the “package of practical expedients,” which allows it to not reassess under the new guidance prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the 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 these 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: Contracts with Customers . 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 lease liability. The adoption of this new standard also required the Company to eliminate deferred gains associated with certain sale-leaseback transactions. Additionally, the Company derecognized $9.3 million of existing property, plant and equipment and $12.7 million of deferred revenue for railcar transactions previously not qualifying as sales due to continuing involvement, that now qualify for sale accounting under the new guidance. The gain associated with this change in accounting, was partially offset by the recognition of a new guarantee liability. A cumulative-effect adjustment of $4.4 million was recorded as an increase to retained earnings as of September 1, 2019. 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 apply 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 apply to debt securities and other financial assets measured at fair value through other comprehensive income. The new guidance is effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt this guidance beginning September 1, 2020. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Note 9 – Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following:
The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with financial statement caption, were as follows:
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Accumulated Other Comprehensive Loss (Tables) |
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Components of Accumulated Other Comprehensive Loss, Net of Tax | Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following:
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Amounts Reclassified out of Accumulated Other Comprehensive Loss | The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with financial statement caption, were as follows:
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases of lessor | Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases at November 30, 2019, will mature as follows:
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Operating lease costs | The components of operating lease costs were as follows:
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Operating leases having initial or remaining non-cancelable terms | Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at November 30, 2019 will mature as follows:
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Additional information related to the Company's leases | The table below presents additional information related to the Company’s leases:
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Supplemental cash flow information related to operating leases | Supplemental cash flow information related to leases were as follows:
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Related Party Transactions |
3 Months Ended |
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Related Party Transactions | Note 17 – Related Party Transactions In June 2017, the Company purchased a 40% interest in the common equity of an entity that buys and sells railcar assets that are leased to third parties. The railcars sold to this leasing warehouse are principally built by Greenbrier. The Company accounts for this leasing warehouse investment under the equity method of accounting. As of November 30, 2019, the carrying amount of the investment was $5.2 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. Th the three months ended November 30, 2019er e were no sales from this entity during . T he Company recognized $4.0 million associated with railcars sold out of the leasing warehouse during the three months ended Nove . The Company also provides administrative and remarketing services to this entity and earns management fees for these services which were immaterial for the three months ended November 30, 2019mber 30, 2018 and 2018. On November 1, 2019, the Company increased its ownership interest in Amsted-Maxion Cruzeiro from 24.5% to 29.5%. This transaction included a conversion to equity of $4.8 million from a note receivable, including accrued interest, and a re-payment to the Company of $1.5 million which was used to acquire the additional 5% ownership interest.As of November 30, 2019, the Company had a 4.5 remaining $ million note receivable 18.0due from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and an $ million note receivable balance from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. These note receivables are included on the Consolidated Balance Sheet in Accounts receivable, net. 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 months ended November 30, 2019, the Company purchased $4.0 million of railcar components from Axis. |
Segment Information |
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Segment Information | Note 13 – Segment Information The Company operates in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. The accounting policies of the segments are described in the summary of significant accounting policies in the Consolidated Financial Statements contained in the Company’s 2019 Annual Report on Form 10-K. Performance is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. The Company does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes. Intersegment sales and transfers are valued as if the sales or transfers were to third parties. Related revenue and margin are eliminated in consolidation and therefore are not included in consolidated results in the Company’s Consolidated Financial Statements. The information in the following ta b le is derived directly from the segments’ internal financial reports used for corporate management purposes. For the three months ended November 30, 2019:
For the three months ended November 30, 2018:
Reconciliation of Earnings from operations to Earnings before income tax and earnings from unconsolidated affiliates:
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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Nov. 30, 2019 |
Nov. 30, 2018 |
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Reclassification of derivative financial instruments recognized in net earnings (loss), tax | $ 0.1 | $ 0.2 |
Unrealized loss on derivative financial instruments, tax | $ 0.5 | $ (0.9) |
Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
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Jul. 26, 2019 |
Nov. 30, 2019 |
Nov. 30, 2018 |
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Business Acquisition [Line Items] | |||
Revenue | $ 769,359 | $ 604,523 | |
Earnings (loss) from operations | 41,784 | 36,454 | |
Manufacturing | |||
Business Acquisition [Line Items] | |||
Revenue | 657,367 | 471,789 | |
Earnings (loss) from operations | 53,143 | $ 36,855 | |
American Railcar Industries | |||
Business Acquisition [Line Items] | |||
Business combination estimated gross purchase price | $ 417,100 | ||
Business combination consideration transferred for capital expenditures | $ 8,500 | ||
Business combination description of voting rights acquired | we did not acquire 100% of ARI | ||
Senior term debt | 300,000 | ||
Convertible senior notes | 50,000 | ||
American Railcar Industries | Manufacturing | |||
Business Acquisition [Line Items] | |||
Revenue | 103,500 | ||
Earnings (loss) from operations | $ (2,500) |
Intangibles and Other Assets, Net - Identifiable Intangible and Other Assets (Detail) - USD ($) $ in Thousands |
Nov. 30, 2019 |
Sep. 01, 2019 |
Aug. 31, 2019 |
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Intangibles and Other Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Net, Total | $ 65,313 | $ 67,995 | |
Intangible assets not subject to amortization | 5,273 | 5,450 | |
Prepaid and other assets | 15,038 | 15,749 | |
Operating lease ROU assets | 37,229 | $ 40,400 | |
Nonqualified savings plan investments | 31,248 | 27,967 | |
Revolving notes issuance costs, net | 4,338 | 4,568 | |
Assets held for sale | 3,650 | 3,650 | |
Total Intangible and other assets, net | 162,089 | 125,379 | |
Customer Relationships | |||
Intangibles and Other Assets by Major Class [Line Items] | |||
Finite lived intangible assets gross | 89,722 | 89,722 | |
Accumulated amortization | (50,782) | (48,850) | |
Other Intangible Assets | |||
Intangibles and Other Assets by Major Class [Line Items] | |||
Finite lived intangible assets gross | 33,904 | 34,031 | |
Accumulated amortization | $ (7,531) | $ (6,908) |
Leases - Components Of Operating Lease Costs (Detail) $ in Thousands |
3 Months Ended |
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Nov. 30, 2019
USD ($)
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Leases [Abstract] | |
Operating lease expense | $ 3,422 |
Short-term lease expense | 1,406 |
Total | $ 4,828 |
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Nov. 30, 2019 |
Aug. 31, 2019 |
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Preferred stock, without par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 25,000 | 25,000 |
Preferred stock, outstanding | ||
Common stock, without par value | $ 0 | $ 0 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares outstanding | 32,596 | 32,488 |
Revenue Recognition (Tables) |
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Summary of Contract Balances | The opening and closing balances of the Company’s contract balances are as follows:
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Summary of Estimated Revenue Related to Performance Obligations Wholly or Partially Unsatisfied | The following table outlines estimated revenue related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.
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Leases |
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Leases | Note 14 – Leases Lessor Equipment on operating leases is reported net of accumulated depreciation of $35.1 million and $44.2 million as of November 30, 2019 and August 31, 2019, respectively. Depreciation expense was $3.5 million for the three months ended November 30, 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 to five years. Operating lease rental revenues included in the Company’s Statement of Income for the three months ended November 30, 2019 was $11.4 million, which included $3.7 million of revenue as a result of daily, monthly or car hire utilization arrangements.Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases at November 30, 2019, will mature as follows:
Lessee The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements. As of and for the three months ended November 30, 2019, finance leases were not a material component of the Company’s lease portfolio. The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 79 years, with some including options to extend up to 15 years. The Company recognizes a lease liability and corresponding right-of-use (ROU) asset based on the present value of lease payments. To determine the present value of lease payments, as most of its leases do not provide a readily determinable implicit rate, the Company’s incremental borrowing rate is used to discount the lease payments based on information available at lease commencement date.The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when estimating its incremental borrowing rate. The components of operating lease costs were as follows:
Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at November 30, 2019 will mature as follows:
The table below presents additional information related to the Company’s leases:
Supplemental cash flow information related to leases were as follows:
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Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands |
Nov. 30, 2019 |
Aug. 31, 2019 |
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Inventory [Line Items] | ||
Manufacturing supplies and raw materials | $ 357,260 | $ 387,015 |
Work-in-process | 184,286 | 156,614 |
Finished goods | 202,780 | 130,576 |
Excess and obsolete adjustment | (10,520) | (9,512) |
Inventories | $ 733,806 | $ 664,693 |
Leases - Operating Leases Having Initial Or Remaining Non-Cancelable Terms (Detail) - USD ($) $ in Thousands |
Nov. 30, 2019 |
Sep. 01, 2019 |
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Future Minimum Payments Receivable [Line Items] | ||
Remaining nine months of 2020 | $ 9,355 | |
2021 | 8,810 | |
2022 | 5,765 | |
2023 | 5,264 | |
2024 | 3,814 | |
Thereafter | 10,367 | |
Total lease payments | 43,375 | |
Less: Imputed interest | (4,978) | |
Total lease obligations | $ 38,397 | $ 41,600 |
Segment Information - Reconciliation of Earnings from Operations to Earnings Before Income Tax and Loss from Unconsolidated Affiliates (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
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Nov. 30, 2019 |
Nov. 30, 2018 |
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Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Earnings from operations | $ 41,784 | $ 36,454 |
Interest and foreign exchange | 12,852 | 4,404 |
Earnings before income tax and earnings from unconsolidated affiliates | $ 28,932 | $ 32,050 |
Derivative Instruments - Effect of Derivative Instruments on Statements of Income (Detail) - Cash Flow Hedging - USD ($) $ in Thousands |
3 Months Ended | |
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Nov. 30, 2019 |
Nov. 30, 2018 |
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Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in OCI on derivatives | $ 2,698 | $ (3,196) |
Gain (loss) reclassified accumulated OCI income | (408) | (632) |
Gain (loss) recognized on derivative (amount excluded from effectiveness testing) | 422 | 604 |
Foreign Exchange Forward | Interest and Foreign Exchange | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in income on derivatives | 71 | 380 |
Foreign Exchange Forward | Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in OCI on derivatives | 573 | 72 |
Gain (loss) reclassified accumulated OCI income | (166) | (256) |
Gain (loss) recognized on derivative (amount excluded from effectiveness testing) | 453 | 262 |
Foreign Exchange Forward | Cost Of Revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in OCI on derivatives | (594) | (1,495) |
Gain (loss) reclassified accumulated OCI income | (75) | (232) |
Gain (loss) recognized on derivative (amount excluded from effectiveness testing) | 134 | 389 |
Interest rate swap contracts | Interest and Foreign Exchange | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in OCI on derivatives | 2,719 | (1,773) |
Gain (loss) reclassified accumulated OCI income | (167) | (144) |
Gain (loss) recognized on derivative (amount excluded from effectiveness testing) | $ (165) | $ (47) |
Earnings Per Share - Additional Information (Detail) |
Nov. 30, 2019 |
Nov. 30, 2018 |
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2.875% Convertible Senior Notes | ||
Earnings Per Share Disclosure [Line Items] | ||
Debt instrument, interest rate | 2.875% | 2.875% |
2.25% Convertible Senior Notes | ||
Earnings Per Share Disclosure [Line Items] | ||
Debt instrument, interest rate | 2.25% |
Accumulated Other Comprehensive Loss - Amounts Reclassified out of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
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Nov. 30, 2019 |
Nov. 30, 2018 |
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Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Interest and foreign exchange | $ 12,852 | $ 4,404 |
Total before tax | (28,932) | (32,050) |
Income tax expense | 5,994 | 9,135 |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Total before tax | 408 | 632 |
Income tax expense | (99) | (163) |
Net of tax | 309 | 469 |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | Foreign Exchange Contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Revenue and Cost of revenue | 241 | 488 |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | Interest rate swap contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Interest and foreign exchange | $ 167 | $ 144 |
Leases - Additional Information Relating To Company's Leases (Detail) |
Nov. 30, 2019 |
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Leases [Abstract] | |
Weighted average remaining lease term | 13 years 9 months 18 days |
Weighted average discount rate | 3.20% |
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |||
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Nov. 01, 2019 |
Nov. 30, 2019 |
Aug. 31, 2019 |
Jun. 30, 2017 |
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Related Party Transaction [Line Items] | ||||
Carrying amount of investment in unconsolidated affiliates | $ 5.2 | |||
Percentage of recognized revenue and margin from sale | 60.00% | |||
Percentage of deferred revenue and margin from sale | 40.00% | |||
Revenue recognize from railcars sold | $ 4.0 | |||
Greenbrier | ||||
Related Party Transaction [Line Items] | ||||
Percentage of ownership in entity | 40.00% | |||
Greenbrier | Leasing Warehouse | ||||
Related Party Transaction [Line Items] | ||||
Revenue recognize from railcars sold | $ 0.0 | |||
Axis LLC | ||||
Related Party Transaction [Line Items] | ||||
Percentage of ownership in entity | 41.90% | |||
Axis LLC | Railcar Components | ||||
Related Party Transaction [Line Items] | ||||
Purchases of goods from related party | $ 4.0 | |||
Amsted-Maxion Cruzeiro | ||||
Related Party Transaction [Line Items] | ||||
Percentage of ownership in entity | 29.50% | 24.50% | ||
Note receivable | 4.5 | |||
Notes receivable conversion to equity | $ 4.8 | |||
Proceeds from notes receivable | $ 1.5 | |||
Additional equity method investment ownership percentage | 5.00% | |||
Greenbrier-Maxion | ||||
Related Party Transaction [Line Items] | ||||
Note receivable | $ 18.0 |
Earnings Per Share |
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Earnings Per Share | Note 10 – Earnings Per Share The shares used in the computation of basic and diluted earnings per common share are reconciled as follows:
Diluted EPS is calculated using the treasury stock method associated with shares underlying the 2.875% Convertible notes, 2.25% Convertible notes, restricted stock units that are not considered participating securities and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved.
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Revolving Notes |
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Nov. 30, 2019 | |
Revolving Notes | Note 6 – Revolving Notes Senior secured credit facilities, consisting of three components, aggregated to $705.9 million as of November 30, 2019. As of November 30, 2019, a $600.0 million revolving line of credit, maturing June 2024, secured by substantially all the Company’s assets in the U.S. not otherwise pledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this facility bear interest at LIBOR plus 1.50% or Prime plus 0.50% depending on the type of As of November 30, 2019, lines of credit totaling $55.9 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1% to WIBOR plus 1.5% and Euro Interbank Offered Rate (EURIBOR) plus 1.1%, were available for working capital needs of the European manufacturing operations. The European lines of credit include $13.8 million of facilities which are guaranteed by the Company. European credit facilities are continually being renewed. Currently, these European credit facilities have maturities that range from June 2020 through July 2021. A Company’s Mexican railcar manufacturing joint venture has two lines of credit totaling $50.0 million. The first line of credit provides up to $30.0 million. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw against this facility through March 2024. The second line of credit provides up to $20.0 million, of which the Company and its joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2021. s of November 30 , 2019, the As of November 30, 2019, outstanding commitments under the senior secured credit facilities consisted of $24.9 million in letters of credit under the North American credit facility and $29.5 million outstanding under the European credit facilities. As of August 31, 2019, outstanding commitments under the senior secured credit facilities consisted of $24.4 million in letters of credit under the North American credit facility and $27.1 million outstanding under the European credit facilities
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Revenue Recognition |
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Revenue Recognition | Note 2 – Revenue Recognition Contract balances Contract assets primarily consist of unbilled receivables related to marine vessel construction and repair services, for which the respective contracts do not yet permit billing at the reporting date. Contract liabilities primarily consist of customer prepayments for manufacturing, maintenance, and other management-type services, for which the Company has not yet satisfied the related performance obligations. The opening and closing balances of the Company’s contract balances are as follows:
For the three month period ended November 30, 2019, the Company recognized $20.1 million of revenue that was included in Contract liabilities as of August 31 , 2019. Performance obligations As of November 30, 2019, 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.
Based on current production and delivery schedules and existing contracts, approximately $1.4 billion of the Railcar s ales amount is expected to be recognized in the remaining nine m 2020 while the remaining amount is expected onths of to be recognized through 2024. The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operation, 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 Services includes management and maintenance services of which approximately 52% are expected to be performed through 2024 and the remaining amount through 2037. |
Warranty Accruals (Tables) |
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Warranty Accrual Activity | Warranty accrual activity:
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Segment Information (Tables) |
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Results of Operations |
For the three months ended November 30, 2018:
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Reconciliation of Earnings from Operations to Earnings Before Income Tax and Loss from Unconsolidated Affiliates | Reconciliation of Earnings from operations to Earnings before income tax and earnings from unconsolidated affiliates:
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Cover Page - shares |
3 Months Ended | |
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Nov. 30, 2019 |
Jan. 03, 2020 |
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Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | GREENBRIER COMPANIES INC | |
Trading Symbol | GBX | |
Security Exchange Name | NYSE | |
Entity Central Index Key | 0000923120 | |
Current Fiscal Year End Date | --08-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Title of 12(b) Security | Common Stock | |
Entity Common Stock, Shares Outstanding | 32,596,292 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 1-13146 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Incorporation, State or Country Code | OR | |
Entity Tax Identification Number | 93-0816972 | |
Entity Address, Address Line One | One Centerpointe Drive | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Lake Oswego | |
Entity Address, State or Province | OR | |
Entity Address, Postal Zip Code | 97035 | |
City Area Code | 503 | |
Local Phone Number | 684-7000 |
Fair Value Measures |
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Fair Value Measures | Note 16 – Fair Value Measures Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value, for this disclosure, is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1 – 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 November 30, 2019 were:
Assets and liabilities measured at fair value on a recurring basis as of August 31, 2019 were:
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Derivative Instruments |
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Derivative Instruments | Note 12 – Derivative Instruments Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign currency forward exchange contracts with established financial institutions are utilized to hedge a portion of that risk. Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The Company’s foreign currency forward exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in accumulated other comprehensive income or loss. At November 30, 2019 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros and Pound Sterling; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $71.4 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 May 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 November 30, 2019 exchange rates, approximately $1.0 million would be reclassified to revenue or cost of revenue in the next year. At November 30, 2019, an interest rate swap agreement maturing in September 2023 had a notional amount of $108.6 million and an interest rate swap agreement maturing June 2024 had a notional amount of $150.0 million . The fair value of the contract s 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 November 30, 2019 interest rates, approximately $1.2 million would be reclassified to interest expense in the next year. Fair Values of Derivative Instruments
The Effect of Derivative Instruments on the Statements of Income Three Months Ended November 30, 2019
The following table presents the amounts in the Consolidated Statements of Income in which the effects of the cash flow hedges are recorded and the effects of the cash flow hedge activity on these line items for the three months ended November 30, 2019 and 2018:
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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |||||
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Nov. 30, 2018 |
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Net earnings | $ 24,011 | $ 23,382 | ||||
Other comprehensive income | ||||||
Translation adjustment | (1,583) | (3,931) | ||||
Reclassification of derivative financial instruments recognized in net earnings | [1] | 309 | 469 | |||
Unrealized gain (loss) on derivative financial instruments | [2] | 2,154 | (2,302) | |||
Other (net of tax effect) | (463) | (230) | ||||
Other comprehensive income | 417 | (5,994) | ||||
Comprehensive income | 24,428 | 17,388 | ||||
Comprehensive income attributable to noncontrolling interest | (16,336) | (5,411) | ||||
Comprehensive income attributable to Greenbrier | $ 8,092 | $ 11,977 | ||||
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Components of 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:
|
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2019 |
Nov. 30, 2018 |
|
Cash flows from operating activities | ||
Net earnings | $ 24,011 | $ 23,382 |
Adjustments to reconcile net earnings to net cash used in operating activities: | ||
Deferred income taxes | (6,515) | (2,360) |
Depreciation and amortization | 29,335 | 20,700 |
Net gain on disposition of equipment | (3,959) | (14,353) |
Accretion of debt discount | 1,350 | 1,076 |
Stock based compensation expense | 3,157 | 3,194 |
Noncontrolling interest adjustments | 1,736 | 3,920 |
Other | (391) | 286 |
Decrease (increase) in assets: | ||
Accounts receivable, net | 58,488 | 54,834 |
Inventories | (69,662) | (63,045) |
Leased railcars for syndication | (13,132) | (116,726) |
Other | (37,304) | (392) |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued liabilities | (47,421) | (10,949) |
Deferred revenue | (10,012) | 3,314 |
Net cash used in operating activities | (70,319) | (97,119) |
Cash flows from investing activities | ||
Proceeds from sales of assets | 27,463 | 34,497 |
Capital expenditures | (23,216) | (28,677) |
Investment in and advances to unconsolidated affiliates | (1,500) | (11,393) |
Cash distribution from unconsolidated affiliates and other | 4,452 | 1,784 |
Net cash provided by (used in) investing activities | 7,199 | (3,789) |
Cash flows from financing activities | ||
Net change in revolving notes with maturities of 90 days or less | 2,399 | (4,840) |
Proceeds from issuance of notes payable | 225,000 | |
Repayments of notes payable | (9,749) | (173,453) |
Debt issuance costs | (4) | (2,766) |
Dividends | (343) | (467) |
Cash distribution to joint venture partner | (4,531) | (3,185) |
Tax payments for net share settlement of restricted stock | (1,870) | (4,747) |
Net cash provided by (used in) financing activities | (14,098) | 35,542 |
Effect of exchange rate changes | 981 | (2,439) |
Decrease in cash and cash equivalents and restricted cash | (76,237) | (67,805) |
Cash and cash equivalents and restricted cash | ||
Beginning of period | 338,487 | 539,474 |
Cash and cash equivalents and restricted cash, Ending balance | 262,250 | 471,669 |
Balance Sheet Reconciliation: | ||
Cash and cash equivalents | 253,602 | 462,797 |
Restricted cash | 8,648 | 8,872 |
Cash and cash equivalents and restricted cash, Ending balance | 262,250 | 471,669 |
Interest | 6,601 | 1,740 |
Income taxes, net | 11,692 | 7,487 |
Non-cash activity | ||
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net | 55,626 | 14,304 |
Capital expenditures accrued in Accounts payable and accrued liabilities | 6,888 | 6,972 |
Change in Accounts payable and accrued liabilities associated with dividends declared | 8,021 | $ 7,830 |
Conversion of unconsolidated affiliate note receivable to Investment in unconsolidated affiliates | 4,760 | |
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner | $ 626 |
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