The Greenbrier Companies, Inc. Q2 FY2026 earnings call

Commercial Activity

• Received broad-based orders for approximately 2,900 new railcars globally, with demand concentrated in North America and supported by leasing activity.
• Backlog ended the quarter with approximately 15,200 railcars valued at $2.1 billion.

Leasing and Fleet Management

• Fleet utilization remained above 98%, retention was strong, and renewal rates continue to be robust.
• Recently completed a 300 million ABS financing with strong investor demand.
• Expanded relationships with key partners and manage a significantly larger rail car fleet on behalf of third parties.

Manufacturing

• Results influenced by a planned two-week shutdown for maintenance over the holidays.
• Continuing to execute footprint optimization actions in Europe to improve competitiveness and profitability, including a full exit from Turkey, which is expected to generate about $20 million in annualized savings.
• Driving improvements in cost structure, productivity, and process efficiency through manufacturing excellence initiatives.

Syndication

• Team delivered solid execution in the quarter, supported by strong investor demand, generating attractive recurring fee income, significant liquidity, and risk management.

Revenue for the quarter was $588 million. Aggregate gross margin was 11.8%. Earnings from operations were $25 million, or 4.3% of revenue. Diluted earnings per share were 47 cents and EBITDA was $61 million or 10.3% of revenue. Leasing and fleet management business performed well with high rail car utilization, retention, and strong renewal rates. Manufacturing results were influenced by a planned two-week shutdown, and footprint rationalization initiatives in Europe. Commercial activity saw broad-based orders for approximately 2,900 new railcars globally, with demand concentrated in North America and supported by leasing activity. Backlog ended the quarter with approximately 15,200 railcars valued at $2.1 billion.

Fiscal 2026 Outlook

• Updated outlook accounts for near-term demand environment and shift of some deliveries from second half of fiscal 2026 to fiscal 2027.
• New rail car deliveries expected to be 15,350 to 16,350 units, including approximately 1,500 units from Greenbrier Maxim Brazil.
• Total revenue forecast to be 2.4 billion to 2.5 billion.
• Aggregate gross margin between 14.8% and 15.2% and operating margin between 7 and 7.8%.
• Anticipate a reduction in SG&A of about 30 million versus prior year.
• Forecast EPS between $3 and $3.50 per share.
• Q3 expected to be similar to Q2 in terms of deliveries with modest sequential improvement in aggregate gross margin.
• Q4 expected to see further sequential improvement in both deliveries and aggregate gross margin.
• Capital expenditures in manufacturing unchanged at $80 million.
• Gross investment in leasing and fleet management now projected to be roughly 300 million, up from 205 million.
• Proceeds from equipment sales forecast to be 175 million.

Market Dynamics

• Customers are deliberate with capital investments amid evolving freight conditions, changing trade policies, geopolitical developments, and a mixed macroeconomic backdrop, which can lead to dynamic market conditions.

Manufacturing Footprint

• Europe's operating environment driving footprint rationalization initiatives, and a full exit from Turkey, which could impact operations if not managed properly.

Secondary Market

• Performance of the secondary market for railcar equipment can impact leasing and fleet management activities, such as equipment gains and the composition of the lease fleet.

Q: Harrison Bauer with Susquehanna asked about the large increase in planned gross capital expenditures for the lease fleet and where the fleet is built from, and follow-up on secondary market equipment gains.

A: Brian said it's a pretty even mix of own manufacturing capabilities and active secondary market. Lori said while not giving quarterly guidance, expects second half to be more of an investment in lease fleet than secondary market sales.

Q: Ken Hexter with Bank of America Merrill Lynch asked about manufacturing numbers pushing out, backlog, and Turkey.

A: Lori said customers taking a pause due to economic uncertainty causing timing shift. Brian added about projects being pushed back by about a month and a half to two months. Lori explained about Turkey's exit due to logistics. Brian talked about backlog and order cadence.

Q: Andre Tomczyk with Goldman Sachs asked about manufacturing margin performance and confidence in 2Q marking a bottom for margins.

A: Lori and Brian discussed margin drag from cost-out actions and confidence in margins improving in the near term. Michael and Brian provided insights on margin differences and future margin expectations.

Q: Andre Tomczyk also asked about leasing and medium-term updates on Class 1 rail merger.

A: Lori talked about leasing margins likely staying in low to mid 60% range. On Class 1 rail merger, Lori said anything benefiting customers should attract more shift of transportation onto rails.

Q: Harrison Bauer with Susquehanna had a follow-up about what's driving recent orders or demand activity.

A: Brian said operating lessors are becoming more active due to anticipating continuing to build up in demand next year and strategic buys