# Greenbrier Companies Inc: Form 10-Q for the period ended Feb 29, 2024

- Company: [Greenbrier Companies Inc](/companies/gbx.md) (CIK 923120)
- Form: 10-Q
- Filed: 2024-04-05
- Accepted by EDGAR: Apr 5, 2024, 16:10 ET
- Period: 2024-02-29
- Accession: 0000950170-24-042261
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/923120/000095017024042261/gbx-20240229.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/923120/000095017024042261/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-02-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-12-01 to 2024-02-29 | $862.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-09-01 to 2024-02-29 | $1.67bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-12-01 to 2024-02-29 | $740.5m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2023-09-01 to 2024-02-29 | $1.43bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-12-01 to 2024-02-29 | $122.2m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-09-01 to 2024-02-29 | $243.5m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-12-01 to 2024-02-29 | $63.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-09-01 to 2024-02-29 | $119.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-12-01 to 2024-02-29 | $63.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-09-01 to 2024-02-29 | $128.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-12-01 to 2024-02-29 | $9.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-09-01 to 2024-02-29 | $19.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-12-01 to 2024-02-29 | $33.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-09-01 to 2024-02-29 | $64.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-12-01 to 2024-02-29 | $1.03 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-09-01 to 2024-02-29 | $1.99 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-12-01 to 2024-02-29 | $1.08 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-09-01 to 2024-02-29 | $2.08 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-12-01 to 2024-02-29 | 32,570,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-09-01 to 2024-02-29 | 32,676,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-09-01 to 2024-02-29 | $54.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-09-01 to 2024-02-29 | $190.5m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2023-09-01 to 2024-02-29 | $19.7m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2023-09-01 to 2024-02-29 | $1.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-02-29 | $252.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-02-29 | $4.04bn | us-gaap:Assets |
| Shareholders' equity | at 2024-02-29 | $1.30bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,864 characters.

### Executive Summary

We operate in three reportable segments: Manufacturing; Maintenance Services; and Leasing & Management Services. Our segments are operationally integrated. The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland, and Romania, produces freight railcars, tank cars, intermodal railcars and automotive railcar products. The Maintenance Services segment performs wheel and axle servicing, railcar maintenance and produces a variety of parts for the rail industry in North America. The Leasing & Management Services segment owns approximately 14,600 railcars as of February 29, 2024. We also provide management services for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America.

Management identifies the following trends which continue to impact our business and our results for the six months ended February 29, 2024. Overall, demand in the marketplace remains strong for our products and services. Supply chain challenges, rail service congestion, inflation, high interest rates, and labor shortages continue to impact our business. Despite this operating environment, we accomplished the following during the six months ended February 29, 2024:

- Margin has improved $57.2 million and 30.7% compared to the same period last year driven by operating efficiencies and favorable product mix in our Manufacturing segment. All segments saw improvement in their margins when compared to the six months ended February 28, 2023.
- Net earnings attributable to Greenbrier increased $48.2 million compared to the same period last year driven in part by operating efficiencies in connection with the ongoing optimization of our industrial footprint to support our strategic plan discussed below.

We believe our results highlight our continued focus on our strategic plan and we remain focused on increasing recurring revenue, expanding our aggregate gross margin, and raising our return on invested capital. Recurring revenue is defined as Leasing & Management Services revenue excluding the impact of syndication transactions.

Our backlog remains strong with railcar deliveries into 2026. Our railcar backlog was 29,200 units with an estimated value of $3.6 billion as of February 29, 2024. Our backlog includes nearly $815 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Approximately 3% of backlog units and 2% of estimated backlog value as of February 29, 2024 was associated with our Brazilian manufacturing operations which is accounted for under the equity method.

Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.

As described in Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2023 the items described above may have a material negative impact on our business, liquidity, results of operations and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude these items will impact our business.

### Three Months Ended February 29, 2024 Compared to the Three Months Ended February 28, 2023

### Overview

Revenue, Cost of revenue, Margin and Earnings from operations (operating profit or loss) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.

*(in millions, except per share amounts)*

| Revenue: | Three Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Manufacturing | $735.8 | $968.6 |
| Maintenance Services | 75.2 | 98.0 |
| Leasing & Management Services | 51.7 | 55.4 |
|  | 862.7 | 1,122.0 |
| Cost of revenue: |  |  |
| Manufacturing | 656.2 | 901.2 |
| Maintenance Services | 69.2 | 89.6 |
| Leasing & Management Services | 15.1 | 14.4 |
|  | 740.5 | 1,005.2 |
| Margin: |  |  |
| Manufacturing | 79.6 | 67.4 |
| Maintenance Services | 6.0 | 8.4 |
| Leasing & Management Services | 36.6 | 41.0 |
|  | 122.2 | 116.8 |
| Selling and administrative | 63.6 | 59.0 |
| Net gain on disposition of equipment | (4.9) | (9.6) |
| Earnings from operations | 63.5 | 67.4 |
| Interest and foreign exchange | 24.6 | 21.6 |
| Earnings before income tax and earnings from unconsolidated affiliates | 38.9 | 45.8 |
| Income tax expense | (9.3) | (11.9) |
| Earnings before earnings from unconsolidated affiliates | 29.6 | 33.9 |
| Earnings from unconsolidated affiliates | 4.0 | 2.9 |
| Net earnings | 33.6 | 36.8 |
| Net earnings attributable to noncontrolling interest | (0.2) | (3.7) |
| Net earnings attributable to Greenbrier | $33.4 | $33.1 |
| Diluted earnings per common share | $1.03 | $0.97 |

Performance for our segments is evaluated based on operating profit or loss. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

*(in millions)*

| Operating profit (loss): | Three Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Manufacturing | $58.8 | $46.6 |
| Maintenance Services | 4.6 | 6.8 |
| Leasing & Management Services | 33.2 | 40.7 |
| Corporate | (33.1) | (26.7) |
|  | $63.5 | $67.4 |

24

### Consolidated Results

*(in millions)*

|  | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $862.7 | $1,122.0 | $(259.3) | (23.1%) |
| Cost of revenue | $740.5 | $1,005.2 | $(264.7) | (26.3%) |
| Margin (%) | 14.2% | 10.4% | 3.8% | \* |
| Net earnings attributable to Greenbrier | $33.4 | $33.1 | $0.3 | 0.9% |

\* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our results of operations.

The 23.1% decrease in Revenue for the three months ended February 29, 2024 as compared to the three months ended February 28, 2023 was primarily due to a 24.0% decrease in Manufacturing revenue and 23.3% decrease in Maintenance Services revenue. The decreases were primarily driven by a 26.4% decrease in railcar deliveries including lower syndications and 22.0% lower volumes in our wheels business due to mild winter weather during the three months ended February 29, 2024.

The 26.3% decrease in Cost of revenue for the three months ended February 29, 2024 as compared to the three months ended February 28, 2023 was primarily due to a 27.2% decrease in Manufacturing cost of revenue. The decrease in Manufacturing cost of revenue was primarily attributed to a 26.4% decrease in railcar deliveries including lower syndications during the three months ended February 29, 2024.

Margin as a percentage of revenue was 14.2% and 10.4% for the three months ended February 29, 2024 and February 28, 2023, respectively. Margin as a percentage of revenue was positively impacted by operating efficiencies and favorable product mix within our Manufacturing segment during the three months ended February 29, 2024.

The $0.3 million increase in Net earnings attributable to Greenbrier for the three months ended February 29, 2024 as compared to the three months ended February 28, 2023 was primarily due to:

- $5.4 million increase in Margin for the three months ended February 29, 2024 primarily due to operating efficiencies and a favorable product mix.
- $3.5 million decrease in Net earnings attributable to noncontrolling interest due to lower profitability for the three months ended February 29, 2024.
- $2.6 million decrease in Income tax expense from lower pre-tax earnings for the three months ended February 29, 2024.

These were partially offset by the following:

- $4.7 million decrease in Net gain on disposition of equipment from lower sales of assets from our lease fleet during the three months ended February 29, 2024.
- $4.6 million increase in Selling and administrative expense primarily attributed to an increase in employee related costs for the three months ended February 29, 2024.

### Manufacturing Segment

*(In millions, except railcar deliveries)*

|  | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $735.8 | $968.6 | $(232.8) | (24.0%) |
| Cost of revenue | $656.2 | $901.2 | $(245.0) | (27.2%) |
| Margin (%) | 10.8% | 7.0% | 3.8% | \* |
| Operating profit ($) | $58.8 | $46.6 | $12.2 | 26.2% |
| Operating profit (%) | 8.0% | 4.8% | 3.2% | \* |
| Deliveries | 5,300 | 7,200 | (1,900) | (26.4%) |

\* Not meaningful

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of freight railcars and from the conversion of existing railcars through our facilities in North America and Europe.

Manufacturing Revenue decreased $232.8 million or 24.0% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease in Revenue was primarily attributed to a 26.4% decrease in railcar deliveries including lower syndications during the three months ended February 29, 2024.

Manufacturing Cost of revenue decreased $245.0 million or 27.2% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease in Cost of revenue was primarily attributed to a 26.4% decrease in railcar deliveries including lower syndications during the three months ended February 29, 2024.

Manufacturing Margin as a percentage of revenue increased 3.8% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The increase in margin percentage for the three months ended February 29, 2024 was primarily attributed to operating efficiencies and favorable product mix during the three months ended February 29, 2024.

Manufacturing Operating profit increased $12.2 million for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The increase in operating profit was primarily attributed to improved Margin of $12.2 million during the three months ended February 29, 2024.

### Maintenance Services Segment

*(in millions)*

|  | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $75.2 | $98.0 | $(22.8) | (23.3%) |
| Cost of revenue | $69.2 | $89.6 | $(20.4) | (22.8%) |
| Margin (%) | 8.0% | 8.6% | (0.6%) | \* |
| Operating profit ($) | $4.6 | $6.8 | $(2.2) | (32.4%) |
| Operating profit (%) | 6.1% | 6.9% | (0.8%) | \* |

\* Not meaningful

Our Maintenance Services segment primarily generates revenue from railcar component manufacturing and servicing and from providing railcar maintenance services.

Maintenance Services Revenue decreased $22.8 million or 23.3% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease was primarily attributed to 22.0% lower volumes in our wheels business due to mild winter weather during the three months ended February 29, 2024.

Maintenance Services Cost of revenue decreased $20.4 million or 22.8% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease was primarily due to operating at lower volumes during the three months ended February 29, 2024.

Maintenance Services Margin as a percentage of revenue decreased 0.6% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease in margin percentage was primarily attributed to lower operating efficiencies as a result of operating at lower volumes during the three months ended February 29, 2024.

Maintenance Services Operating profit decreased $2.2 million for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease in operating profit was primarily attributed to lower operating efficiencies as a result of operating at lower volumes during the three months ended February 29, 2024.

### Leasing & Management Services Segment

*(in millions)*

|  | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $51.7 | $55.4 | $(3.7) | (6.7%) |
| Cost of revenue | $15.1 | $14.4 | $0.7 | 4.9% |
| Margin (%) | 70.8% | 74.0% | (3.2%) | \* |
| Operating profit ($) | $33.2 | $40.7 | $(7.5) | (18.4%) |
| Operating profit (%) | 64.2% | 73.5% | (9.3%) | \* |

\* Not meaningful

Our Leasing & Management Services segment generates revenue from leasing railcars from our lease fleet, providing various management services, syndication revenue associated with leases attached to new railcar sales, and interim rent on leased railcars for syndication.

Leasing & Management Services Revenue decreased $3.7 million or 6.7% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease was primarily attributed to lower syndication activity. This was partially offset by an increase of $4.0 million in rents associated with a larger fleet during the three months ended February 29, 2024.

Leasing & Management Services Cost of revenue increased $0.7 million or 4.9% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The increase was primarily due to higher costs from the larger fleet during the three months ended February 29, 2024.

Leasing & Management Services Margin as a percentage of revenue decreased 3.2% for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease in margin percentage was primarily attributed to the lower syndication activity during the three months ended February 29, 2024.

Leasing & Management Services Operating profit decreased $7.5 million for the three months ended February 29, 2024 compared to the three months ended February 28, 2023. The decrease was primarily attributed to lower syndication activity and $2.9 million lower Net gain on disposition of equipment during the three months ended February 29, 2024.

### Selling and Administrative Expense

*(in millions)*

|  | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling and administrative expense | $63.6 | $59.0 | $4.6 | 7.8% |

Selling and administrative expense was $63.6 million or 7.4% of Revenue for the three months ended February 29, 2024 compared to $59.0 million or 5.3% of Revenue for the prior comparable period. The $4.6 million increase was primarily attributed to an increase in employee related costs for the three months ended February 29, 2024.

### Net Gain on Disposition of Equipment

Net gain on disposition of equipment typically includes the sale of assets from our lease fleet (Equipment on operating leases, net) and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to optimize our fleet and to manage risk and liquidity.

Net gain on disposition of equipment was $4.9 million for the three months ended February 29, 2024 compared to $9.6 million for the prior comparable period. The decrease in Net gain on disposition of equipment was primarily attributed to fewer sales of assets from our lease fleet during the three months ended February 29, 2024.

### Interest and Foreign Exchange

Interest and foreign exchange expense was composed of the following:

*(in millions)*

| Interest and foreign exchange: | Three Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Interest and other expense | $23.9 | $20.9 | $3.0 |
| Foreign exchange loss | 0.7 | 0.7 | — |
|  | $24.6 | $21.6 | $3.0 |

The $3.0 million increase in Interest and foreign exchange expense for the three months ended February 29, 2024 compared to the three months ended February 28, 2023 was attributed to an increase in interest expense from higher interest rates and borrowings.

### Income Tax

For the three months ended February 29, 2024, we had Income tax expense of $9.3 million on pre-tax income of $38.9 million for an effective tax rate of 23.9%. The effective tax rate benefited from net favorable adjustments related to our foreign subsidiaries.

For the three months ended February 28, 2023, we had Income tax expense of $11.9 million on a pre-tax income of $45.8 million for an effective tax rate of 25.9%. Tax expense included net favorable discrete items in our foreign operations.

The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year and may be positively or negatively impacted by adjustments that are required to be reported in the quarter. The effective tax rate can fluctuate year-to-year due to changes in the mix of foreign and domestic pre-tax earnings. It can also fluctuate with changes in the proportion of pre-tax earnings attributable to our Mexican railcar manufacturing joint venture. The joint venture is treated as a partnership for tax purposes and, as a result, the partnership’s entire pre-tax earnings are included in earnings before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.

### Earnings From Unconsolidated Affiliates

Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the results from these unconsolidated affiliates on an after-tax basis.

Earnings from unconsolidated affiliates were $4.0 million and $2.9 million for the three months ended February 29, 2024 and February 28, 2023, respectively. The increase was primarily related to $2.2 million in higher earnings at our Brazil operations for the three months ended February 29, 2024.

### Noncontrolling Interest

Net earnings attributable to noncontrolling interest was $0.2 million for the three months ended February 29, 2024 compared to $3.7 million for the three months ended February 28, 2023. Net earnings attributable to noncontrolling interest primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.

### Six Months Ended February 29, 2024 Compared to the Six Months Ended February 28, 2023

### Overview

Revenue, Cost of revenue, Margin and Earnings from operations (operating profit or loss) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.

*(in millions, except per share amounts)*

| Revenue: | Six Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Manufacturing | $1,411.7 | $1,615.1 |
| Maintenance Services | 159.0 | 183.5 |
| Leasing & Management Services | 100.8 | 89.9 |
|  | 1,671.5 | 1,888.5 |
| Cost of revenue: |  |  |
| Manufacturing | 1,257.1 | 1,505.7 |
| Maintenance Services | 140.8 | 169.2 |
| Leasing & Management Services | 30.1 | 27.3 |
|  | 1,428.0 | 1,702.2 |
| Margin: |  |  |
| Manufacturing | 154.6 | 109.4 |
| Maintenance Services | 18.2 | 14.3 |
| Leasing & Management Services | 70.7 | 62.6 |
|  | 243.5 | 186.3 |
| Selling and administrative | 119.9 | 112.4 |
| Net gain on disposition of equipment | (4.8) | (12.9) |
| Asset impairment, disposal, and exit costs | — | 24.2 |
| Earnings from operations | 128.4 | 62.6 |
| Interest and foreign exchange | 47.8 | 41.2 |
| Earnings before income taxes and earnings from unconsolidated affiliates | 80.6 | 21.4 |
| Income tax expense | (19.3) | (8.1) |
| Earnings before earnings from unconsolidated affiliates | 61.3 | 13.3 |
| Earnings from unconsolidated affiliates | 5.5 | 6.2 |
| Net earnings | 66.8 | 19.5 |
| Net earnings attributable to noncontrolling interest | (2.2) | (3.1) |
| Net earnings attributable to Greenbrier | $64.6 | $16.4 |
| Diluted earnings per common share | $1.99 | $0.49 |

Performance for our segments is evaluated based on operating profit or loss. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

*(in millions)*

| Operating profit (loss): | Six Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Manufacturing | $113.1 | $43.2 |
| Maintenance Services | 15.2 | 12.3 |
| Leasing & Management Services | 59.5 | 56.3 |
| Corporate | (59.4) | (49.2) |
|  | $128.4 | $62.6 |

31

### Consolidated Results

*(in millions)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $1,671.5 | $1,888.5 | $(217.0) | (11.5%) |
| Cost of revenue | $1,428.0 | $1,702.2 | $(274.2) | (16.1%) |
| Margin (%) | 14.6% | 9.9% | 4.7% | \* |
| Net earnings attributable to Greenbrier | $64.6 | $16.4 | $48.2 | \* |

\* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our results of operations.

The 11.5% decrease in Revenue for the six months ended February 29, 2024 as compared to the six months ended February 28, 2023 was primarily due to a 12.6% decrease in Manufacturing Revenue. The decrease in Manufacturing Revenue was primarily attributed to a 10.3% decrease in railcar deliveries during the six months ended February 29, 2024.

The 16.1% decrease in Cost of revenue for the six months ended February 29, 2024 as compared to the six months ended February 28, 2023 was primarily due to a 16.5% decrease in Manufacturing Cost of revenue. The decrease in Manufacturing Cost of revenue was primarily attributed to a 10.3% decrease in railcar deliveries during the six months ended February 29, 2024.

Margin as a percentage of revenue was 14.6% and 9.9% for the six months ended February 29, 2024 and February 28, 2023, respectively. Margin as a percentage of revenue was positively impacted by an increase in Manufacturing Margin from 6.8% to 11.0% primarily attributed to operating efficiencies and favorable product mix during the six months ended February 29, 2024.

The $48.2 million increase in Net earnings attributable to Greenbrier for the six months ended February 29, 2024 as compared to the six months ended February 28, 2023 was primarily due to the following:

- $57.2 million increase in Margin for the six months ended February 29, 2024 primarily due to operating efficiencies and a favorable product mix.
- $24.2 million impairment of long-lived assets at our Gunderson facility for the six months ended February 28, 2023.

These were partially offset by the following:

- $11.2 million increase in Income tax expense associated with higher pre-tax earnings during the six months ended February 29, 2024.
- $8.1 million decrease in Net gain on disposition of equipment from lower sales of assets from our lease fleet for the six months ended February 29, 2024.
- $7.5 million increase in Selling and administrative expense primarily attributed to an increase in employee related costs for the six months ended February 29, 2024.
- $6.6 million increase in Interest and foreign exchange primarily attributed to an increase in interest expense from higher borrowing and interest rates for the six months ended February 29, 2024.

### Manufacturing Segment

*(In millions, except railcar deliveries)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $1,411.7 | $1,615.1 | $(203.4) | (12.6%) |
| Cost of revenue | $1,257.1 | $1,505.7 | $(248.6) | (16.5%) |
| Margin (%) | 11.0% | 6.8% | 4.2% | \* |
| Operating profit ($) | $113.1 | $43.2 | $69.9 | 161.8% |
| Operating profit (%) | 8.0% | 2.7% | 5.3% | \* |
| Deliveries | 10,500 | 11,700 | (1,200) | (10.3%) |

\* Not meaningful

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of freight railcars and from the conversion of existing or in-service railcars through our facilities in North America and Europe.

Manufacturing Revenue decreased $203.4 million or 12.6% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The decrease in Revenue was primarily attributed to a 10.3% decrease in railcar deliveries during the six months ended February 29, 2024.

Manufacturing Cost of revenue decreased $248.6 million or 16.5% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The decrease in Cost of revenue was primarily attributed to a 10.3% decrease in the volume of railcar deliveries and operating efficiencies during the six months ended February 29, 2024.

Manufacturing Margin as a percentage of revenue increased 4.2% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase in margin percentage for the six months ended February 29, 2024 was primarily attributed to operating efficiencies and favorable product mix during the six months ended February 29, 2024.

Manufacturing Operating profit increased $69.9 million for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase in Operating profit was primarily attributed to an increase in Margin during the six months ended February 29, 2024 as well as a $24.2 million impairment loss during the six months ended February 28, 2023.

### Maintenance Services Segment

*(in millions)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $159.0 | $183.5 | $(24.5) | (13.4%) |
| Cost of revenue | $140.8 | $169.2 | $(28.4) | (16.8%) |
| Margin (%) | 11.4% | 7.8% | 3.6% | \* |
| Operating profit ($) | $15.2 | $12.3 | $2.9 | 23.6% |
| Operating profit (%) | 9.6% | 6.7% | 2.9% | \* |

\* Not meaningful

Our Maintenance Services segment primarily generates revenue from railcar component manufacturing and servicing and from providing railcar maintenance services.

Maintenance Services Revenue decreased $24.5 million or 13.4% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The decrease was primarily attributed to 19.3% lower volumes in our wheels business due to mild winter weather despite higher average selling prices during the six months ended February 29, 2024.

Maintenance Services Cost of revenue decreased $28.4 million or 16.8% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The decrease was primarily due to operating at lower volumes during the six months ended February 29, 2024.

Maintenance Services Margin as a percentage of revenue increased 3.6% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase in margin percentage was primarily attributed to favorable pricing during the six months ended February 29, 2024.

Maintenance Services Operating profit increased $2.9 million for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase in Operating profit was primarily attributed to favorable pricing during the six months ended February 29, 2024.

### Leasing & Management Services Segment

*(in millions)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $100.8 | $89.9 | $10.9 | 12.1% |
| Cost of revenue | $30.1 | $27.3 | $2.8 | 10.3% |
| Margin (%) | 70.1% | 69.6% | 0.5% | \* |
| Operating profit ($) | $59.5 | $56.3 | $3.2 | 5.7% |
| Operating profit (%) | 59.0% | 62.6% | (3.6%) | \* |

\* Not meaningful

Our Leasing & Management Services segment generates revenue from leasing railcars from our lease fleet, providing various management services, syndication revenue associated with leases attached to new railcar sales, and interim rent on leased railcars for syndication.

Leasing & Management Services Revenue increased $10.9 million or 12.1% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase was primarily attributed to higher lease rents due to a larger fleet and improved lease rates during the six months ended February 29, 2024.

Leasing & Management Services Cost of revenue increased $2.8 million or 10.3% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase was primarily due to higher costs from the larger fleet during the six months ended February 29, 2024.

Leasing & Management Services Margin as a percentage of revenue increased 0.5% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase in margin percentage was primarily attributed to the higher lease rents during the six months ended February 29, 2024.

Leasing & Management Services Operating profit increased $3.2 million or 5.7% for the six months ended February 29, 2024 compared to the six months ended February 28, 2023. The increase was primarily attributed to the larger fleet and improved lease rates during the six months ended February 29, 2024. This was partially offset by $4.8 million lower Net gain on disposition of equipment during the six months ended February 29, 2024.

### Selling and Administrative Expense

*(in millions)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling and administrative expense | $119.9 | $112.4 | $7.5 | 6.7% |

Selling and administrative expense was $119.9 million or 7.2% of Revenue for the six months ended February 29, 2024 compared to $112.4 million or 6.0% of Revenue for the prior comparable period. The $7.5 million increase was primarily attributed to an increase in employee related costs during the six months ended February 29, 2024.

### Net Gain on Disposition of Equipment

Net gain on disposition of equipment typically includes the sale of assets from our lease fleet (Equipment on operating leases, net) and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to optimize our fleet and to manage risk and liquidity.

Net gain on disposition of equipment was $4.8 million for the six months ended February 29, 2024 compared to a gain of $12.9 million for the prior comparable period. The decrease in Net gain on disposition of equipment was primarily attributed to fewer sales of assets from our lease fleet during the six months ended February 29, 2024.

### Impairment of Long-Lived Assets

The six months ended February 28, 2023 included a $24.2 million impairment of long-lived assets at our Gunderson facility.

### Interest and Foreign Exchange

Interest and foreign exchange expense was composed of the following:

*(in millions)*

| Interest and foreign exchange: | Six Months Ended February 29, 2024 | February 28, 2023 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Interest and other expense | $45.8 | $38.7 | $7.1 |
| Foreign exchange loss | 2.0 | 2.5 | (0.5) |
|  | $47.8 | $41.2 | $6.6 |

The $6.6 million increase in Interest and foreign exchange expense for the six months ended February 29, 2024 compared to the six months ended February 28, 2023 was primarily attributed to an increase in interest expense from higher interest rates and borrowings.

### Income Tax

For the six months ended February 29, 2024, we had Income tax expense of $19.3 million on pre-tax income of $80.6 million for an effective tax rate of 23.9%. The effective tax rate benefited from net favorable adjustments related to our foreign subsidiaries.

For the six months ended February 28, 2023, we had Income tax expense of $8.1 million on pre-tax income of $21.4 million for an effective tax rate of 37.8%. Tax expense was negatively impacted by the geographic mix of earnings as well as net unfavorable discrete items including changes in foreign currency exchange rates for our U.S. Dollar denominated foreign operations.

The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year and may be positively or negatively impacted by adjustments that are required to be reported in the quarter. The effective tax rate can fluctuate year-to-year due to changes in the mix of foreign and domestic pre-tax earnings. It can also fluctuate with changes in the proportion of pre-tax earnings attributable to our Mexican railcar manufacturing joint venture. The joint venture is treated as a partnership for tax purposes and, as a result, the partnership’s entire pre-tax earnings are included in earnings before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.

### Earnings From Unconsolidated Affiliates

Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the results from these unconsolidated affiliates on an after-tax basis.

Earnings from unconsolidated affiliates were $5.5 million and $6.2 million for the six months ended February 29, 2024 and February 28, 2023, respectively. The decrease was primarily related to a loss at a temporarily idle facility during the six months ended February 29, 2024.

### Noncontrolling Interest

Net earnings attributable to noncontrolling interest was $2.2 million for the six months ended February 29, 2024 compared to $3.1 million for the six months ended February 28, 2023. Net earnings attributable to noncontrolling interest primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations.

### Liquidity and Capital Resources

*(in millions)*

|  | Six Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $54.4 | $(96.4) |
| Net cash used in investing activities | (163.1) | (105.2) |
| Net cash provided by financing activities | 79.7 | 23.7 |
| Effect of exchange rate changes | (1.7) | 18.4 |
| Decrease in Cash and cash equivalents and Restricted cash | $(30.7) | $(159.5) |

We have been financed through cash generated from operations and borrowings. At February 29, 2024 Cash and cash equivalents and Restricted cash were $272.0 million, an decrease of $30.7 million from $302.7 million at August 31, 2023.

#### Cash Flows From Operating Activities

The $150.8 million increase in cash from operating activities for the six months ended February 29, 2024 compared to the six months ended February 28, 2023 was primarily due to a $71.8 million net change in working capital and a $47.3 million increase in Net earnings.

#### Cash Flows From Investing Activities

Cash used in investing activities primarily related to capital expenditures net of proceeds from the sale of assets and investment activity with our unconsolidated affiliates. The $57.9 million increase in cash used in investing activities for the six months ended February 29, 2024 compared to the six months ended February 28, 2023 was primarily attributable to a $36.2 million decrease in proceeds from sales of assets when compared to the six months ended February 28, 2023. Proceeds from the sale of assets primarily relate to fleet sales in our Leasing & Management Services segment.

*(in millions)*

| Capital expenditures: | Six Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| Leasing & Management Services | $(132.3) | $(142.6) |
| Manufacturing | (47.9) | (22.3) |
| Maintenance Services | (10.3) | (4.8) |
| Total capital expenditures (gross) | $(190.5) | $(169.7) |
| Proceeds from sales of assets | 25.9 | 62.1 |
| Total capital expenditures (net of proceeds) | $(164.6) | $(107.6) |

Capital expenditures primarily relate to additions to our lease fleet and on-going investments into the safety and productivity of our facilities. Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Management Services. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity. Proceeds from sales of assets are expected to be approximately $75 million for 2024.

Gross capital expenditures for 2024 are expected to be approximately $280 million for Leasing & Management Services, approximately $140 million for Manufacturing and approximately $15 million for Maintenance Services. Capital expenditures for 2024 primarily relate to additions to our lease fleet reflecting our leasing strategy and continued investments into the safety and productivity of our facilities.

#### Cash Flows From Financing Activities

The $56.0 million increase in cash flow from financing activities for the six months ended February 29, 2024 compared to the six months ended February 28, 2023 was primarily attributed to $53.6 million higher proceeds from the issuance of notes payable, net of repayments. During the six months ended February 29, 2024 we issued $178.5 million of asset backed securities and used proceeds to pay down $139.9 million of our GBX Leasing warehouse facility. We also drew $89.2 million on the GBX Leasing warehouse facility to grow the fleet. In February 2024, we paid $47.7 million to retire our 2024 Convertible Notes.

#### Dividend & Share Repurchase Program

A quarterly dividend of $0.30 per share was declared on April 2, 2024.

The Board of Directors has authorized our company to repurchase shares of our common stock. The share repurchase program has an expiration date of January 31, 2025. Under the share repurchase program, shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. The timing and amount of purchases is based upon market conditions, securities law limitations and other factors. The program may be modified, suspended or discontinued at any time without prior notice. The share repurchase program does not obligate us to acquire any specific number of shares in any period.

During the six months ended February 29, 2024, we purchased a total of 38 thousand shares for $1.3 million. As of February 29, 2024, the amount remaining for repurchase under the share repurchase program was $45.1 million. During the six months ended February 28, 2023, we purchased a total of 575 thousand shares for $17.4 million.

#### Cash, Borrowing Availability and Credit Facilities

As of February 29, 2024, we had $252.0 million in Cash and cash equivalents and $329.3 million in available borrowings. The available balance to draw under committed credit facilities includes $214.6 million on the North American credit facility, $43.7 million on the European credit facilities and $71.0 million on the Mexican credit facilities.

Senior secured credit facilities aggregated to $1.4 billion as of February 29, 2024 which consisted of the following components:

*GBX Leasing –* As of February 29, 2024, a $550.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing. Advances under this facility bear interest at SOFR plus 1.85% plus 0.11% as a SOFR adjustment. Interest rate swap agreements cover approximately 99% of the outstanding balance to swap the floating interest rate to a fixed rate. The warehouse credit facility converts to a term loan in August 2025 and matures in August 2027.

*North America –* As of February 29, 2024, a $600.0 million revolving line of credit, maturing August 2026, secured by substantially all our U.S. assets not otherwise pledged as security for term loans or the warehouse credit facility, existed to provide working capital and interim financing of equipment, principally for our U.S. and Mexican operations. Advances under this North American credit facility bear interest at SOFR plus 1.75% plus 0.10% as a SOFR adjustment or Prime plus 0.75% depending on the type of borrowing. Available borrowings under the credit facility are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.

*Europe –* As of February 29, 2024, lines of credit totaling $75.3 million secured by certain of our European assets, with variable rates that range from WIBOR plus 1.2% to WIBOR plus 1.6% and EURIBOR plus 1.9%, were available for working capital needs of our European manufacturing operations. The European lines of credit include $32.5 million which is guaranteed by us. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from June 2024 through November 2025.

*Mexico –* As of February 29, 2024, our Mexican railcar manufacturing operations had lines of credit totaling $196.0 million for working capital needs, $96.0 of which we and our joint venture partner have each guaranteed 50%. Advances under these facilities bear interest at variable rates that range from SOFR plus 2.22% to SOFR plus 4.25%. The Mexican credit facilities have maturities that range from June 2024 through January 2027.

Credit facility balances:

*(in millions)*

| Nonrecourse credit facility balances | February 29, 2024 | August 31, 2023 |
| --- | ---: | ---: |
| GBX Leasing | $89.2 | $139.9 |
| Other credit facility balances |  |  |
| North America | 55.0 | — |
| Europe | 31.6 | 47.2 |
| Mexico | 125.0 | 110.0 |
| Total Revolving notes | $300.8 | $297.1 |

Outstanding commitments under the North American credit facility included letters of credit which totaled $7.1 million and $4.9 million as of February 29, 2024 and August 31, 2023, respectively.

#### Other Information

The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us and our various subsidiaries, the most restrictive of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into financing leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of February 29, 2024, we were in compliance with all such restrictive covenants.

From time to time, we may seek to repurchase or otherwise retire or exchange securities, including outstanding convertible notes, borrowings and equity securities, and take other steps to reduce our debt, extend the maturities of our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated transactions or other retirements, repurchases or exchanges. Such retirements, repurchases or exchanges of one note or security for another note or security (now or hereafter existing), if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity requirements and contractual restrictions, if applicable. The amounts involved in any such transactions may, individually or in the aggregate, be material and may involve all or a portion of a particular series of notes or other indebtedness which may reduce the float and impact the trading market of notes or other indebtedness which remain outstanding.

We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency, we enter into foreign currency forward exchange contracts with established financial institutions to protect the margin on a portion of foreign currency sales in firm backlog.

To mitigate the exposure to changes in interest rates, we have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $608.6 million of variable rate debt to fixed rate debt as of February 29, 2024.

Given the strong credit standing of the counterparties, no provision has been made for credit loss due to counterparty non-performance.

We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.

### Off-Balance Sheet Arrangements

We do not currently have off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our Consolidated Financial Statements.

### Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.

*Impairment of long-lived assets -* We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed based upon estimated undiscounted cash flows expected to be realized over the remaining useful life of the asset group. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group.

An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, and the determination of the fair value of real and personal property. Estimates of future cash flows are by nature highly uncertain and contemplate factors that may change over time.

*Goodwill* - We evaluate goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amounts of our reporting units exceed their fair value. We determine the fair value of our reporting units based on a weighting of income and market approaches. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows which incorporates forecasted revenues, long-term growth rate, gross margin percentages, operating expenses, and the use of discount rates. Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.

We performed a quantitative assessment for our annual goodwill impairment test during the third quarter of 2023. Based on the results of our assessment, the estimated fair values of all reporting units with goodwill increased from our prior quantitative assessment, and exceeded their carrying values; therefore, we concluded that goodwill was not impaired. Pursuant to the authoritative guidance, we make certain estimates and assumptions to determine our reporting units and whether the fair value for each reporting unit is greater than its carrying value. The above highlighted judgments contemplated estimates and effects of macroeconomic trends that are inherently uncertain. Changes in these estimates, which may include the effects of inflation and policy reactions thereto, increases in pricing of materials and components, changes in demand, or potential macroeconomic events may cause future assessment conclusions to differ.

As of February 29, 2024, our goodwill balance was $128.0 million, of which $85.4 million related to our Manufacturing segment and $42.6 million related to our Maintenance Services segment. Our Manufacturing segment includes the North America Manufacturing reporting unit with a goodwill balance of $56.3 million and the Europe Manufacturing reporting unit with a goodwill balance of $29.1 million.

*Income taxes* - The asset and liability method is used to account for income taxes. We are required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for each tax jurisdiction to determine the amount of deferred tax assets and liabilities. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. We recognize a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities.

Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Judgment is required in determining our tax expense and in evaluating our tax positions, as tax laws are complex and subject to different interpretations by taxpayers and government taxing authorities. Our income tax rate is affected by the tax rates that apply to our foreign earnings and could be adversely impacted by higher or lower earnings than anticipated in a particular jurisdiction. In addition to local country tax laws and regulations, our income tax rate depends on the extent that our foreign earnings are taxed by the U.S. through provisions such as the global intangible low-taxed income (GILTI) tax and base erosion and anti-abuse tax (BEAT). We review our deferred tax assets and tax positions quarterly and adjust the balances as new information becomes available.

*Environmental costs* - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which reserves are established are made.

Judgments used in determining if a liability is estimable are subjective and based on known facts and our historic experience. If further developments in or resolution of an environmental matter result in facts and circumstances that differ from those assumptions used to develop these reserves, the accrual for environmental remediation could be materially understated or overstated. Due to the uncertain nature of environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us. For further information regarding our environmental costs, see Note 14 to the Condensed Consolidated Financial Statements.

## Market risk

As filed, 2,076 characters.

#### Foreign Currency Exchange Risk

We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protect revenue or margin on a portion of forecasted foreign currency sales and expenses. At February 29, 2024 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $110.9 million. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible to predict the impact that a movement in a single foreign currency exchange rate would have on future operating results.

In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At February 29, 2024, net assets of foreign subsidiaries aggregated to $153.6 million and a 10% strengthening of the U.S. Dollar relative to the foreign currencies would result in a decrease in equity of $15.4 million, or 1.2% of Total equity - Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.

#### Interest Rate Risk

We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $608.6 million of variable rate debt to fixed rate debt. Notwithstanding these interest rate swap agreements, we are still exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates. At February 29, 2024, 84% of our outstanding debt had fixed rates and 16% had variable rates. At February 29, 2024, a uniform increase by 10% in variable interest rates would result in approximately $1.4 million of additional annual interest expense.

## Controls and procedures

As filed, 2,623 characters.

#### Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective as of such date due to the material weakness in internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023.

#### Ongoing Remediation of Previously Identified Material Weakness

The Company’s management, under the oversight of the Audit Committee, is designing and implementing corrective actions to remediate the control deficiencies contributing to the material weakness. These remediation actions are ongoing and include:

- Enhancing risk assessment and control design to address potential financial reporting risk related to system implementations;
- Improving policy and procedure documentation related to IT general controls to better define roles and responsibilities, improve control owner understanding, and provide a basis for knowledge transfer upon personnel changes; and
- Enhancing our education concerning the principles and requirements of each control, with a focus on those related to user access, change management, and segregation of duties over IT systems impacting financial reporting.

As we continue to evaluate and enhance our internal control over financial reporting, we may determine that additional measures to address the material weaknesses or adjustments to the remediation plan may be required. Once controls are designed and implemented, the controls must be operating effectively for a sufficient period of time and be tested by management in order to consider them remediated and conclude that the design is effective to address the risks of material misstatement.

#### Changes in Internal Control over Financial Reporting

Except for the changes in connection with our implementation of the remediation plans above, there have been no changes in our internal control over financial reporting during the quarter ended February 29, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 285 characters.

This Form 10-Q should be read in conjunction with Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2023. There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the year ended August 31, 2023.

Filed Apr 5, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-042261. Last ingested by Listed: Oct 29, 2026, 18:28 ET. No prices; not investment advice.