GBX Greenbrier Companies Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 7, 2016

 

 

THE GREENBRIER COMPANIES, INC.

(Exact name of registrant as specified in its charter)

 

 

Commission File No. 1-13146

 

Oregon		93-0816972
(State of Incorporation)		(I.R.S. Employer Identification No.)

One Centerpointe Drive, Suite 200,

Lake Oswego, OR 97035

(Address of principal executive offices) (Zip Code)

(503) 684-7000

(Registrant’s telephone number, including area code)

Former name or former address, if changed since last report: N/A

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition

On January 7, 2016, The Greenbrier Companies issued a press release reporting the Company’s results of operations for the three months ended November 30, 2015. A copy of such release is attached as Exhibit 99.1.

 

Item 7.01

Regulation FD Disclosure

In the press release issued on January 7, 2016 and attached hereto as Exhibit 99.1, Greenbrier also reaffirmed 2016 guidance.

 

Item 9.01

Financial Statements and Exhibits

(c) Exhibits:

99.1 Press Release dated January 7, 2016 of The Greenbrier Companies, Inc.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

						THE GREENBRIER COMPANIES, INC.
Date:		January 7, 2016				By:		/s/ Mark J. Rittenbaum
								Mark J. Rittenbaum
								Executive Vice President and
								Chief Financial Officer
								(Principal Financial Officer)

Exhibit 99.1

 

One Centerpointe Drive Suite 200 Lake Oswego, Oregon 97035 503-684-7000			www.gbrx.com

 

For release: January 7, 2016, 6:00 a.m. EST		Contact:		Mark Rittenbaum
				Lorie Tekorius
				503-684-7000

Greenbrier Reports Record First Quarter Results

~ Posts EPS of $2.15 ~

~ Expands aggregate gross margin to 23% ~

Lake Oswego, Oregon, January 7, 2016 – The Greenbrier Companies, Inc. (NYSE: GBX) today reported financial results for its first fiscal quarter ended November 30, 2015.

First Quarter Highlights

 

•

Net earnings attributable to Greenbrier for the quarter were a record $69.4 million, or $2.15 per diluted share, on record revenue of $802.4 million.

 

•

Adjusted EBITDA for the quarter was a record $161.8 million, or 20.2% of revenue.

 

•

New railcar backlog as of November 30, 2015 was 36,000 units with an estimated value of $4.14 billion (average unit sale price of $115,000), compared to 41,300 units with an estimated value of $4.71 billion (average unit sale price of $114,000) as of August 31, 2015.

 

•

Diversified orders for 500 new railcars were received during the quarter. After quarter end, Greenbrier received orders for an additional 2,100 railcars, of which 1,300 units were disclosed in our order release on December 15, 2015. The aggregate value of the cumulative orders for 2,600 new railcars is nearly $250 million, or an average sales price of approximately $96,000 per railcar.

 

•

New railcar deliveries totaled 6,900 units for the quarter, compared to 6,200 units for the quarter ended August 31, 2015.

 

•

Marine backlog as of November 30, 2015 was approximately $36 million.

 

•

Board declares a quarterly dividend of $0.20 per share payable on February 10, 2016 to shareholders of record as of January 20, 2016.

 

•

Repurchased 521,626 shares of common stock at a cost of $19.1 million during the quarter. Since inception of the share repurchase program in October 2013, 2,673,165 shares have been repurchased at a cost of $123.7 million. Board authorization for approximately $101.3 million remains available for further share repurchases.

Progress on Longer Term Financial Goals

 

•

Aggregate gross margin expanded to 23.0%, compared to 22.8% in the prior quarter, continuing above the goal of at least 20% gross margin by the second half of fiscal 2016.

 

•

First quarter annualized ROIC of 34.0% reflects record operating results. We remain on track to reach the goal of at least 25% ROIC for the second half of fiscal 2016.

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 2

 

William A. Furman, Chairman and CEO said, “Greenbrier’s first quarter results are the fourth consecutive quarter we have produced record-breaking performance. This accomplishment is a testament to the value of our integrated business model and our strategy to diversify our product offerings, create efficient, flexible manufacturing capacity in low-cost facilities and drive more value through our lease syndication model. Aggregate gross margin hit an all-time high of 23.0%, up 520 bps year-over-year, with our manufacturing and lease syndication activities continuing to lead the way.”

Furman added, “We anticipate and are prepared for market conditions in which order and backlog levels will likely come down from their elevated energy-driven peak. We see positive continuing demand for a range of non-energy related railcars including automotive carrying railcars, large cube covered hoppers, non-energy tank cars and boxcars. We believe our strong backlog, geographic diversity and manufacturing flexibility will lead to another solid year of earnings and free cash flow in fiscal 2016.”

Furman concluded, “While the markets where we compete may transition over the course of this year and into 2017, we have built a solid foundation for Greenbrier’s future growth. Now serving customers on four continents, we are further diversifying our revenue base by growing our business outside North America. Greenbrier is a much different company today than it was just a couple of years ago. I strongly believe that Greenbrier has a great future ahead.”

Business Outlook

Based on current business trends, industry forecasts and production schedules for fiscal 2016, Greenbrier reaffirms previously provided guidance for:

 

•

Deliveries of approximately 20,000 – 22,500 units

 

•

Revenue will exceed $2.8 billion

 

•

Diluted EPS will be in the range of $5.65 to $6.15

We expect financial results to be weighted towards the first half of the year primarily due to line changeovers, product mix changes and lower production rates on certain lines in the second half of fiscal 2016.

As noted in the “Safe Harbor” statement, there are risks to achieving this guidance. Certain orders and backlog in this release are subject to customary documentation and completion of terms.

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 3

 

Financial Summary

 

		Q1 FY16				Q4 FY15				Sequential Comparison – Main Drivers
Revenue			$802.4M				$765.5M			Up 4.8% primarily due to increased deliveries
Gross margin			23.0%				22.8%			Up 20 bps due to favorable product mix, favorable pricing and improved production efficiencies in the manufacturing segment
Selling and administrative expense			$36.5M				$39.6M			Down 7.8% primarily due to timing of employee-related costs
Gain on disposition of equipment			$0.3M				$0.4M			Timing of sales fluctuates and is opportunistic
Adjusted EBITDA			$161.8M				$147.6M			Up 9.6% driven by higher deliveries and gross margin
Effective tax rate			31.3%				26.9%			Reflects a change in the geographic mix of earnings and in GIMSA JV earnings, and the effects of discrete items
Net earnings attributable to noncontrolling interest			$29.3M				$31.1M			Driven by timing of deliveries and margin from our GIMSA JV
Net earnings			$69.4M				$66.9M
Diluted EPS			$2.15				$2.02

Segment Summary

 

		Q1 FY16				Q4 FY15				Sequential Comparison – Main Drivers
Manufacturing
Revenue			$698.7M				$657.5M			Up 6.3% primarily due to increased deliveries
Gross margin			23.7%				23.0%			Up 70 bps due to favorable product mix, favorable pricing and improved efficiencies
Operating margin (1)			22.0%				21.0%
Deliveries			6,900				6,200
Wheels & Parts
Revenue			$78.7M				$84.6M			Down 7.0% primarily attributable to lower wheel and component volumes
Gross margin			7.3%				10.8%			Down 350 bps primarily due to lower volumes and a decrease in scrap metal prices
Operating margin (1)			4.3%				7.8%
Leasing & Services
Revenue			$25.0M				$23.4M			Up 6.8% primarily due to higher volume of maintenance management railcars
Gross margin			53.6%				62.0%			Down 840 bps primarily due to railcar transportation and storage costs
Operating margin (1) (2)			39.8%				43.6%
Lease fleet utilization			89.0%				96.6%			Impacted by tank cars and recent portfolio acquisition; utilization is 97% excluding these items

 

(1)	See supplemental segment information on page 10 for additional information.

(2)	Includes Net gain on disposition of equipment, which is excluded from gross margin.

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 4

Conference Call

Greenbrier will host a teleconference to discuss its first quarter 2016 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. Teleconference details are as follows:

 

•

January 7, 2016

 

•

8:00 a.m. Pacific Standard Time

 

•

Phone: 1-630-395-0143, Password: “Greenbrier”

 

•

Real-time Audio Access: (“Newsroom” at http://www.gbrx.com)

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

About Greenbrier

Greenbrier (www.gbrx.com), headquartered in Lake Oswego, Oregon, is a leading supplier of transportation equipment and services to the railroad industry. Greenbrier builds new railroad freight cars in manufacturing facilities in the U.S., Mexico and Poland and marine barges at our U.S. manufacturing facility. Greenbrier sells reconditioned wheel sets and provides wheel services at locations throughout the U.S. We recondition, manufacture and sell railcar parts at various U.S. sites. Through GBW Railcar Services, LLC, a 50/50 joint venture with Watco Companies, LLC, freight cars are repaired and refurbished at over 30 locations across North America, including more than 10 tank car repair and maintenance facilities certified by the Association of American Railroads. Greenbrier owns a lease fleet of over 10,000 railcars and performs management services for over 250,000 railcars.

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This press release may contain forward-looking statements, including statements regarding expected new railcar production volumes and schedules, expected customer demand for the Company’s products and services, plans to adjust manufacturing capacity, restructuring plans, new railcar delivery volumes and schedules, changes in demand for the Company’s railcar services and parts business, and the Company’s future financial performance. Greenbrier uses words such as “anticipates,” “believes,” “forecast,” “potential,” “goal,” “contemplates,” “expects,” “intends,” “plans,” “projects,” “hopes,” “seeks,” “estimates,” “strategy,” “could,” “would,” “should,” “likely,” “will,” “may,” “can,” “designed to,” “future,” “foreseeable future” and similar expressions to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from in the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog and awards are not indicative of our financial results; uncertainty or changes in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of our indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; sovereign risk to contracts, exchange rates or property rights; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, costs or inefficiencies associated with expansion, start-up or changing of production lines or changes in production rates, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; integration of current or future acquisitions and establishment of joint ventures; succession planning; discovery of defects in railcars or services

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 5

resulting in increased warranty costs or litigation; physical damage or product or service liability claims that exceed our insurance coverage; train derailments or other accidents or claims that could subject us to legal claims; actions or inactions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other rail car or railroad regulation; and issues arising from investigations of whistleblower complaints; all as may be discussed in more detail under the headings “Risk Factors” and “Forward Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2015, and our other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements.

Adjusted EBITDA is not a financial measure under generally accepted accounting principles (GAAP). We define Adjusted EBITDA as Net earnings before Interest and foreign exchange, Income tax expense, Depreciation and amortization. Adjusted EBITDA is a performance measurement tool commonly used by rail supply companies and Greenbrier. You should not consider Adjusted EBITDA in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, this measure presented may differ from and may not be comparable to similarly titled measures used by other companies.

Annualized ROIC is calculated by taking year to date Earnings from operations, less cash paid for income taxes, net, which is then annualized and divided by the average balance of the sum of the Revolving notes, plus Notes payable, plus Total equity, less cash in excess of $40 million. The average is calculated based on the quarterly ending balances.

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 6

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

		November 30, 2015				August 31, 2015				May 31, 2015				February 28, 2015				November 30, 2014
Assets
Cash and cash equivalents		$	197,633			$	172,930			$	122,783			$	145,512			$	118,958
Restricted cash			9,818				8,869				8,912				8,722				9,170
Accounts receivable, net			237,213				196,029				214,890				207,488				191,532
Inventories			444,023				445,535				426,655				418,590				372,039
Leased railcars for syndication			238,911				212,534				213,197				198,010				177,221
Equipment on operating leases, net			252,641				255,391				257,962				261,234				264,615
Property, plant and equipment, net			307,196				303,135				285,570				271,977				258,303
Investment in unconsolidated affiliates			86,658				87,270				91,217				71,225				72,342
Intangibles and other assets, net			76,157				65,554				62,664				64,386				61,937
Goodwill			43,265				43,265				43,265				43,265				43,265
		$	1,893,515			$	1,790,512			$	1,727,115			$	1,690,409			$	1,569,382
Liabilities and Equity
Revolving notes		$	163,888			$	50,888			$	92,507			$	90,563			$	46,527
Accounts payable and accrued liabilities			384,670				455,213				405,544				417,844				374,509
Deferred income taxes			63,483				60,657				75,572				77,632				81,808
Deferred revenue			42,351				33,836				24,209				28,287				27,067
Notes payable			324,668				326,429				346,279				441,326				443,303
Total equity — Greenbrier			771,945				732,838				672,396				541,491				519,884
Noncontrolling interest			142,510				130,651				110,608				93,266				76,284
Total equity			914,455				863,489				783,004				634,757				596,168
		$	1,893,515			$	1,790,512			$	1,727,115			$	1,690,409			$	1,569,382

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 7

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

 

		Three Months Ended November 30
		2015				2014
Revenue
Manufacturing		$	698,661			$	379,949
Wheels & Parts			78,729				86,624
Leasing & Services			24,999				28,485
			802,389				495,058
Cost of revenue
Manufacturing			533,033				316,037
Wheels & Parts			73,002				76,872
Leasing & Services			11,589				14,081
			617,624				406,990
Margin			184,765				88,068
Selling and administrative			36,549				33,729
Net gain on disposition of equipment			(269	)			(83	)
Earnings from operations			148,485				54,422
Other costs
Interest and foreign exchange			5,436				3,141
Earnings before income tax and earnings from unconsolidated affiliates			143,049				51,281
Income tax expense			(44,719	)			(16,054	)
Earnings before earnings from unconsolidated affiliates			98,330				35,227
Earnings from unconsolidated affiliates			383				755
Net earnings			98,713				35,982
Net earnings attributable to noncontrolling interest			(29,280	)			(3,196	)
Net earnings attributable to Greenbrier		$	69,433			$	32,786
Basic earnings per common share:		$	$2.36			$	1.19
Diluted earnings per common share:		$	$2.15			$	1.01
Weighted average common shares:
Basic			29,391				27,665
Diluted			32,578				33,713
Dividends declared per common share		$	$0.20			$	0.15

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 8

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

		Three Months Ended November 30
		2015				2014
Cash flows from operating activities:
Net earnings		$	98,713			$	35,982
Adjustments to reconcile net earnings to net cash used in operating activities:
Deferred income taxes			3,019				607
Depreciation and amortization			12,974				12,050
Net gain on disposition of equipment			(269	)			(83	)
Stock based compensation expense			5,301				3,411
Noncontrolling interest adjustments			262				12,952
Other			637				152
Decrease (increase) in assets:
Accounts receivable, net			(40,889	)			7,806
Inventories			(274	)			(67,642	)
Leased railcars for syndication			(61,059	)			(54,732	)
Other			(3,578	)			2,211
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities			(77,605	)			(13,032	)
Deferred revenue			(723	)			6,488
Net cash used in operating activities			(63,491	)			(53,830	)
Cash flows from investing activities:
Proceeds from sales of assets			41,353				2,073
Capital expenditures			(15,595	)			(31,314	)
Increase in restricted cash			(949	)			(30	)
Cash distribution from unconsolidated affiliates			616				—
Investment in and advances to unconsolidated affiliates			(1,866	)			(2,500	)
Net cash provided by (used in) investing activities			23,559				(31,771	)
Cash flows from financing activities:
Net changes in revolving notes with maturities of 90 days or less			113,000				15,000
Proceeds from revolving notes with maturities longer than 90 days			—				23,056
Repayments of revolving notes with maturities longer than 90 days			—				(4,610	)
Repayments of notes payable			(1,761	)			(1,758	)
Debt issuance costs			(4,493	)
Decrease in restricted cash			—				11,000
Cash distribution to joint venture partner			(17,654	)			(2,275	)
Repurchase of stock			(20,203	)			(21,730	)
Dividends			(105	)			—
Excess tax benefit from restricted stock awards			2,827				2,970
Other			(6	)			—
Net cash provided by financing activities			71,605				21,653
Effect of exchange rate changes			(6,970	)			(2,010	)
Increase (decrease) in cash and cash equivalents			24,703				(65,958	)
Cash and cash equivalents
Beginning of period			172,930				184,916
End of period		$	197,633			$	118,958

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 9

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In thousands, except per share amounts, unaudited)

Operating Results by Quarter for 2015 are as follows:

 

		First				Second				Third				Fourth				Total
Revenue
Manufacturing		$	379,949			$	505,241			$	593,376			$	657,485			$	2,136,051
Wheels & Parts			86,624				102,640				97,407				84,566				371,237
Leasing & Services			28,485				22,268				23,823				23,414				97,990
			495,058				630,149				714,606				765,465				2,605,278
Cost of revenue
Manufacturing			316,037				403,227				465,658				506,492				1,691,414
Wheels & Parts			76,872				92,768				89,645				75,395				334,680
Leasing & Services			14,081				8,844				10,017				8,889				41,831
			406,990				504,839				565,320				590,776				2,067,925
Margin			88,068				125,310				149,286				174,689				537,353
Selling and administrative expense			33,729				32,899				45,595				39,568				151,791
Net gain on disposition of equipment			(83	)			(121	)			(720	)			(406	)			(1,330	)
Earnings from operations			54,422				92,532				104,411				135,527				386,892
Other costs
Interest and foreign exchange			3,141				1,929				4,285				1,824				11,179
Earnings before income tax and earnings (loss) from unconsolidated affiliates			51,281				90,603				100,126				133,703				375,713
Income tax expense			(16,054	)			(29,372	)			(30,783	)			(35,951	)			(112,160	)
Earnings (loss) from unconsolidated affiliates			755				(185	)			982				204				1,756
Net earnings			35,982				61,046				70,325				97,956				265,309
Net earnings attributable to noncontrolling interest			(3,196	)			(10,695	)			(27,514	)			(31,072	)			(72,477	)
Net earnings attributable to Greenbrier		$	32,786			$	50,351			$	42,811			$	66,884			$	192,832
Basic earnings per common share (1)		$	1.19			$	1.86			$	1.54			$	2.23			$	6.85
Diluted earnings per common share (1)		$	1.01			$	1.57			$	1.33			$	2.02			$	5.93

 

(1)

Quarterly amounts may not total to the year to date amount as each period is calculated discretely. Diluted earnings per common share includes the dilutive effect of the 2026 Convertible Notes and restricted stock units that are subject to performance criteria, for which actual levels of performance above target have been achieved, using the treasury stock method when dilutive and the dilutive effect of shares underlying the 2018 Convertible Notes using the “if converted” method in which debt issuance and interest costs, net of tax, were added back to net earnings.

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 10

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In thousands, unaudited)

Segment Information

 

Three months ended November 30, 2015:
		Revenue												Earnings (loss) from operations
		External				Intersegment				Total				External				Intersegment				Total
Manufacturing		$	698,661			$	—			$	698,661			$	153,704			$	—			$	153,704
Wheels & Parts			78,729				6,816				85,545				3,403				684				4,087
Leasing & Services			24,999				6,709				31,708				9,958				6,709				16,667
Eliminations			—				(13,525	)			(13,525	)			—				(7,393	)			(7,393	)
Corporate			—				—				—				(18,580	)			—				(18,580	)
		$	802,389			$	—			$	802,389			$	148,485			$	—			$	148,485

 

Three months ended August 31, 2015:
		Revenue												Earnings (loss) from operations
		External				Intersegment				Total				External				Intersegment				Total
Manufacturing		$	657,485			$	—			$	657,485			$	138,319			$	—			$	138,319
Wheels & Parts			84,566				6,807				91,373				6,577				585				7,162
Leasing & Services			23,414				19,067				42,481				10,210				19,067				29,277
Eliminations			—				(25,874	)			(25,874	)			—				(19,652	)			(19,652	)
Corporate			—				—				—				(19,579	)			—				(19,579	)
		$	765,465			$	—			$	765,465			$	135,527			$	—			$	135,527

 

		Total assets
(In thousands)		November 30 2015				August 31, 2015
Manufacturing		$	656,505			$	675,409
Wheels & Parts			302,164				291,798
Leasing & Services			631,699				549,073
Unallocated			303,147				274,232
		$	1,893,515			$	1,790,512

The results of operations for GBW, which are shown below, are not reflected in the above tables as the investment is accounted for under the equity method of accounting.

 

		As of and for the Three Months Ended
		November 30, 2015				August 31, 2015
Revenue		$	96,000			$	95,200
Earnings from operations		$	2,400			$	300
Total assets		$	245,700			$	239,900

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 11

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In thousands, excluding backlog and delivery units, unaudited)

Reconciliation of Net earnings to Adjusted EBITDA

		Three Months Ended
		November 30, 2015				August 31, 2015
Net earnings		$	98,713			$	97,956
Interest and foreign exchange			5,436				1,824
Income tax expense			44,719				35,951
Depreciation and amortization			12,974				11,898
Adjusted EBITDA		$	161,842			$	147,629

Adjusted EBITDA is not a financial measure under generally accepted accounting principles (GAAP). We define Adjusted EBITDA as Net earnings before interest and foreign exchange, income tax expense, depreciation and amortization. Adjusted EBITDA is a performance measurement tool commonly used by rail supply companies and Greenbrier. You should not consider Adjusted EBITDA in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Adjusted EBITDA measure presented may differ from and may not be comparable to similarly titled measures used by other companies.

 

		Three Months Ended November 30, 2015
Backlog Activity (units)
Beginning backlog			41,300
Orders received			500
Production held as Leased railcars for syndication			(600	)
Production sold directly to third parties			(5,200	)
Ending backlog			36,000
Delivery Information (units)
Production sold directly to third parties			5,200
Sales of Leased railcars for syndication			1,700
Total deliveries			6,900

 

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Greenbrier Reports Record First Quarter Results . . . (Cont.)		Page 12

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In thousands, except per share amounts, unaudited)

Reconciliation of common shares outstanding and diluted earnings per share

The shares used in the computation of the Company’s basic and diluted earnings per common share are reconciled as follows:

 

		Three Months Ended
		November 30, 2015				August 31, 2015
Weighted average basic common shares outstanding (1)			29,391				30,040
Dilutive effect of convertible notes (2)			3,177				3,192
Dilutive effect of performance awards (3)			10				165
Weighted average diluted common shares outstanding			32,578				33,397

(1)	Restricted stock grants and restricted stock units, 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 2018 Convertible notes are included in the Weighted average diluted common shares outstanding as they were considered dilutive under the “if converted” method as further discussed below. The dilutive effect of the 2026 Convertible notes are included in the Weighted average diluted common shares outstanding as the average stock price during the period exceeded the conversion price of $48.05.

 

(3)	Restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved, and are included in Weighted average diluted shares outstanding when the company is in a net earnings position.

Diluted earnings per share was calculated using the more dilutive of two approaches. The first approach includes the dilutive effect, using the treasury stock method, associated with shares underlying the 2026 Convertible notes and performance based restricted stock units that are subject to performance criteria, for which actual levels of performance above target have been achieved. The second approach supplements the first by including the “if converted” effect of the 2018 Convertible notes issued in March 2011. Under the “if converted method” debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes.

 

		Three Months Ended
		November 30, 2015				August 31, 2015
Net earnings attributable to Greenbrier		$	69,433			$	66,884
Add back:
Interest and debt issuance costs on the 2018 Convertible notes, net of tax			496				744
Earnings before interest and debt issuance costs on convertible notes		$	69,929			$	67,628
Weighted average diluted common shares outstanding			32,578				33,397
Diluted earnings per share		$	2.15			$	2.02

 

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