The Greenbrier panies(GBX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Greenbrier achieved record full-year diluted earnings per share and record core EBITDA, with an aggregate gross margin of nearly 19% and over $265 million in operating cash flow [4][16] - Operating income for Q4 was $72 million, representing nearly 10% of revenue, with core diluted earnings per share at $1.26 and core EBITDA at $115 million, or 15% of revenue [17] - The company generated nearly $98 million in operating cash flow for Q4, marking the highest liquidity level in 10 quarters at over $800 million [18] Business Line Data and Key Metrics Changes - The leasing and fleet management business saw recurring revenue reach nearly $170 million, representing almost 50% growth from $113 million two years ago [12] - The lease fleet grew by about 10% in Fiscal 2025 to just over 17,000 units, with high fleet utilization at 98% [13] Market Data and Key Metrics Changes - In Q4, Greenbrier received approximately 2,400 new railcar orders valued at over $300 million, bringing full-year orders to more than 13,000 units and closing the year with a backlog of 16,600 units valued at $2.2 billion [10][11] - The company noted that freight trends and tariff dynamics in North America are moderating new railcar demand, leading many fleet owners to extend acquisition timelines [11] Company Strategy and Development Direction - Greenbrier is focused on operational excellence, innovation, and responsible growth, with a goal to double recurring revenues by Fiscal 2028 [7][9] - The company is undergoing footprint rationalization in Europe, expecting annualized savings of $20 million while maintaining production capacity [7][32] - The integration of manufacturing and leasing is a key feature of Greenbrier's model, providing stability and efficiency [8] Management's Comments on Operating Environment and Future Outlook - Management views the current market conditions as an opportunity to enhance production efficiency and cost reduction initiatives [10] - The company anticipates a stronger back half of Fiscal 2026, driven by backlog orders and customer needs [41] Other Important Information - Greenbrier's capital allocation framework remains focused and disciplined, with a commitment to returning capital to shareholders through dividends and stock buybacks [18][19] - The company declared a dividend of $0.32 per share, marking its 46th consecutive quarterly dividend [18] Q&A Session Summary Question: Outlook on new railcar deliveries - Management indicated that they believe they are at the low point of the cycle and expect inquiries to increase, forecasting a production ramp-up in the latter half of the year [24][25] Question: Impact of tariffs and cost inputs - Management stated that they are well-protected in their contracts regarding tariffs and have the ability to pivot if necessary [31] Question: Details on European facility closures - The company will be down to three facilities in Europe, maintaining the same production capacity while reducing overhead [32][36] Question: First quarter outlook - Management is not inclined to provide quarterly guidance but expects a stronger back half of the year compared to the first half [41] Question: Balance sheet and leasing business funding - Management confirmed a consistent strategy of adding about $300 million net each year to the lease fleet, with a robust secondary market for leasing [56]