A：Greenbrier delivered solid commercial, operational, and financial results in the third quarter, with sequentially improved gross margin and earnings. The improvements made over the last several years, combined with operating discipline, cost control, and commercial excellence, led to a more resilient earnings profile. The company's focus on operational efficiency and a strong financial foundation contributed to these results.

A：The current global macroeconomic conditions support freight railcar lease rates and utilization, further strengthening Greenbrier's business. However, demand for new rail cars is pressured due to market conditions, but maintenance and replacement needs provide a foundation for future orders. The North American market for new railcar deliveries is expected to be around 35,000 per year since 2020, with industry forecasts indicating less than 25,000 for 2026, which is the lowest level since 2010. The outlook for 2027 shows an increase to over 34,000 deliveries. While intermodal activity is uneven, there is a positive long-term outlook for new railcar demand.

A：The manufacturing segment of Greenbrier executed well in the third quarter, with solid program and maintenance work contributing to overall performance. The company is focusing on growth in leasing and fleet management, expanding its own lease fleet with high utilization. The goal is to double the recurring revenue base by 2028 through both manufacturing operations and secondary market opportunities. Additionally, the segment is benefiting from insourcing investments, which are delivering efficiency gains that will further improve earnings power as demand grows.

A：The leasing and fleet management segment expanded the owned lease fleet to 20,600 railcars with strong utilization at 99%. Renewal rates were healthy, reflecting the quality of the fleet and customer relationships. The segment is pursuing disciplined fleet growth through secondary market acquisitions and remains active in evaluating additional opportunities, which support lease fleet growth, recurring revenue, and long-term value creation.

A：The manufacturing segment's production rates are aligned with current demand levels, which are consistent with the company's proactive management of the business. Headcount is being adjusted in line with market conditions, and operational efficiency and performance improvements are being realized, reflecting the benefits of the insourcing strategy and efforts to enhance cost competitiveness. Recent capital investments are yielding strong returns, and the segment is focused on maintaining steady throughput and improving quality and production rates. In Europe, actions are being taken to improve the efficiency of the maintenance service network, and there is encouraging traction in the leasing market.

A：Greenbrier's strong operational performance was driven by demand in the agriculture and biodiesel sectors, supported by disciplined cost control, operating efficiency, and improved pricing. The Capital Markets team's support through monetization activities and improved financial results were also contributing factors.

A：Leasing and fleet management revenue was 47 million, up 3% from Q2, primarily reflecting the addition of leased railcars. The aggregate gross margin was 14.1%, which is within the long-term target range and an improvement from Q2, demonstrating the strength of the company's integrated business model and the impact of continued cost discipline.

A：Earnings from operations were 32 million, or about 6% of revenue. The effective tax rate was about 20%, primarily driven by discrete items related to foreign exchange impacts. Diluted earnings per share were 60 cents, and EBITDA was 69 million, or about 12% of revenue.

A：Greenbrier ended the quarter with total liquidity of approximately 887 million, consisting of 274 million in cash and 613 million of available borrowing capacity. Investment in leased railcars purchased in the secondary market was 227 million. They refinanced their term loan with a new $300 million facility, extending the maturity by six years, improving credit terms, and adding a delayed draw. The company maintained discipline in capital allocation, returning capital to shareholders through dividends and share repurchases.

A：For fiscal 2026, Greenbrier continues to expect total revenue of 2.4 billion to 2.5 billion and has narrowed its expected EPS range to $3.15 per share to $3.25 per share. Additional details are included in the earnings release and accompanying slides.

A：Greenbrier is not currently incurring any tariffs for equipment coming from Mexico into the U.S. Recent pronouncements and determinations industry-wide are being reviewed by the company and its industry partners. They are seeking guidance from CBP on how best to navigate these changes, as the new regulations represent a change from previous industry practices. Clarification from CBP on compliance is pending.

A：Approximately 20% of Greenbrier's backlog consists of tank cars. The company has provisions in all of its contracts to pass through tariffs and duties as needed.

A：Shifting production from Mexico to the Arkansas facility is feasible. The company is currently building tank cars there and is evaluating how much production could be shifted. A significant factor is finding and training a skilled workforce, which is a challenge for many industries in the U.S.

A：The speaker indicates that there is a lot of desire from customers for additional rail cars, but macroeconomic shifts are creating delays in their investment decisions. There is an acknowledgment of pent-up demand for new equipment that needs a settled economy to make long-term investment decisions.

A：The inquiries and backlog in the core business have been fairly stable, but the pent-up demand is beginning to rise. This suggests that there is a growing interest and need for new rail cars.

A：The demand in the AI data center infrastructure area is driving a significant increase in demand for heavy-duty infrastructure, which is reflected in the orders-to-production ratios and a notable increase in labor hours for certain cars.

A：The insourcing initiatives, along with a focus on labor efficiency and overhead costs, have started to pay off. These factors, combined with production levels, have led to significant improvements in manufacturing margins.

A：Regulatory issues, such as Section 232 on tank cars and the coupler case, are not the primary reasons for holding back customer investment decisions. The main impediment is the broader macroeconomic situation. The company is filing an administrative appeal in the coupler case, and there is industry-wide implication and guidance being sought for compliance. While there is uncertainty, the industry has a history of finding solutions to navigate challenges.

A：The decision is influenced by factors such as quarterly concentration limits within debt financing agreements, the quality and risk profile of assets, and strategic considerations from a commercial customer perspective. It's managed on a quarterly basis to ensure prudent and disciplined management of the fleet.

A：The annual investment target for the lease fleet is up to $300 million. This investment is not expected to significantly impact the strategy and is part of the ongoing efforts to transform the company to have more substantial recurring revenue from leasing compared to manufacturing income.

A：While there is no specific target size for the fleet by the end of fiscal 2027, the focus is on transforming the company with a more substantial portion of recurring revenue coming from leasing. The role of the secondary market in achieving this target is about the quality and earning power of the assets, not just the overall fleet numbers.

A：The strategy is to focus on building a quality fleet, ensuring that investments in the cars are of high quality and do not just aim to grow the fleet size. The team is proud of the efforts made over the past couple of years to focus on the quality of the fleet, which is evidenced by the substantial gains on sale in the first half of the fiscal year.

A：The company has visibility into production schedules based on backlog, which currently stands at roughly 13,000 cars. The visibility extends several months into the year, and the company continues to renew this backlog on a quarterly basis.

A：The trucking market affects intermodal car demand and the quality of rail service. A degradation in rail service due to potential changes in trucking market dynamics can impact the flow of intermodal cars and may spur some upside in fiscal or calendar year 2027. A focus is placed on improving rail service to grow modal share and not just on maintaining the current market share.