GBX IR Presentation November 2019 (Full)filecache.investorroom.com/mr5ir_gbrx/265/download... ·...

NYSE: GBXNovember 2019

Investor.Relations@gbrx.com

www.gbrx.com

Safe Harbor Statement

UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This presentation may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words, and variations of words, such as “affirms,” “anticipates,” “believes,” “estimates,” “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 include, without limitation, statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to the future market dynamics for the rail industry (both domestically and in international markets), the effect of our business initiatives, the cost savings, synergies and other benefits of our ARI acquisition, and any other information regarding future performance and strategies. 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 the results contemplated by the forward-looking statements.

Factors that might cause such a difference include, but are not limited to, economic downturns (global or national); reported backlog and awards that are not indicative of Greenbrier’s financial results; uncertainty or changes in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of Greenbrier’s indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; integration of past or future acquisitions, including the integration of the manufacturing business of American Railcar Industries, and establishment of joint ventures; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; interest rate fluctuations and volatility in global or national financial markets; loss of one or more significant customers; customer order or payment defaults or related issues; policies and priorities of the federal government regarding international trade, taxation and infrastructure; risks related to operations outside of the U.S. including economic or political instability, dishonoring of contracts, exchange rates, diminishment of property rights; violations of anti-corruption laws; 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, energy, 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; inability to compete successfully; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; succession planning; discovery of defects in railcars or services resulting in increased warranty costs or litigation; inability to lease railcars at favorable rates and on favorable terms; physical damage or product or service liability claims that exceed Greenbrier’s insurance coverage; train derailments or other accidents or claims that could subject Greenbrier to legal claims; actions or inactions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other railcar or railroad regulation; a decline in performance or demand, oversupply, or increase in efficiency, of the rail freight industry; and issues arising from investigations of whistleblower complaints. More information on these risks and other potential factors that could cause our results to differ from our forward-looking statements is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and subsequent Form 10-Q filings. Except as otherwise required by law, the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof.

1

Integrated Business Model

Greenbrier’s integrated business model delivers superior value to customers by creating customized freight car solutions over the entire life of a railcar.

Our diversified portfolio of quality products

and services enhances our financial

performance across the business cycle.

2

Leading Integrated Transportation Equipment & Service Provider

3

Aftermarkets(1)

• Wheels, Repair & Parts include eight wheel service locations, four railcar part reconditioning locations, eight repair locations

Manufacturing(1)

• Leading manufacturer of railcars in North America, Europe and South America

• Leading domestic manufacturer of ocean-going barges

• New railcar backlog valued at $3.3 billion

• Marine backlog of ~$100 million provides production visibility through 2020

• Q4 FY19 new railcar orders of 4,900 units, valued at over $500 million

• Acquired the manufacturing business of ARI in ~$418 million transaction

(1)Data as of 8/31/2019

-

500

1,000

1,500

2,000

2,500

3,000

3,500

1994 1999 2004 2009 2014 2019

$ m

illi

on

s

Historical Revenue

(IPO)

Leasing and Services(1)

• Fleet Information

― 6,500 long-term owned units

― 2,900 short-term owned units

― 380,000 managed units

Investment Highlights

Ind

ustr

y D

yn

am

ics

Un

iqu

e S

tra

teg

ic P

ositio

n

Str

on

g F

ina

ncia

l P

rofile

4

• North American Drivers

― Long-term dynamics favor rail

― Near-term dynamics demand manufacturing flexibility

― Recent trend towards private railcar ownership

• International Drivers

― Developing European, South American, GCC and Eurasia markets

• Provides customized solutions

• ARI acquisition fuels continued growth

• Transformational initiatives create growth platform

― Enhanced Leasing model

― Product & service diversification

― Extensive North American aftermarket repair network

― Scalable and flexible across diversified product mix

• Diverse revenue and earnings stream

• Large railcar backlog and proven track record over multiple cycles

• Strong financial performance

• Continued focus on cash flow, investing in high return projects and shareholder return

• Seasoned management team

North American Market

10

30

50

70

Ca

r L

oa

din

gs (

in M

illio

ns)

N.A. Freight Traffic

Transportation Industry Dynamics Favor Rail

• Rail significantly more fuel efficient than trucks

• Environmental concerns favor rail

• Highway congestion, driver shortage, regulation and aging highway infrastructure constrain trucking

6Source: FTR Associates – Rail Equipment Outlook (September 2019)

7

Freight Car Metrics - Traffic

Rail TrafficVelocity

Cars in Storage

Source: AAR (10/26/19), RPM, CSX, CP

Freight Car Metrics - Rail Velocity

• Velocity has increased year-over-year

8Source: AAR (10/26/19), RPM, CSX, CP

+8.6%

Box & Refrigerator Cars

25,804 7%

Covered Hoppers132,131

35%

Gondolas43,587 11%Flat & Vehicular

Flat Cars26,402

7%

Hopper Cars29,622

8%

Tank Cars111,120

29%

Intermodal Cars11,330

3%

Freight Car Metrics - Cars In Storage

9

November 2018 November 2019

100% = 277,773 100% = 379,996

Source: AAR, November 2019 Cars in Storage

Box & Refrigerator Cars

15,097 6%

Covered Hoppers96,014 35%

Gondolas28,525 10%

Flat & Vehicular Flat Cars

14,709 5%

Hopper Cars28,831 10%

Tank Cars92,374 33%

Intermodal Cars2,223 1%

November 2018 – 278k cars in storage, representing 17% of total fleet

November 2019 – 380k cars in storage, representing 23% of total fleet

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F 2022F 2023F

Calendar Years

Covered hopper Tanks Boxcar Intermodal Flat cars (auto) Other hoppers / gondolas Coal

Manufacturing Flexibility Vital as Demand Changes

10

Long-term average ~50,000 units

Source: FTR Associates – Rail Equipment Outlook (September 2019)

Growing Revenues through Diversification

11Source: Public filings

$749

$2,431

$102

$445

$103

$158

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2006 2019

Revenue (

in m

illio

ns)

Manufacturing Wheels, Repair & Parts Leasing & Services

$3,034

$954

Car types produced:Intermodal & Flat

Cars

Revenue

Car types produced:Tank cars, covered

hoppers, intermodal units, boxcars, automotive carrying railcars, and

gondola cars

Greenbrier has grown and diversified its revenue streams through a broadened product portfolio.

North American Freight Car Fleet

12Source: FTR (September 2019)

306 302 305 320 343 374 408 415 416 418

174 168 164 157 152 147145 143 140 136

242 240 240 240 237 233231 225 217 214

208 199 200 201 201 202206 209 209 212

470 463 471 483 484500

526 542 557 572

128125 124 122 119

114111 111 110 109

1,543 1,511 1,518

1,537 1,549 1,584 1,641 1,657 1,662 1,673

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of Cars, by Type(in thousands)

Other

Boxcars

Covered Hoppers

Flats

Gondolas

Hoppers

Tanks

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Millio

ns

Calendar Years

U.S. Rail Ton-Miles

Aftermarket Demand Drivers

• Wheel demand driven by rail ton-miles, which has been impacted by decline in coal

• Ton-miles and equipment upgrades drive repair spending

13Source: FTR Associates – Rail Equipment Outlook (September 2019)

Leasing & Services Demand Drivers

• Users seek flexibility

• Financial institutions seek yield

• Trend of increasing private (“leasing/shipping companies”) railcar ownership expected to continue

• Creates opportunity for partnering, service contracts and enhanced margins

14

International Markets

62%State

Railroads60%

Private Operator

s15%

Lessors / Shippers

25%

100% = 700,000 units

Estimated European Freight Wagon Ownership

• State railroads own approximately 50-60% of the Western

European freight fleet but this is expected to decrease

• State railroads under intense pressure due to increased

competition from deregulation, stagnant economy, and the

influence of low oil prices which favor transport on roads

– Expected to increase reliance on lessors

• Private rail operators playing an increasingly important role

in the new wagon market

– Taking share from inefficient state railroads

– Adding new and more efficient equipment to their fleets, which further

improves value proposition

16Source: SCI Multiclient Studies – Global Market Trends

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Units

• Replacement demand for ~700,000 railcar fleet with life of 50 years is estimated to be ~14,000 wagons annually implying significant pent-up demand.

• Additional demand increase is currently driven by availability of EU funds designed to take container traffic off the roads to help the continent meet its ambitious carbon reduction goals.

• Ultimately, demand is expected to increase and stay above pre-recession levels

2010-2018 average ~6,000 units

European Deliveries Around Recent Long-term Average

17Source: SCI Multiclient Studies – Global Market Trends

Brazilian Industry Deliveries

18

0

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F

Units

Source: ABIFER (Brazilian Association of the Railroad Industry)

• Greenbrier-Maxion has achieved an average market share of ~60-70%

• Market demand expectations are near recent averages although large infrastructure investments will likely result in significant delivery increases.

2010-2019 average ~3,400 units

0%

10%

20%

30%

40%

50%

60%

70%

Roads Railroads Waterways Pipeline Air Freight

Modal Share Projections

2005 2015 2025

ANTT projects railway modal

share to grow to 31% from 15%

Brazilian Market Outlook - Key Drivers

19

• Market Poised for Growth

• Shift in modal transportation

― Freight rail volumes are expected to increase substantially requiring significant infrastructure and railcar investment over the next several years

• Aging Fleet (market of ~130,000 railcars)

― Nearly 50% of the freight cars in 2018 were 30+ years old with 14,000 over 50 years old

• Other market dynamics

― Increase of innovation, growing exportation of agriculture, and growth in other Latin American markets

Source: ANTT (Brazil’s Department of Transportation)

Unique Strategic Position

Transformational Initiatives Create Diversified Growth Platform

• Improves customer offerings due to diverse product mix at lower-cost, flexible

manufacturing facilities

• Diversifies business mix by expanding repair and wheel maintenance business; large

aftermarket business provides stability and strategic benefits throughout business

cycles

• Enhances leasing activities, capturing more value throughout the railcar life cycle

• Expands available market by increasing throughput and diversifying product portfolio

while maintaining the quality customers demand

• Expands geographic reach into new international markets with entries into Romania,

Brazil, Turkey and Saudi Arabia

21

Greenbrier is stronger today—both operationally and financially—than in previous cycles due to these initiatives.

Customers order cars to lease for their

own use

Greenbrier Manufacturing builds

ordered cars

Revenue recognized by Greenbrier Manufacturing

Two Ways to Sell New Railcars

22

Direct

Lease

Order

Build

Deliver

Lease Syndication

Customers order cars to lease for their own use

Greenbrier Manufacturing builds ordered cars

Cars temporarily reside on Greenbrier’s balance sheet

(i.e. “Leased railcars for Syndication”), generating

lease income for Leasing & Services Unit

Cars aggregated and sold to 3rd party investors (non-recourse to GBX)

•Creates sales price premium due to attached lease•Revenue recognized by Greenbrier Manufacturing

Long term management fees are earned through servicing fleet now owned by investors

•Revenue recognized by Greenbrier Leasing & Services

Order

ManageSyndicateTemporarily Hold

Build

Greenbrier’s unique lease syndication model provides an additional avenue to sell railcars and generated over $1.2 billion of revenue over the last few years

Lease

Direct

Growing Our Addressable Market

24

Since 2007, product diversification and geographic expansion grew the GBX new railcar manufacturing market by ~420%

Source: SCI Multiclient Studies, Global Market Trends, 2017; RSI ARCI, public filings (October 2019)

434,000

1,441,000 1,462,000

700,000

23,000130,000

1,163,000

200,000

200,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2007 2015 Current

Total Addressable Market

N.A. market not addressed by GBX (ex. Coal)Brazil marketTurkey marketEurope maketN.A. market addressed by GBX

1,597,000

2,454,000

1,605,000

100% = 88,116 units

September 2006*100% = 58,127 units

September 2019

*September 30, 2006 represents the industry backlog prior to Greenbrier’s extensive transformations

North American Backlog

GBX, 13%

GBX, 41%ARI, 21%

RAIL, 14% RAIL, 3%

TRN, 36%TRN, 34%

Others, 16%

Others, 21%

0%

20%

40%

60%

80%

100%

$90 $112

$129 $113

$254

$434

$474

$64 $76

$317 $318 $291

$103

$161 $163

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

($ i

n m

illi

on

s)

Adjusted EBITDA

Peak Trough Transition

Average EBITDA during ‘05-’08 peak: $111

Average EBITDA during ‘14-’16 peak: $387

Average EBITDA during ‘17-’19 trough:

$309

Average EBITDA during ’09-’10 trough: $70

Increased Profitability Through Cycles

25

Greenbrier consistently grows earnings through industry peaks and troughs

Greenbrier’s Railcar Backlog

26

4Q FY 2019 orders of 4,900 units worth ~$500 million and backlog of 30,300 units worth ~$3.3 billion ($108 thousand per unit) provides earnings visibility

Provides Earnings Visibility

($ in billions, except per unit values)

$1.4 $1.2

$0.4

$1.2 $1.2 $1.5

$3.3

$4.7

$3.2 $2.8 $2.7

$3.3

$-

$20

$40

$60

$80

$100

$120

$140

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Avera

ge S

ale

s P

rice/U

nit (

$ in thousands)

Balc

klo

g V

alu

e (

$ in b

illio

ns)

Backlog units

16,200 13,400 5,300 15,400 10,700 14,400 31,500 41,300 27,500 28,600 27,400 30,300

1.9x

-1.0x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Net Debt(4) / Adj. EBITDA(2)

0

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Deliv

eries (

in thousands)

Deliveries(1)

$(1.00)

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Adj. EPS(2)

Strong Financial Performance

27

(1) Beginning in 2017, results include Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method(2) Adjusted EPS & Adjusted EBITDA exclude Goodwill impairment, Restructuring charges, ARI acquisition/integration costs and other Special Items (3) Excludes any ARI integration or acquisition-related costs (4) Net debt is defined as Gross funded debt less Cash

Deliveries of 26,000 – 28,000

units

Adj. EPS(3) of $2.60 – 3.00

($ in millions, except EPS)

FY20 Guidance:

Strong liquidity profile continues

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenue

Revenue of ~$3.5 billion

Strong Balance Sheet and Liquidity Provide Flexibility

28

Liquidity Summary ($ in millions)

(1) Net debt is defined as gross debt plus debt discount less cash(2) Adjusted EBITDA exclude gain on contribution to GBW, restructuring charges, goodwill impairment and other special items

5.5x

4.6x

2.7x

2.0x

1.1x

0.5x0.2x

0.0x(0.1x)

1.9x

-1.0x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$99 $50 $54

$97 $185 $173

$223

$611 $531

$330 $105 $192

$299 $304

$321 $268

$350

$339 $450

$312

$204 $242

$353 $401

$506 $441

$573

$950 $981

$641

$0

$200

$400

$600

$800

$1,000

$1,200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Cash Borrowing Availability

Net Funded Debt(1)

/ Adjusted EBITDA(2)

Increase due to ARI acquisition

financing

• Organically in high ROIC projects

• Strategically in core competencies

• Shareholder focused actions

– Over $250 million of capital returned to shareholders through dividends and share repurchase since October 2013

– Board declared quarterly dividend of $0.25 per share ($1.00 annualized), payable December 4, 2019 to shareholders of record as of November 13, 2019

• Since initiating a dividend in July 2014, Greenbrier has established a history of steady increases

• Dividend yield ~3.1% as of October 24, 2019

Balanced Approach to Capital Deployment

29

Strategic Pillars

30

Increase Scale

Talent Pipeline

Core North American Market

International Diversification

ARI Manufacturing Acquisition

32

Grow core North American market

Expand international operations

Grow at scale in new and existing markets

Acquiring ARI’s Manufacturing assets aligns with our strategy and positions us for near and long-term success

Extend talent base through a deeper talent pipeline

GBX Communicated Strategy Acquisition of ARI Manufacturing Assets

ARI Aquisition: Delivering on Our Strategic Commitments

33

Strategic Rationale

Achieves Growth at Scale in Core North American Market through Expanded Product Offering1

Reduces Manufacturing Costs; Improves Efficiency; Diversifies Operations Across America4

Improves Production Footprint and Manufacturing Efficiency through Midwest Locations2

Expands and Deepens Customer Base in Shipper Community3

Achieves Growth at Scale in Core North American Market through Expanded Product Offering

34

North American Industry Overview

Source: Company filings and presentations, FTR September 2019

1

2018 N.A. Fleet

Total Fleet: 1.65M

2019E-2021E N.A. DeliveriesTotal Projected Deliveries:

~150,000

2017 2018

14,100 15,900

2,400 2,200

2017 & 2018 North American Market Deliveries to Third Parties

5%

32%

0%6%

16%

41%

Box Cars

CoveredHopper

Open-TopHopper

Gondolas

Flat Cars

Tank Cars

7%

34%

8%13%

13%

25%

Improves Production Footprint and Manufacturing Efficiency through Midwest Locations

35

• Enhances footprint better serving geographically diverse customer base throughout:

– Canada

– Central U.S.

– Southeast/East U.S. (including strong petrochemical markets)

• Unlocks new cost-saving opportunities through use of best practices, increased vertical integration, maximizing production runs, including smaller production run capabilities, enhanced purchasing power and lower transportation costs

• Castings and axle production provide increased vertical integration benefits

• Strong, highly-skilled workforce with more American jobs

• Opportunity to extend R&D leadership across new product categories

• Benefits including broader product portfolio and enhanced lease syndication opportunities

Complementary North American Manufacturing Footprint

2

ARI Railcar Manufacturing

ARI Component Manufacturing

Marmaduke, AR

Paragould, AR

Jackson, MO

Kennet, MO

Longview, TX

ARI: St. Charles, MO

Headquarters

GBX: Lake Oswego, OR

GBX Railcar Manufacturing

Portland, OR

Monclova, MX

Ciudad Sahagun, MX

Tlaxcala, MX

JV Locations¹

¹ Not pictured in the map.

Axis LLC, Paragould, AK

Ohio Castings LLC, Alliance, OH

Expands and Deepens Customer Base in Shipper Community

36

3

GBX Relatively Stronger Relationship ARI Relatively Stronger Relationship

The strengths of GBX and ARI buyer relationships are complementary across buyer segments including relationships based in GBX’s integrated lease syndication and asset management model

Class I Railroads Shippers

• Greenbrier has strong relationships with Class I Buyers who typically order large volumes of conventional railcars

• ARI sells mainly to shippers and has historically leased much of its production to operating lessors

Operating Lessors

• Greenbrier’s business relies more on large-volume orders of general-service cars, whereas ARI focuses on smaller runs of specialty cars

• Greenbrier and ARI consequently have different historical relationships among operating lessors

• Historically, ARI has purchased railcars for its own leasing fleet and/or for its former affiliate, ARL

• ARI has strong relationships with shippers, especially in the Midwestern and Southeastern U.S.

• ARI is proficient in smaller order production runs & Greenbrier offers larger order sizes for both general freight and tank cars

Reduces Manufacturing Costs; Improves Efficiency; Diversifies Operations Across America

37

At least $30 Million of identified, run-rate annual cost synergies expected to be achieved within the first 24 months after closing

Supply Chain Savings

SG&A Savings

Cost Savings from Vertical Integration

Integration team identified and coordinated to develop seamless execution of business combination and synergy attainment

4

Immediately accretive to adjusted EPS

Strong cash flow generation supported by:

— Operating cash flow

— Synergies

— Tax attributes

GBX to maintain attractive capital structure with ample liquidity at transaction close through existing revolver and cash on hand

Savings from Increased Efficiency

Lower Transportation Costs

Enhanced Tank Car Lining Capability

Manufacturing cost savings resulting from geographic advantages of operating locations and expansion of U.S.-based workforce

Flexible balance

sheet supports

strategy

Clear Path to Growth and Shareholder Value

38

Product and

customer diversity

provides visibility

Unique model that

enhances financial

performance across

the cycle, with

powerful cross

selling opportunities

Grow our core

North American

market and

diversify

internationally into

growing rail

markets

Solid Railcar Backlog

Diversified Revenue Streams

Strong Balance Sheet & Liquidity

Focus During Current Market

Appendix

4Q FY 2019 Key Metric Highlights

40

• Backlog 30,300 units valued at $3.3 billion

– Diverse backlog includes tank cars, covered hoppers, intermodal units, boxcars, automotive carrying railcars and gondola cars

• Deliveries of 7,300 units including syndication activity of 1,800 units

• Orders for 4,900 diversified railcars were received during the quarter, valued at over $500 million

27,400 27,500

26,000 26,100

30,300

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Backlog

6,000

4,500 5,100

6,500 7,300

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Deliveries(1)

500 300

1,200

1,500

1,800

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Syndicated Deliveries

(1) Results include Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method

4Q FY 2019 Income Statement Highlights

41

• Record revenue of $914.2 million

• Gross margin of 14.6%

• Adjusted EBITDA of $109.4 million

– Adjusted EBITDA margin of 12.0%

• Adjusted Diluted EPS of $1.31

$689.2 $604.5 $658.7

$856.2 $914.2

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Revenue ($ millions)

(1) See Slides 47 and 49 for reconciliation

Adjusted(1) EBITDA ($ millions)

$75.3 $58.3

$38.8

$84.4

$109.4

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

$0.80

$0.56

$0.11

$0.89

$1.31

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Adjusted(1) EPS

4Q FY 2019 Balance Sheet & Cash Flow Highlights

42

• Positive operating cash flow due to timing of leased railcars for syndication

• Quarterly dividend of $0.25 per share or an annualized rate of $1.00

• Nearly $650 million of available liquidity

(1) Investment in Unconsolidated Affiliates included to reflect investments in unconsolidated joint ventures(2) Excludes debt discounts and issuance costs

$23.7

$(97.1)

$(49.5)

$52.5 $72.9

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

$39.8

$3.8

$39.9

$14.9 $23.5

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

$(33.2) $80.0 $198.4 $180.2

$558.0

4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Operating Cash Flow ($ millions)

Net Capex & Invest. in Unconsol. Affiliates(1) ($ millions)

Net Funded Debt(2) ($ millions)

Manufacturing

43

Quarterly Trends

Revenue and Gross Margin % FY20 Outlook

• 40% increase in revenue from 4Q 2018 driven by 29% increase in deliveries and improved product mix

• Quarter over quarter gross margin increase primarily driven by higher deliveries and increased syndication activity

• Marine backlog of ~$100 million

• Deliveries of 26,000 to 28,000 units including Greenbrier-Maxion (Brazil) which will account for approximately 2,000 units

• Capital expenditures are expected to be approximately $95 million, primarily related to enhancements of our existing manufacturing facilities and newly owned facilities

($ in millions) 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Revenues $ 571.2 $ 471.8 $ 476.0 $ 681.6 $ 802.1

Gross Margin $81.7 $54.0 $33.0 $90.8 $116.1

Gross Margin % 14.3% 11.4% 6.9% 13.3% 14.5%

Operating Margin % 10.9% 7.8% 2.9% 10.6% 11.8%

Capital Expenditures $25.6 $17.5 $23.0 $20.3 $24.3

New Railcar Backlog $2,750 $2,690 $2,660 $2,740 $3,280

New Railcar Backlog (units) 27,400 27,500 26,000 26,100 30,300

Deliveries (units) (1) 5,600 4,200 4,500 6,500 7,300

4Q Business Conditions

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Revenue Gross Margin

(1) Excludes Brazil deliveries since they do not impact Manufacturing Revenue and Margins.

Quarterly Trends

Revenue and Gross Margin % (1) FY20 Outlook

• Lower volumes driven by decreased rail traffic

• Gross margin increase due to improved Wheels and Parts profitability partially offset by Repair operations

• Capital expenditures are expected to be approximately $15 million, primarily related to enhancements to our existing facilities

• Strategic evaluation and optimization of the railcar repair network continues

4Q Business Conditions

($ in millions) 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Revenues $85.8 $108.5 $125.3 $125.0 $85.7

Gross Margin $6.5 $7.6 $6.8 $5.2 $4.1

Gross Margin % 7.6% 7.0% 5.4% 4.1% 4.7%

Operating Margin % 4.3% 3.0% 2.3% (7.1%) (0.2%)

Capital Expenditures $3.6 $2.1 $1.1 $1.9 $8.2

(1) Pre-2014 results include legacy Repair operations which were contributed to GBW Railcar JV in July 2014. In August 2018, the GBW Railcar Services joint venture was dissolved resulting in 12 repair locations returning to Greenbrier which are included in the Wheels, Repair & Parts segment.

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Wheels, Repair & Parts

44

Leasing & Services

45

Quarterly Trends

Revenue and Gross Margin %

FY20 Outlook

• Revenue decrease primarily due to less secondary market syndication activity

• More normalized margin levels reflecting less secondary market syndication activity

• Capital expenditures (including corporate) are expected to be approximately $30 million, with $95 million of Proceeds from the sale of leased assets

• Continued growth in management services

4Q Business Conditions

($ in millions, except managed fleet) 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Revenues $32.2 $24.2 $57.4 $49.6 $26.4

Gross Margin $17.7 $11.0 $14.0 $10.6 $13.4

Gross Margin % 54.9% 45.4% 24.4% 21.4% 50.7%

Operating Margin % 54.2% 72.4% 36.7% 30.9% 41.2%

Net Capital Expenditures(1) $5.5 ($25.4) $16.0 ($7.3) ($8.9)

Managed fleet (000’s) 357 358 372 374 380

Lease Fleet Utilization 94.4% 94.9% 97.4% 97.3% 93.3%

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(1) Includes corporate expenditures and is net of proceeds from sale of equipment.

Leasing & Services Supplemental Information

46

Owned & Managed Fleet

• Owned Equipment on operating lease ‘right-sized’ over last few years

― Asset sales to MUL will be largely reinvested and will refresh tax profile of the fleet

― Secures Leasing term loan with a current balance of $217.1 million

• Managed fleet services include railcar remarketing, maintenance management, car hire accounting and various other services

― Accounts for ~22% of North American railcar fleet

Lease Syndication Model

• Over $1.2 billion of Syndication volume during the last few years (reported in Manufacturing segment)

• One of two channels to market, expanding customer universe beyond traditional base

• Dwell time of rent producing railcars on balance sheet (“Leased railcars for syndication”) averages 3 months, as railcar leases are aggregated and sold in bundles to investors

• In addition to premium pricing above direct sales, creates stream of multi-year management fee income

• Able to source externally produced railcars to diversify offerings

Fleet Information

Units Aug. 31, 2018 Nov. 30, 2018 Feb. 28, 2019 May 31, 2019 Aug. 31, 2019

Long term owned units (“Equipment on operating lease”)

6,300 5,900 7,700 6.900 6,500

Short term owned units(“Leased railcars for syndication”)

1,800 3,700 2,900 2,000 2,900

Total owned fleet 8,100 9,600 10,600 8,900 9,400

Managed fleet (units) 357,000 358,000 372,000 374,000 380,000

Quarterly Adjusted EBITDA Reconciliation

47

Supplemental DisclosureReconciliation of Net Earnings to Adjusted EBITDA(In millions, unaudited)

Quarter Ending

Aug. 31, 2018

Nov. 30, 2018

Feb. 28, 2019

May 31, 2019

Aug. 31, 2019

Net earnings $37.2 $23.4 $5.8 $25.8 $50.8

Goodwill impairment - - - 10.0 -

ARI acquisition costs - - - 5.8 11.0

Interest and foreign exchange 8.8 4.4 9.2 9.8 7.5

Income tax expense 10.1 9.1 2.3 13.0 17.2

Depreciation and amortization 19.2 20.7 20.1 20.0 22.9

Adjusted EBITDA $75.3 $57.6 $37.4 $84.4 $109.4

See slide 51 for definition of Adjusted EBITDA

Supplemental DisclosureReconciliation of Net Earnings (loss) to Adjusted EBITDA(In millions, unaudited)

Year Ending August 31,

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Net earnings (loss) $8.3 $8.4 $61.2 ($5.4) $149.8 $265.3 $284.8 $160.5 $172.1 $105.8

Interest and foreign exchange 45.2 37.0 24.8 22.2 18.7 11.2 13.5 24.2 29.3 31.0

Income tax expense (benefit) (0.9) 3.5 32.4 25.1 72.4 112.2 112.3 64.0 32.9 41.6

Depreciation and amortization 37.5 38.3 42.4 41.4 40.4 45.1 63.4 65.1 74.4 83.7

ARI acquisition costs - - - - - - - - - 18.8

Goodwill impairment(1) - - - 76.9 - - - 3.5 9.5 10.0

Gain on contribution to GBW - - - - (29.0) - - - - -

Loss (gain) on debt extinguishment

(2.1) 15.7 - - - - - - - -

Special items (11.9) - - 2.7 1.5 - - - - -

Adjusted EBITDA $76.1 $102.9 $160.8 $162.9 $253.8 $433.8 $474.0 $317.3 $318.2 $290.9

See slide 51 for definition of Adjusted EBITDA

(1) 2013 and 2019 Goodwill impairment relates to our Wheels, Repair and Parts segment. 2017 and 2018 Goodwill impairment reflects our portion of a Goodwill impairment change recorded by GBW.

Annual Adjusted EBITDA Reconciliation

48

Quarterly Adjusted EPS Reconciliation

49

Quarter Ending

Aug. 31, 2018

Nov. 30, 2018

Feb. 28, 2019

May 31, 2019

Aug. 31, 2019

Net earnings attributable to Greenbrier

$30.9 $18.0 $2.8 $15.3 $35.1

Goodwill impairment - - - 10.0 -

ARI acquisition costs (after-tax) - - - 4.3 8.2

Non-recurring Tax Act (benefit) (4.5) - - - -

Adjusted net earnings $26.4 $18.0 $2.8 $29.6 $43.3

Weighted average diluted shares outstanding

33.0 33.1 33.2 33.2 33.2

Adjusted EPS $0.80 $0.54 $0.08 $0.89 $1.31

See slide 51 for definitions of Adjusted net earnings and Adjusted EPS

Supplemental DisclosureReconciliation of Net Earnings Attributable to Greenbrier to Adjusted Net Earnings(In millions, except per share amounts, unaudited)

Year Ending August 31,

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Net earnings (loss) attributable to Greenbrier $4.3 $6.5 $58.7 ($11.1) $111.9 $192.8 $183.2 $116.1 $151.8 $71.1

Goodwill impairment(1) - - - 71.8 - - - 3.5 9.5 10.0

ARI acquisition costs (after-tax) - - - - - - - - - 14.1

Gain on contribution to GBW (after-tax)

- - - - (13.6) - - - - -

Loss (gain) on debt extinguishment (after-tax)

(1.3) 9.4 - - - - - - - -

Non-recurring Tax Act (benefit) - - - - - - - - (27.4) -

Special items (after-tax) (11.9) - - 1.8 1.0 - - - - -

Adjusted net earnings (loss) ($8.9) $15.9 $58.7 $62.5 $99.3 $192.8 $183.2 $119.6 $133.9 $95.2

Weighted average diluted shares outstanding

20.2 26.5 33.7 34.2 34.2 33.3 32.5 32.6 32.8 33.2

Adjusted EPS ($0.44) $0.60 $1.91 $2.00 $3.07 $5.93 $5.73 $3.76 $4.13 $2.87

Supplemental DisclosureReconciliation of Net Earnings (loss) Attributable to Greenbrier to Adjusted Net Earnings (loss)(In millions, except per share amounts, unaudited)

See slide 51 for definitions of Adjusted net earnings and Adjusted EPS

(1) 2013 and 2019 Goodwill impairment relates to our Wheels, Repair and Parts segment. 2017 and 2018 Goodwill impairment reflects our portion of a Goodwill impairment change recorded by GBW.

Annual Adjusted EPS Reconciliation

50

Adjusted Financial Metric Definition

51

Adjusted EBITDA, Adjusted net earnings attributable to Greenbrier, Adjusted diluted EPS and Diluted EPS range excluding integration and acquisition-related expenses from the ARI acquisition are not financial measures under generally accepted accounting principles (GAAP). These metrics are performance measurement tools used by rail supply companies and Greenbrier. You should not consider these metrics in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because these metrics are not a measure of financial performance under GAAP and are susceptible to varying calculations, the measures presented may differ from and may not be comparable to similarly titled measures used by other companies.

We define Adjusted EBITDA as Net earnings before Interest and foreign exchange, Income tax expense (benefit), Depreciation and amortization and excluding the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe the presentation of Adjusted EBITDA provides useful information as it excludes the impact offinancing, foreign exchange, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company’s core business. We believe this assists incomparing our performance across reporting periods.

Adjusted net earnings attributable to Greenbrier and Adjusted diluted EPS excludes the impact associated with items we do not believe are indicative of our core business or which affect comparability. Diluted EPS range excluding integration and acquisition-related expenses from the ARI acquisition exclude integration and acquisition-related expenses from the ARI acquisition. We believe this assists in comparing our performance across reporting periods.

NYSE: GBXNovember 2019

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