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Item 7. Management’s Discussion and Analysis

2023-10-25 compared with 2022-10-31 · 363 added, 406 removed, 1149 unchanged (40% of the section changed)

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Executive Summary

The financial results for 2022 reflect a year of transition and agility.

We delivered strong results despite a volatile macroeconomic environment.

We identify a few general trends impacting our business at present, all of which we believe are reflected in our results for the year ended August 31, 2022.

First, we believe the North American freight rail equipment market continues to emerge from the cyclical decrease in economic activity which began prior to the emergence of COVID-19.

Second, we believe global economic activity continues to recover from the historic decrease resulting from the COVID-19 pandemic.

We were able to leverage these trends to accomplish the following:

Significant increases in production throughout 2022;

Growth in new order activity year over year;

The financial results for 2023 reflect another year of transformation and profitable growth.

We delivered strong results despite challenges that impacted our business throughout the year.

We identified a few general trends that impacted our business, all of which we believe are reflected in our results for the year ended August 31, 2023.

Overall, demand for our products and services remains strong in the marketplace.

Supply chain challenges, inflation, rising interest rates, rail service congestion and labor shortages continued to impact our business and required focused attention from management.

We were able to manage these factors to accomplish the following in 2023:

Achieved record annual revenues and deliveries;

Strong ending backlog value and units;

Despite these accomplishments, inflation, rising interest rates, price volatility, supply chain disruptions and geopolitical disquiet, demand concerted management focus for successful execution across the business.

We believe we have the necessary management expertise and are well-positioned to navigate the immediate challenges.

While we believe the current market and broader economic environment most likely will present many positive opportunities for our business, as we navigate the recovery, we face a number of challenges which include:

Inflation and policy reactions thereto, currency volatility and rising interest rates;

An increase in the price and the shortage of certain materials and components;

Shipping and transportation delays;

Shortages of skilled labor;

Adverse effects on the European market and the global economic markets, generally from the war in Ukraine.

Increased our quarterly dividend 11% at Q3;

Repurchased 1.9 million shares.

We also launched a multi-year strategy during the year which we outlined at our first-ever Investor Day in April 2023.

The strategy has three basic tenets:

Maintain our manufacturing leadership position across geographies;

Optimize our industrial footprint for efficiency and margin enhancement while addressing the needs of our customers;

Increase our recurring revenue to reduce the impact of manufacturing cyclicality.

Our strategic focus aligns with three financial goals.

Those are (a) increasing recurring revenue, (b) expanding our aggregate gross margin and (c) raising our return on invested capital.

As part of our strategic goal to optimize our footprint, during the year we launched a review of our global business capacity.

This resulted in three divestitures, including our Gunderson Marine business and closure of our Gunderson Facility, Southwest Steel, a foundry business in Longview, Texas, and our interest in Rayvag, a manufacturing facility located in Turkey.

Additionally, we acquired the minority interest in GBX Leasing from our partner, and now wholly own our lease fleet.

Business Highlights

Despite the challenging operating environment, we achieved the following accomplishments in 2022:

We progressively increased our revenue during the year.

The sequential growth in revenue was primarily driven by higher deliveries throughout the year.

Our revenue increased by $1.2 billion and 70.4% compared to the prior year driven by a 65.5% increase in railcar deliveries.

In February 2022, we completed our first offering of railcar asset-backed securities.

In September 2021, we acquired more than 3,600 railcars in a successful portfolio acquisition.

The railcar acquisition advanced our strategy to increase the scale of our lease fleet assets.

We increased our global headcount by nearly 40% during a challenging labor market to support higher levels of business activity.

Despite the challenging operating environment, we accomplished the following in 2023:

Revenue increased by $966.3 million and 32.5% compared to the prior year, driven primarily by a 33.2% increase in railcar deliveries;

Margin improved $135.1 million and 44.2% compared to the prior year, driven primarily by a 33.2% increase in railcar deliveries and operating efficiencies across segments;

Added 1,200 railcars to our owned lease fleet, representing nearly 10% growth during the year;

Increased Earnings from Operations by $58.4 million and 49.5% compared to the prior year.

The improvement was primarily attributed to higher deliveries and operating efficiencies across the business.

This increase was partially offset by $46.7 million of charges associated with the divestitures previously discussed.

Manufacturing Backlog

Our backlog remains strong at August 31, 2022 with an increase in backlog units and value highlighted by the following:

Our backlog remains strong at August 31, 2023 and includes a diverse portfolio of railcar types, highlighted by the following:

Our railcar backlog was 30,900 units with an estimated value of $3.8 billion as of August 31, 2023 with deliveries that extend into 2026.

We generated new railcar orders of 24,600 units valued at approximately $2.9 billion.

We increased our backlog compared to the prior year by approximately 2,900 units and $670 million.

In addition to our new railcar backlog, we had sustainable conversion orders at August 31, 2022 of approximately $180 million.

Backlog units for lease may be syndicated to third parties or held in our lease fleet depending on a variety of factors.

During 2023, we generated new railcar orders of 30,000 units valued at approximately $3.8 billion.

We increased our backlog compared to the prior year by approximately 1,400 units.

Our backlog includes $970 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.

Multi-year supply agreements are a part of rail industry practice.

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Under terms of the orders, the exact mix and pricing will be determined in the future, which may impact backlog.

Approximately 6% of backlog units and estimated backlog value as of August 31, 2022 was associated with our Brazilian manufacturing operations which is accounted for under the equity method.

Marine backlog as of August 31, 2022 was $31 million with deliveries that extend into 2023.

Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations.

Certain orders in backlog are subject to customary documentation and completion of terms.

Approximately 3% of backlog units and 2% of estimated backlog value as of August 31, 2023 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 and conditions.

Customers may attempt to cancel or modify orders in backlog.

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Net gain on disposition of equipment

Asset impairment, disposal, and exit costs

Earnings from operations

Interest and foreign exchange

Net loss on extinguishment of debt

Earnings (loss) before income tax and earnings from

unconsolidated affiliates

Income tax (expense) benefit

Earnings before income tax and earnings from unconsolidated affiliates

Income tax expense

Earnings before earnings from unconsolidated affiliates

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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) benefit for either external or internal reporting purposes.

Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

Year Ended August 31,

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The 32.5% increase in revenue for the year ended August 31, 2023 as compared to the prior year was primarily due to an 35.6% increase in Manufacturing revenue.

The increase in Manufacturing revenue was primarily attributed to a 65.5% increase in railcar deliveries.

The increase in Manufacturing revenue was primarily attributed to a 33.2% increase in railcar deliveries and higher syndication revenues.

The 31.1% increase in cost of revenue for the year ended August 31, 2023 as compared to the prior year was primarily due to a 34.0% increase in Manufacturing cost of revenue.

The increase in Manufacturing cost of revenue was primarily attributed to a 65.5% increase in railcar deliveries and higher steel and other input costs in the current year.

The increase in Manufacturing cost of revenue was primarily attributed to a 33.2% increase in railcar deliveries and higher material and other input costs in the current year.

Margin as a percentage of revenue was 11.2% and 10.3% for the years ended August 31, 2023 and 2022, respectively.

The overall margin as a percentage of revenue was negatively impacted by a decrease in Manufacturing margin from 9.3% to 7.1% was primarily attributed to higher costs and inefficiencies in our Manufacturing operations in part due to ramping up production.

Many of our customer contracts include price escalation provisions.

When certain of our manufacturing costs increase, we are able to increase the sales price to our customers.

While this has no impact to our margin dollars, the increase in revenue and cost of sales has a negative impact to our margin as a percentage of revenue.

The $14.5 million increase in net earnings attributable to Greenbrier for the year ended August 31, 2022 as compared to the prior year was primarily due to the following:

An increase in margin dollars primarily due to higher railcar deliveries and syndication revenue for the year ended August 31, 2022.

An increase in Net gain on disposition of equipment for the year ended August 31, 2022.

These were partially offset by:

The income tax benefit for the year ended August 31, 2021, which primarily related to accelerated depreciation and the impact of the CARES Act which allowed us to carry back tax losses to years when tax rates were higher, resulting in a tax benefit.

An increase in Selling and administrative expense for the year ended August 31, 2022 primarily attributed to higher employee related costs as well as higher costs for legal, consulting and travel associated with increased business activity.

Consolidated Margin as a percentage of revenue was positively impacted by an increase in Manufacturing Margin from 7.1% to 8.2% primarily attributed to operating at consistently higher production levels during the current year.

The $15.6 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2023 as compared to the prior year was primarily due to an increase in margin dollars that was mainly attributable to higher railcar deliveries and syndications.

This was partially offset by:

The net impact of divestitures totaled $46.7 million during the year ended August 31, 2023.

Higher Interest and foreign exchange expense in the current year primarily attributed to an increase in interest expense from higher interest rates and borrowings.

A lower Net gain on disposition of equipment for the year ended August 31, 2023.

For discussion related to the results of operations and changes in financial condition for 2022 compared to 2021 refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K, which was filed with the United States Securities and Exchange Commission on October 31, 2022.

Manufacturing Segment

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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.

We also manufacture a broad range of ocean-going and river barges for transporting merchandise between ports within the United States.

Manufacturing revenue increased $1.2 billion or 88.9% for the year ended August 31, 2022 compared to the prior year.

The increase in revenue was primarily attributed to a 65.5% increase in railcar deliveries.

The increase was also due to the additional revenue associated with an increase in steel and other input costs during the year ended August 31, 2022, as many of our customer contracts include price escalation provisions when certain of our manufacturing costs increase.

Manufacturing cost of revenue increased $1.1 billion or 93.5% for the year ended August 31, 2022 compared to the prior year.

The increase in cost of revenue was primarily attributed to a 65.5% increase in the volume of railcar deliveries and higher steel and other input costs as well as inefficiencies in our Manufacturing operations in part due to ramping up production and supply chain issues during the year ended August 31, 2022.

Manufacturing margin as a percentage of revenue decreased 2.2% for the year ended August 31, 2022 compared to the prior year.

The decrease in margin percentage for the year ended August 31, 2022 was primarily attributed to higher costs and inefficiencies in our Manufacturing operations in part due to ramping up production.

Many of our customer contracts include price escalation provisions.

When certain of our manufacturing costs increase, we are able to increase the sales price to our customers.

While this has no impact to our margin dollars, the increase in revenue and cost of sales has a negative impact to our margin as a percentage of revenue.

In addition, the margin percentage for year ended August 31, 2021 benefited from a $15.8 million favorable resolution of warranty and other loss contingencies associated with our international operations.

Manufacturing operating profit increased $48.9 million for the year ended August 31, 2022 compared to the prior year.

The increase in operating profit was primarily attributed to an increase in railcar deliveries.

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 increased $881.1 million or 35.6% for the year ended August 31, 2023 compared to the prior year.

The increase in revenue was primarily attributed to a 33.2% increase in railcar deliveries, including syndications and higher average selling price.

Manufacturing cost of revenue increased $782.5 million or 34.0% for the year ended August 31, 2023 compared to the prior year.

The increase in cost of revenue was primarily attributed to a 33.2% increase in the volume of railcar deliveries and higher material and other input costs during the year ended August 31, 2023.

Manufacturing Margin as a percentage of revenue increased 1.1% for the year ended August 31, 2023 compared to the prior year.

The increase in Margin percentage for the year ended August 31, 2023 was primarily attributed to operating at consistently higher production levels.

This was partially offset by increased costs associated with component outsourcing to support the higher production.

Manufacturing operating profit increased $43.7 million or 45.0% for the year ended August 31, 2023 compared to the prior year.

The increase in operating profit was primarily attributed to an increase in railcar deliveries at improved margins and included the $46.7 million of net loss on divestitures in 2023.

Maintenance Services Segment

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

Our Maintenance Services segment generates revenue from wheel and axle servicing, railcar maintenance and the production of a variety of component parts in North America.

Maintenance Services revenue increased $58.7 million or 16.9% for the year ended August 31, 2023 compared to the prior year.

The increase was primarily attributed to higher volumes due to increased demand and an increase in scrap metal pricing and volume as we scrap wheels and other components.

The increase was primarily attributed to improved pricing and higher volumes.

This was partially offset by lower scrap metal pricing in the current year.

Maintenance Services cost of revenue increased $42.0 million or 13.0% for the year ended August 31, 2023 compared to the prior year.

The increase was primarily due to higher costs associated with an increase in volumes and an increase in material and labor costs.

The increase was primarily due to higher costs associated with operating at higher volumes.

Maintenance Services Margin as a percentage of revenue increased 3.0% for the year ended August 31, 2023 compared to the prior year.

The increase in margin percentage was primarily attributed to an increase in volumes and scrap metal pricing.

These were partially offset by higher material and labor costs during the year ended August 31, 2022.

The increase in Margin percentage was primarily attributed to improved pricing and operating efficiencies.

This was partially offset by lower scrap metal pricing in the current year.

Maintenance Services operating profit increased $15.2 million or 70.0% for the year ended August 31, 2023 compared to the prior year.

The increase in operating profit was primarily attributed to higher volumes and an increase in scrap metal pricing and lower selling and administrative costs.

The increase was primarily attributed to the improved Margins discussed above and higher volumes.

This was partially offset by lower scrap metal pricing in the current year.

Leasing & Management Services Segment

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Our Leasing & Management Services segment generates revenue from leasing railcars from our lease fleet which includes GBX Leasing, providing various management services, syndication revenue associated with new railcar sales with leases attached, interim rent on leased railcars for syndication and the sale of railcars purchased from third parties with the intent to resell.

The gross proceeds from the sale of these railcars are recorded in revenue and the costs of purchasing these railcars are recorded in cost of revenue.

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 $26.5 million or 17.3% for the year ended August 31, 2023 compared to the prior year.

The increase was primarily attributed to higher syndication revenue from an increase in the volume of new railcar sales with leases attached as well as higher revenue from additions to our lease fleet.

In addition, revenue for the year ended August 31, 2021 benefited from a lease modification and transfer fee.

The increase was primarily attributed to higher lease rents due to higher lease rates and a larger fleet as well as higher interim rents on railcars for syndication.

Leasing & Management Services cost of revenue increased $6.7 million or 13.7% for the year ended August 31, 2023 compared to the prior year.

The increase was primarily due to an increase in costs from the additions to our lease fleet, partially offset by lower costs associated with railcars we had purchased from third parties with the intent to resell.

The increase was primarily due to higher costs from owning a larger fleet.

Leasing & Management Services Margin as a percentage of revenue increased 0.9% for the year ended August 31, 2023 compared to the prior year.

The increase in margin percentage was primarily attributed to higher syndication activity.

In addition, the margin percentage for the year ended August 31, 2021 was negatively impacted by higher sales of railcars that we purchased from third parties which have lower margin percentages.

Leasing & Management Services operating profit increased $39.4 million or 57.2% for the year ended August 31, 2022 compared to the prior year.

The increase was primarily attributed to an increase of $32.5 million net gain on disposition of equipment and higher syndication activity.

The increase in Margin percentage was primarily attributed to higher lease rates and growth of the lease fleet.

Leasing & Management Services operating profit decreased $5.0 million or 4.6% for the year ended August 31, 2023 compared to the prior year.

The decrease was primarily attributed to lower Net gains on disposition of equipment for the year ended August 31, 2023, partially offset by higher Margin as a result of growth in the lease fleet.

Selling and Administrative

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Selling and administrative expense was $235.3 million or 6.0% of revenue for the year ended August 31, 2023 and $225.2 million or 7.6% of revenue for the year ended August 31, 2022.

The $33.4 million increase was primarily attributed to higher employee related costs as well as higher costs for legal, consulting and travel associated with increased business activity.

The $10.1 million increase was primarily attributed to higher employee related and IT support costs, partially offset by lower legal costs.

Net Gain on Disposition of Equipment

Net gain on disposition of equipment primarily 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 accommodate customer demand and to manage risk and liquidity.

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 $17.3 million and $37.2 million for the years ended August 31, 2023 and 2022, respectively.

The increase in Net gain on disposition of equipment was primarily attributed to sales of assets from our lease fleet during the year ended August 31, 2022.

The decrease in Net gain on disposition of equipment was primarily attributed to fewer sales of assets from our lease fleet during the year ended August 31, 2023.

Asset Impairment, Disposal and Exit Costs

Asset impairment, disposal, and exit costs in the current year included total charges associated with the Gunderson Facility of $40.7 million and a divestiture of Southwest Steel of $9.7 million, partially offset by a gain on disposal of our majority ownership interest in the Rayvag joint venture of $3.7 million.

Interest and Foreign Exchange

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Interest and other expense

Foreign exchange (gain) loss

The $14.1 million increase in interest and foreign exchange expense during the year ended August 31, 2022 compared to the prior year was primarily attributed to an increase in interest expense from higher levels of borrowings and interest rates.

Net Loss on Extinguishment of Debt

Net loss on extinguishment of debt was $6.3 million for the year ended August 31, 2021 relates to the retirement of $227.3 million of our 2.875% convertible notes due 2024 and $50.0 million of our 2.25% convertible notes due 2024.

Foreign exchange loss

The $28.0 million increase in Interest and foreign exchange expense during the year ended August 31, 2023 compared to the prior year was primarily attributed to an increase in interest expense from higher interest rates and borrowings.

The $4.5 million change in Foreign exchange loss was primarily attributed to the change in the Mexican Peso's exchange rate relative to the U.S.

In 2023 our income tax expense was $24.6 million on $91.0 million of pre-tax earnings for an effective tax rate of 27.0%.

The rate was higher than the U.S.

statutory tax rate primarily due to the geographic mix of earnings and U.S.

taxes on profits in foreign jurisdictions, offset by net favorable impacts related to changes in foreign currency exchange rates for our U.S.

Dollar denominated foreign operations.

In 2022 our income tax expense was $18.1 million on $60.6 million of pre-tax earnings for an effective tax rate of 29.9%.

The tax rate was primarily attributable to the geographic mix of earnings, partially offset by net favorable discrete items.

In 2021 our income tax benefit was $40.2 million on $8.6 million of pre-tax loss.

The tax benefit was primarily attributable to accelerated depreciation and impact of the CARES Act which allowed us to carry back tax losses to years when tax rates were higher, resulting in a tax benefit.

The tax benefit is primarily derived from the U.S.

Federal tax rate differential between 2016 - 2017 tax rates of 35% and the current rate of 21%.

The effective tax rate can fluctuate year-to-year due to discrete items and 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 (loss) before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax (expense) benefit.

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

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Earnings from unconsolidated affiliates was $9.2 million and $11.3 million for the years ended August 31, 2023 and 2022, respectively.

The increase was primarily attributable to higher profitability at our Brazil operations.

The decrease was primarily related to lower sales volumes at our Brazil operations.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest was $13.1 million and $6.9 million for the years ended August 31, 2023 and 2022, respectively, which 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.

The increase from the prior year is primarily a result of an increase in earnings due to improved operating results at our European operations and the gain on sale of Rayvag.

Liquidity and Capital Resources

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(In millions)

Net cash used in operating activities

Net cash provided by (used in) operating activities

Net cash used in investing activities

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Cash Flows From Operating Activities

The change in cash used in operating activities for 2022 compared to 2021 was primarily due to a net increase in working capital as we increased production rates and from higher steel and other input costs.

Cash flows from operating activities benefited from a cash tax refund received in 2022.

The change in cash provided by (used in) operating activities for 2023 compared to 2022 was primarily due to an increase in Net earnings and net favorable change in working capital driven by more efficient working capital usage when compared to the prior year.

Cash Flows From Investing Activities

Cash used in investing activities primarily relates to capital expenditures net of proceeds from the sale of assets and investment activity with our unconsolidated affiliates.

The change in cash used in investing activities for 2022 compared to 2021 was primarily attributable to an increase in capital expenditures partially offset by an increase in proceeds from the sale of assets.

The increase in capital expenditures in 2022 primarily relates to additions to our lease fleet as part of our leasing strategy.

Cash used in investing activities primarily relates to capital expenditures net of proceeds from the sale of assets, divestitures during the year and investment activity with our unconsolidated affiliates.

The change in cash used in investing activities for 2023 compared to 2022 was primarily attributable to a decrease in proceeds from the sale of assets.

Year Ended August 31,

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Total capital expenditures (net of proceeds)

Capital expenditures primarily relate to additions to our lease fleet and on-going investments into our facilities, including 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.

Capital expenditures primarily relate to additions to our lease fleet and on-going investments into our facilities, including the safety, productivity and efficiency of our facilities.

Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Management Services and divestitures previously discussed.

Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity.

Capital expenditures for 2024 are expected to be approximately $280 million for Leasing & Management Services, approximately $190 million for Manufacturing and approximately $15 million for Maintenance Services.

Capital expenditures for 2023 primarily relate to additions to our lease fleet reflecting our enhanced leasing strategy and continued investments into the safety and productivity of our facilities.

Capital expenditures for 2024 primarily relate to additions to our lease fleet and continued investments into the safety and productivity of our facilities.

Proceeds from sales of assets are expected to be approximately $80 million for 2024.

Cash Flows From Financing Activities

The change in cash provided by (used in) financing activities for 2022 compared to 2021 was primarily attributed to proceeds from the issuance of debt, net of repayments.

During the year ended August 31, 2022 we issued asset backed securities of $323.3 million, and used proceeds to pay down our warehouse credit facility for GBX Leasing.

We also amended our $200 million term facility to provide an additional $75 million in term debt, with another $75 million available as a delayed draw within the next six months.

During 2021, we refinanced certain debt by issuing $373.8 million of new convertible notes due 2028 and retiring a total of $277.3 million of convertible notes due 2024.

We also renewed and extended our $600.0 million domestic revolving facility, $291.9 million term loan to 2026 and $200.0 million term loan until August 2027.

GBX Leasing entered into its initial $300.0 million non-recourse warehouse credit facility, which was increased to $350 million in 2022.

The change in cash provided by (used in) financing activities for 2023 compared to 2022 was primarily attributed to lower net proceeds from the issuance of debt and higher share repurchases.

During the year ended August 31, 2023 we paid off the North America credit facility, drew the remaining $75.0 million on our leasing term loan facility and drew $139.9 million on the GBXL warehouse credit facility as we continued to grow the fleet.

During 2022 we issued asset backed securities of $323.3 million, and used proceeds to pay down our warehouse credit facility for GBX Leasing.

We also amended our $200 million term facility to provide an additional $75.0 million in term debt.

Dividend & Share Repurchase Program

A quarterly dividend of $0.30 per share was declared on October 18, 2023.

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, 2023.

The amount remaining for repurchase was $100.0 million as of August 31, 2022.

Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time to time.

The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors.

The Board of Directors has authorized our company to repurchase in aggregate up to $100.0 million of our common stock.

The program may be modified, suspended, or discontinued at any time without prior notice.

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 share repurchase program does not obligate us to acquire any specific number of shares in any period.

There were no shares repurchased under the share repurchase program during 2022, 2021 or 2020.

The prior authorization was set to expire on January 31, 2023.

On January 5, 2023, the Board of Directors authorized the extension of the existing share repurchase program to January 31, 2025.

During the year ended August 31, 2023, we purchased a total of 1.9 million shares for $56.9 million, of which 1.8 million shares for $53.6 million were purchased under the current authorization of the share repurchase program.

As of August 31, 2023, the amount remaining for repurchase under the share repurchase program was $46.4 million.

There were no shares repurchased under the share repurchase program during the year ended August 31, 2022.

Cash, Borrowing Availability and Credit Facilities

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Senior secured credit facilities, consisting of four components, aggregated to $1.4 billion as of August 31, 2023.

We had an aggregate of $147.9 million available to draw down under committed credit facilities as of August 31, 2022.

We had an aggregate of $364.4 million available to draw down under credit facilities as of August 31, 2023.

This amount consists of $273.8 million available on the North American credit facility, $25.6 million on the European credit facilities and $65.0 million on the Mexican credit facilities.

North America –

As of August 31, 2023, a $600.0 million revolving line of credit, maturing August 2026, secured by substantially all of our U.S.

assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities, was available to provide working capital and interim financing of equipment, principally for the Company’s U.S.

assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities, existed to provide working capital and interim financing of equipment, principally for our U.S.

and Mexican operations.

Advances under this facility bear interest at SOFR plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% depending on the type of borrowing.

Advances under this North American credit facility bear interest at the Secured Overnight Financing Rate (SOFR) plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% 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.

As of August 31, 2022, a $350.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing, a joint venture in which we own approximately 95%.

GBX Leasing –

As of August 31, 2023, a $550.0 million nonrecourse 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.

The warehouse credit facility converts to a term loan in August 2025 and matures in August 2027.

As of August 31, 2022, there were no outstanding borrowings associated with this facility.

We intend that GBX Leasing will aggregate leased railcars to obtain term or capital market financing, similar to the securitization in February 2022.

As of August 31, 2022, lines of credit totaling $67.2 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.6% and Euro Interbank Offered Rate (EURIBOR) plus 1.5%, were available for working capital needs of our European manufacturing operations.

The European lines of credit include $40.8 million which are guaranteed by us.

Interest rate swap agreements cover 87% 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 which matures in August 2027.

Europe –

As of August 31, 2023, lines of credit totaling $72.8 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.6% and Euro Interbank Offered Rate (EURIBOR) plus 1.5% to EURIBOR plus 1.9%, were available for working capital needs of our European manufacturing operations.

The European lines of credit include $35.9 million which are guaranteed by our Company.

European credit facilities are regularly renewed.

Currently, these European credit facilities have maturities that range from September 2022 through October 2023.

As of August 31, 2022, our Mexican railcar manufacturing operations had four lines of credit totaling $120.0 million.

The first line of credit provides up to $30.0 million, of which we and our joint venture partner have each guaranteed 50%.

Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024.

Currently, these European credit facilities have maturities that range from October 2023 through July 2025.

Mexico –

As of August 31, 2023, our Mexican railcar manufacturing operations had three lines of credit totaling $175.0 million.

The first line of credit provides up to $100.0 million and matures in June 2026.

Advances under this facility bear interest at SOFR plus 4.25%.

The second line of credit provides up to $45.0 million, of which we and our joint venture partner have each guaranteed 50%.

Advances under this facility bear interest at LIBOR plus 3.75%.

Advances under this facility bear interest at SOFR plus 2.55%.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through

February 2025.

The third line of credit provides up to $30.0 million, of which we and our joint venture partner have each guaranteed 50%.

Advances under this facility bear interest at a variable rate.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024.

The third line of credit provides up to $50.0 million and matures in October 2024.

Advances under this facility bear interest at LIBOR plus 4.25%.

The fourth line of credit provided up to $5.0 million and matured September 2022.

Advances under this facility bear interest at LIBOR plus 2.95% and are to be used for working capital needs.

As of August 31,

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Revolving notes

1 The repayment of the $47.7 million of 2024 Convertible Notes due February 2024 and the $373.8 million of 2028 Convertible Notes due April 2028 is assumed to occur at the scheduled maturity instead of assuming an earlier conversion by the holders.

2 A portion of the estimated future cash obligation relates to interest on variable rate borrowings.

Amounts are based on interest rates as of August 31, 2023.

Off Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.

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Actual results could differ from those estimates.

Goodwill - In accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles–Goodwill and Other (ASC 350), the Company evaluates goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The Company uses a two-step process to assess the realizability of goodwill.

The first step is a qualitative assessment that analyzes macroeconomic considerations and industry indicators, financial performance and cost estimates associated with a particular reporting unit.

This assessment requires subjectivity based on cumulative information available at the assessment date.

If a qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed to the quantitative second step where the fair value of a reporting unit is calculated based on weighted income and market-based approaches.

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.

For further information, see Note 5 to the Consolidated Financial Statements.

Goodwill - In accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles–Goodwill and Other (ASC 350), 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 our annual goodwill impairment test during the third quarter of 2022 and concluded that goodwill for all reporting units was not impaired.

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 carry 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, continued increases in pricing of materials and components, or potential macroeconomic events may cause future assessment conclusions to differ.

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.

For further information, see Note 8 to the Consolidated Financial Statements.

Income taxes - The asset and liability method is used to account for income taxes.

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Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.

We recognize liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit.

It is inherently difficult and subjective to estimate whether a valuation allowance or uncertain tax position is necessary.

In making this assessment, management may analyze future taxable income, reversing temporary differences and/or ongoing tax planning strategies.

Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, the Company would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Changes in tax law or court interpretations may result in the recognition of a tax benefit or an additional charge to the tax provision.

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.

For further information regarding income taxes, see Note 18 of the Consolidated Financial Statements.

Warranty accruals - Warranty costs to cover a defined warranty period are estimated and charged to operations.

The estimated warranty cost is based on historical warranty claims for each particular product type.

For new product types without a warranty history, preliminary estimates are based on historical information for similar product types.

These estimates are inherently uncertain as they are based on historical data for existing products and judgment for new products.

If warranty claims are made in the current period for issues that have not historically been the subject of warranty claims and were not taken into consideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense may exceed the accrual for that particular product.

Conversely, there is the possibility that claims may be lower than estimates.

The warranty accrual is periodically reviewed and updated based on warranty trends.

However, as we cannot predict future claims, the potential exists for the difference in any one reporting period to be material.

For further information regarding the warranty accrual, see Note 11 of the Consolidated Financial Statements.

Environmental costs - At times we may be involved in various proceedings related to environmental matters.

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For further information regarding our environmental costs, see Note 22 of the Consolidated Financial Statements.

New Accounting Pronouncements

See Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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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 August 31, 2022 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 $73.6 million.

At August 31, 2023 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros aggregated to $70.9 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 of a movement in a single foreign currency exchange rate would have on future operating results.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Qualitative goodwill impairment assessment of the Europe Manufacturing and Wheels & Parts reporting units

As discussed in Note 7 to the consolidated financial statements, the goodwill balance as of August 31, 2022 was $127.3 million, of which $27.7 million related to the Europe Manufacturing reporting unit and $43.0 million related to the Wheels & Parts reporting unit.

As discussed in Note 2, the Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit likely exceeds its fair value using either a qualitative or a quantitative assessment.

If the qualitative assessment is performed and the Company determines that fair value of each reporting unit more likely than not exceeds its carrying value, no further assessment is necessary.

For the annual impairment test that occurred during 2022, the Company performed a qualitative assessment to test the goodwill related to its Europe Manufacturing and Wheels & Parts reporting units.

We identified the evaluation of the Company’s qualitative assessment that it was more likely than not the fair value of the Europe Manufacturing and Wheels & Parts reporting units exceeded their carrying values as a critical audit matter.

There was subjective auditor judgement in evaluating the impact of (1) macroeconomic considerations, as well as industry and market indicators included in the Company’s goodwill impairment assessment, and (2) the entity-specific financial performance, including management’s current and prior year cost reduction initiatives on the reporting units’

actual financial results.

Sufficiency of audit evidence within the North American manufacturing businesses

As discussed in Item 9A.

Controls and Procedures, a material weakness was identified as of August 31, 2023 and included in management’s report on internal control over financial reporting.

The description of the material weakness states that the Company did not effectively design and maintain controls over information technology (IT) general controls in one IT environment in its primary North America manufacturing businesses that are relevant to the preparation of the Company’s consolidated financial statements.

The Company did not (i) maintain change management controls to ensure configuration data changes affecting the IT application were appropriate (ii) design and maintain program development controls to ensure the data migration, program testing and approval of new software development is aligned with business and IT requirements and (iii) maintain user access controls to ensure segregation of duties in the Company’s financial application.

The control deficiencies resulted from incomplete risk assessment, inadequate training of personnel and ineffective control activities related primarily to the implementation of a new ERP system in the Company's primary North America manufacturing businesses.

As a result, process level automated controls that are dependent on the affected IT environment and manual controls that rely on system-generated data or reports from the affected IT environment were ineffective because they could have been adversely impacted.

We identified the evaluation of the sufficiency of audit evidence over the Company’s primary North American manufacturing businesses as a critical audit matter.

Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgment because of the pervasiveness of the material weakness noted above.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the goodwill impairment process.

This included controls related to the evaluation of the qualitative factors used by the Company to assess the Europe Manufacturing and Wheels & Parts reporting units.

We evaluated the Company’s assessment of the macroeconomic considerations, as well as industry and market indicators by comparing them to publicly available industry and market information.

We evaluated the entity-specific financial performance, including management’s cost reduction initiatives, by:

comparing actual and projected performance to projected results of relevant prior periods, and

assessing cost savings resulting from current and prior year actions on the reporting units’

actual financial results.

We applied auditor judgment to determine the nature and extent of procedures to be performed over the Company’s primary North American manufacturing businesses including evaluating our scoping thresholds and control risk assessments considering the material weakness noted above.

For relevant financial statement account balances at the North America manufacturing businesses, we:

increased the number of sample selections compared to what we would have otherwise made if the Company’s controls were designed and operating effectively

tested the underlying records of selected transaction data obtained from the impacted information technology system to support the use of the information in the conduct of the audit

inspected supporting documentation and evidence of authorization for a selection of manual and automated journal entries.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2011.

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Contingently redeemable noncontrolling interest

Preferred stoc k - without par value;

Preferred stock - without par value;

25,000 shares authorized;

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Net gain on disposition of equipment

Asset impairment, disposal, and exit costs, net

Earnings from operations

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Cumulative effect adjustment due to

adoption of Topic 842 (See Note 2)

Other comprehensive loss, net

Noncontrolling interest adjustments

Joint venture partner distribution

Noncontrolling interest acquired

Restricted stock awards (net of

cancellations)

Unamortized restricted stock

Restricted stock amortization

Cash dividends ($ 1.06 per share)

Balance August 31, 2020

Cumulative effect adjustment due to

adoption of ASU 2016-13 (See

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Unamortized restricted stock

Restricted stock amortization

Stock based compensation expense

Repurchase of stock

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Unamortized restricted stock

Restricted stock amortization

Stock based compensation expense

Cash dividends ($ 1.08 per share)

Balance August 31, 2022

Other comprehensive income, net

Noncontrolling interest adjustments

Joint venture partner distribution

Restricted stock awards (net of

cancellations)

Unamortized restricted stock

Stock based compensation expense

Repurchase of stock

Cash dividends ($ 1.11 per share)

Balance August 31, 2023

The accompanying notes are an integral part of these financial statements.

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Stock based compensation expense

Asset impairment, disposal, and exit costs, net

Net loss on extinguishment of debt

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Cash distribution from unconsolidated affiliates and other

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities

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Effect of exchange rate changes

Increase (decrease) in cash and cash equivalents and restricted cash

Decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash

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and Leasing & Management Services.

The segments are operationally integrated.

The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland, Romania and Turkey, produces double-stack intermodal railcars, tank cars, conventional railcars, automotive railcar products and marine vessels.

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, which includes GBX Leasing, owns approximately 12,200 railcars as of August 31, 2022.

The Company also provides management services for approximately 408,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America as of August 31, 2022.

The segments support the Company's integrated business model.

The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland and Romania, produces double-stack intermodal railcars, tank cars, freight railcars, and automotive railcar products.

The Maintenance Services segment performs wheel and axle servicing, railcar maintenance services and produces a variety of component parts for the rail industry in North America.

The Leasing & Management Services segment owns approximately 13,400 railcars as of August 31, 2023.

The Company also provides management services for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America.

Through unconsolidated affiliates the Company produces rail and industrial components and has an ownership stake in a railcar manufacturer in Brazil .

In 2022 the Company renamed two of its reportable segments to more prominently display the nature of the customer solutions it provides and markets in which it operates.

The new names of its reportable segments are Manufacturing (unchanged), Maintenance Services (previously Wheels, Repair & Parts), and Leasing & Management Services (previously Leasing & Services).

The name changes have no impact on the organization’s reporting structure nor on financial information previously reported.

Separately, effective September 1, 2021, the Company changed its measurement basis for allocating syndication revenue between the Manufacturing and Leasing & Management Services reportable segments.

This change in measurement reflects the information currently used by management to assess the Company's operating performance in accordance with its refined leasing strategy and has no impact to the Company’s total consolidated revenue.

Segment results for the prior periods have been recast to conform to the current period presentation.

Note 2 —

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Translation adjustments are accumulated as a separate component of equity in other comprehensive income (loss).

The net foreign currency translation adjustment balances were $ 57.4 million, $ 35.8 million and $ 39.8 million as of August 31, 2022, 2021 and 2020, respectively

Cash and cash equivalents - Cash may temporarily be invested primarily in money market funds.

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Several factors are considered in determining whether the equity method of accounting is appropriate including the relative ownership interests and governance rights of the joint venture partners.

As of August 31, 2022, selected investments in unconsolidated affiliates include the Company’s 60 % interest in Greenbrier-Maxion, 29.5 % interest in Amsted-Maxion Cruzeiro (which owns 40 % of Greenbrier-Maxion), 40 % interest in Greenbrier Railcar Funding I LLC and 41.9 % interest in Axis, LLC.

As of August 31, 2023 , investments in unconsolidated affiliates include the Company’s 60 % interest in Greenbrier-Maxion, 29.5 % interest in Amsted-Maxion Cruzeiro (which owns 40 % of Greenbrier-Maxion) and 41.9 % interest in Axis, LLC.

Property, plant and equipment - Property, plant and equipment is stated at cost, net of accumulated depreciation.

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Intangible assets with finite lives are amortized using the straight line method over their estimated useful lives which are up to 20 years.

Other assets include nonqualified savings plan investments, and revolving note fees which are capitalized and amortized as interest expense over the life of the related borrowings.

Other assets include operating lease right-of-use (ROU) assets, nonqualified savings plan investments, and revolving note fees which are capitalized and amortized as interest expense over the life of the related borrowings.

Under the short term lease recognition exemption, the Company does not recognize ROU assets or lease liabilities for qualifying leases with terms of less than twelve months.

The Company does not separate lease and non-lease components.

Impairment of long-lived assets - When changes in circumstances indicate the carrying amount of certain long-lived asset groups may not be recoverable, the assets are evaluated for impairment.

If the forecasted undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reduce the carrying value of the assets to estimated realizable value is recognized in the current period.

The Company recorded $ 24.2 million as impairment of long-lived assets for the year ended August 31, 2023.

No impairment of long-lived assets was recorded in the years ended August 31, 2022 and 2021 .

See Note 5 –

Divestitures for additional information.

Goodwill - Goodwill is recorded when the purchase price of an acquisition exceeds the fair market value of the net assets acquired.

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An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit.

No impairment

of goodwill was recorded in the years ended August 31, 2023, 2022, and 2021.

See Note 8 –

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Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.

The Company recognizes liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit.

The Company recognizes 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.

The Company reevaluates these uncertain tax positions on a quarterly basis.

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The carrying value of the noncontrolling interest cannot be less than the maximum redemption amount, which is the amount Greenbrier will settle the put option for if exercised.

Adjustments to reconcile the carrying value to the maximum redemption amount are recorded to retained earnings.

In August 2018, Greenbrier-Astra Rail entered into an agreement to take an approximately 68 % ownership stake in Rayvag, a railcar manufacturing company based in Adana, Turkey.

Rayvag is controlled by the Company.

The Company consolidates Rayvag for financial reporting purposes.

The noncontrolling interest related to the partner’s interest is included in Noncontrolling interest in the equity section of the Company’s Consolidated Balance Sheet.

During 2023, the Company recorded a noncash $ 26.3 million redemption value adjustment to Contingently redeemable noncontrolling interest and Retained earnings to record the carrying value at the maximum redemption amount.

The increase in maximum redemption amount is primarily attributed to the impact of industry and entity-specific indicators which positively impacted the estimated future cash flows of Greenbrier-Astra Rail.

In August 2023, Greenbrier-Astra Rail sold its approximately 68 % ownership interest in Rayvag, a railcar manufacturing company based in Adana, Turkey.

The Company no longer holds an ownership interest in Rayvag and has deconsolidated Rayvag and its noncontrolling interest for financial reporting purposes as of August 31, 2023.

See Note 5 –

Divestitures for additional information.

Net earnings attributable to noncontrolling interest on the Company’s Consolidated Statement of Income represents the Company’s partners’

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Total before tax

Tax expense (benefit)

Revenue recognition –

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The Company recognizes revenue either at the point in time or over the period of time that performance obligations to customers are satisfied.

The Company treats shipping costs that occur after control is transferred as fulfillment costs.

Payment terms vary by segment and product type and are generally due within normal commercial terms.

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Each railcar delivery is considered a distinct performance obligation, such that the amounts that are recognized as revenue following railcar delivery are generally not subject to change.

The Company typically recognizes marine vessel manufacturing revenue over time using the cost input method, based on progress toward contract completion measured by actual costs incurred to date in relation to the estimate of total expected costs.

This method best depicts the Company’s performance in completing the construction of the marine vessel for the customer.

When estimates of total costs to be incurred on a contract exceed total revenue, the expected loss is recorded in the period in which the loss is determined.

Maintenance Services

The Company operates a network of facilities in North America that provide complete wheelset reconditioning and maintenance services.

Wheels revenue is recognized when wheelsets are shipped to the customer or when consumed by customers in the case of consignment arrangements.

The Company operates a network of facilities in North America that provide wheel and axle servicing and products, railcar maintenance services and produces a variety of component parts for the rail industry.

Wheels revenue is recognized when wheelsets are shipped to the customer.

Parts revenue is recognized upon shipment of the parts to the customers.

Maintenance revenue is typically recognized over time using the cost input method, based on progress toward contract completion measured by actual costs incurred to date in relation to the estimate of total expected costs.

This method best depicts the Company’s performance in servicing the railcars for the customer.

best depicts the Company’s performance in servicing the railcars for the customer.

Maintenance services are typically completed in less than 90 days.

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At the time of such sale, revenue and cost of revenue is allocated between the Manufacturing segment and Leasing & Management Services segment based on the relative standalone selling price of the product and services provided.

Revenue and cost of revenue associated with railcars which were obtained from a third-party with the intent to resell them and subsequently sold, are recognized in the Leasing & Management Services segment.

The Company utilizes both ASC 842, Leases and ASC 606, Revenue from Contracts with Customers when evaluating retained risk of services and other performance obligations in conjunction with selling railcars with a lease attached as part of the syndication model.

The Company enters into multi-year contracts to provide management and maintenance services to customers for which revenue is generally recognized on a straight-line basis over the contract term as a stand-ready obligation.

Costs to fulfill these contracts are recognized as incurred.

Interest and foreign exchange - Interest and foreign exchange includes foreign exchange transaction gains and losses, amortization of debt issuance costs, and external interest expense.

Interest and foreign exchange - Interest includes amortization of debt issuance costs and external interest expense.

Foreign exchange gains and losses includes the effects of remeasuring monetary assets and liabilities denominated in a currency other than the functional currency of the respective subsidiary.

Year Ended August 31,

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Stock-based compensation –

The value of stock-based compensation awards is amortized as compensation expense from the date of grant through the earlier of the vesting period or in some instances the recipient’s eligible retirement date.

Stock based compensation expense consists of restricted stock units and restricted stock awards.

The fair value of awards is measured using the number of shares granted multiplied by the closing share price on the grant date.

Stock based compensation expense for the years ended August 31, 2022, 2021 and 2020 was $ 15.5 million, $ 14.7 million and $ 9.0 million, respectively and was recorded in Selling and administrative and Cost of revenue on the Consolidated Statements of Income.

Restricted stock units and restricted stock awards are accounted for as equity based awards (see Note 14 - Equity).

Restricted stock units and restricted stock awards are accounted for as equity based awards (see Note 15 -

The value of stock-based compensation awards is amortized as compensation expense from the date of grant through the vesting period.

Forfeitures are recognized as they occur.

Management estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.

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Initial Adoption of Accounting Policies

Lease accounting

On September 1, 2019 , the Company adopted Accounting Standards Update 2016-02, Leases and related amendments (Topic 842).

Upon adoption, the Company recorded a cumulative-effect adjustment of $ 4.4 million as an increase to retained earnings.

Under the short term lease recognition exemption, the Company does not recognize ROU assets or lease liabilities for qualifying leases with terms of less than twelve months.

The Company does not separate lease and non-lease components.

The Company utilizes both Topic 842 and Accounting Standards Codification 606, Revenue from Contracts with Customers (Topic 606) when evaluating retained risk of services and other performance obligations in conjunction with selling railcars with a lease attached as part of the syndication model.

Derivatives and Hedging

In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2017-12, Derivatives and Hedging:

Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12).

The Company adopted this guidance effective September 1, 2019 and it did not have a material impact on its consolidated financial statements.

Measurement of Credit Losses on Financial Instruments

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Beginning September 1, 2021, when calculating net earnings attributable to Greenbrier per share of common stock, the Company uses the if-converted method as required under ASU 2020-06 to determine the dilutive effect of its convertible notes.

Simplification of Accounting for Income Taxes

In December 2019, the FASB issued Accounting Standard Update 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 for:

recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods.

The ASU also improves consistent application of GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The Company adopted this guidance September 1, 2021 with no impact to the Company's consolidated financial statements.

The ongoing application of ASU 2019-12 is not expected to materially impact the Company's consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial Reporting , which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The elective amendments provide expedients to contract modification, affected by reference rate reform if certain criteria are met.

The expedients and exceptions provided by this guidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform.

This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

The guidance can be applied immediately through December 31, 2022.

During the fourth quarter of fiscal year 2022 , the Company adopted the optional relief guidance provided under this ASU after modifying certain debt to update the reference rate from LIBOR to SOFR.

This caused a temporary mismatch in our interest rate swap and debt for a period of time.

The application of this expedient preserves the presentation of the derivatives consistent with past presentation.

The Company will continue to assess the impact of the guidance and may apply other elections as applicable going forward.

Note 3 –

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Greenbrier Management Services, LLC (GMS) entered into certain agreements relating to the management and servicing of the Issuer’s assets.

The Company used the net proceeds received from the issuance of the term notes to pay down the GBX Leasing warehouse credit facility.

The Company evaluated the accounting for the transaction and concluded that, based on its equity investment in the Issuer combined with GMS’s capacity as servicer, the Company is the primary beneficiary of the SPE and will consolidate the SPE for financial reporting purposes.

The Company evaluated the accounting for the transaction and concluded that, based on its equity investment in the Issuer combined with GMS’s capacity as servicer, the Company is the primary beneficiary of the SPE and therefore consolidates the SPE for financial reporting purposes.

Issued debt includes $ 302.6 million of GBXL I Series 2022-1 Class A Secured Railcar Equipment Notes (Class A Notes) and $ 20.7 million of GBXL I Series 2022-1 Class B Secured Railcar Equipment Notes (Class B Notes), collectively the GBXL Series 2022-1 Notes (the GBXL Notes).

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The GBXL Notes are payable monthly and have a legal maturity date of February 20, 2052 .

The Company incurred $ 5.0 million in debt issuance costs, which will be amortized to interest expense through the expected repayment period.

The Company incurred $ 5.0 million in debt issuance costs in 2022, which will be amortized to interest expense through the expected repayment period.

Both Class A and Class B Notes have an anticipated repayment date of January 20, 2029 and a legal maturity date.

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Contract balances

Contract assets primarily consist of unbilled receivables related to marine vessel construction and railcar maintenance services, for which the respective contracts do not yet permit billing at the reporting date.

Contract liabilities primarily consist of customer prepayments for manufacturing, maintenance, and other management-type services, for which the Company has not yet satisfied the related performance obligations.

Contract assets primarily consist of work completed for railcar maintenance but not billed at the reporting date.

Contract liabilities primarily consist of customer prepayments for manufacturing and other management services, for which the Company has not yet satisfied the related performance obligations.

Contract assets in the August 31, 2022 balance also included unbilled receivables on marine vessel construction for which the respective contracts did not permit billing at the reporting date.

The opening and closing balances of the Company’s contract balances are as follows:

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Deferred revenue

1 Contract liabilities balance includes deferred revenue within the scope of Topic 606.

1 August 31, 2022 b alances include contract assets and liabilities associated with Gunderson Marine which was disposed of in May 2023.

See Note 5 for further discussion.

2 Contract liabilities balance includes deferred revenue within the scope of Revenue from Contracts with Customers (Topic 606) .

For the years ended August 31, 2023 and 2022 the Company recognized $ 13.0 million and $ 16.4 million of revenue, respectively, that was included in Contract liabilities as of August 31, 2022 and 2021.

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As of August 31, 2023 , the Company has entered into contracts with customers for which revenue has not yet been recognized.

The following table outlines estimated revenue related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.

The following table outlines estimated transaction prices related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.

(In millions)

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Manufacturing –

Railcars intended for syndication 1

1 Not a performance obligation as defined in Topic 606

Based on current production and delivery schedules and existing contracts, approximately $ 2.1 billion of the Railcar sales amount is expected to be recognized in the next 12 months while the remaining amount is expected to be recognized through 2024.

Sustainable conversions

Based on current production and delivery schedules and existing contracts, approximately $ 1.9 billion of the Railcar sales amount is expected to be recognized in the next 12 month s while the remaining amount is expected to be recognized into 2026.

The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operations, as they are accounted for under the equity method.

Revenue amounts reflected in Railcars intended for syndication may be syndicated to third parties or held in the Company’s fleet depending on a variety of factors.

Marine revenue is expected to be recognized through 2023 as vessel construction is completed.

Sustainable conversions represent orders to modernize existing railcars and are expected to be recognized in the next 12 months.

Services includes management and maintenance services of which approximately 57 % are expected to be performed through 2028 and the remaining amount through 2037.

Note 5 –

On November 17, 2022, as part of the Company's strategic review of the global business capacity footprint, the Company decided to permanently cease rail production at the Gunderson Facility and to explore alternatives to exit marine barge production .

Due to the change in future use of the facility, management assessed recoverability of the Gunderson assets in accordance with the Company’s policy on impairment of long-lived assets.

Based on an analysis of future undiscounted cash flows associated with these assets, management determined that the carrying value was not recoverable.

The carrying amount of the Company’s long-lived assets at the Gunderson Facility was $ 44.0 million and the fair value was $ 19.8 million as of the impairment date.

The Company concluded that an impairment charge was necessary and $ 24.2 million was recorded within the Manufacturing segment as Asset impairment, disposal and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.

In May 2023, the Company sold its ownership interest in Gunderson Marine and the Gunderson Facility assets (which includes the Portland Property) and recognized a $ 14.4 million loss on sale and $ 2.1 million severance, which are recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.

Southwest Steel

In August 2023, the Company sold its ownership interest in Southwest Steel Castings Company, a steel foundry business in Longview, Texas, and recorded a $ 9.7 million loss on sale, which is recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.

As discussed in Note 2 - Summary of Significant Accounting Policies, Greenbrier-Astra Rail sold its ownership interest in Rayvag in August 2023 and recorded a $ 3.7 million gain on sale, which is recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.

The following table summarizes the Company's Asset impairment, disposal, and exit costs, net:

For the year ended August 31,

(In millions)

Impairment of long-lived assets

Severance and exit costs

Southwest Steel loss on sale

Rayvag gain on sale

Note 6 —

As of August 31,

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Balance August 31, 2023

The Company performed its annual goodwill impairment test during the third quarter.

For the annual impairment test during the third quarter of 2022, the Company utilized the qualitative assessment allowable under ASC 350 Intangibles –

Goodwill and Other to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic considerations and industry indicators, financial performance and cost estimates associated with a particular reporting unit.

If based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.

Based on our review of the qualitative factors, the Company determined for all three of our reporting unit goodwill balances that a quantitative impairment analysis was not necessary, primarily as a result of positive market indicators and entity-specific financial performance during the assessment period.

As of August 31, 2022, our Manufacturing segment includes the North America Manufacturing reporting unit with a goodwill balance of $ 56.6 million and the Europe Manufacturing reporting unit with a goodwill balance of $ 27.7 million.

The Company performed its annual goodwill impairment test during the third quarter of 2023.

For the annual impairment test, the Company utilized the quantitative assessment under ASC 350 Intangibles –

Goodwill and Other to determine whether the fair value of a reporting unit was less than its carrying value.

The Company determined the fair value of the reporting units considering both the income and market approaches.

Under the income approach, the Company calculates 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, the Company estimates the fair value based on observed market multiples for comparable businesses, when appropriate.

Based on the results of the annual goodwill impairment test, the fair values of the reporting units exceeded their carrying values and the Company concluded that goodwill was not impaired.

As of August 31, 2023 , the 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 $ 29.6 million.

The Maintenance Services segment had a goodwill balance of $ 43.0 million related to the Wheels & Parts reporting unit.

Based on the results of the Company’s annual impairment test, the Company concluded that goodwill was not impaired.

Note 9 —

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Assets held for sale

Amortization expense for the years ended August 31, 2022, 2021 and 2020 was $ 9.3 million, $ 11.6 million and $ 11.0 million, respectively.

Deferred tax assets

Amortization expense for the years ended August 31, 2023, 2022 and 2021 was $ 8.0 million, $ 9.3 million and $ 11.6 milli on, respectively.

As of August 31, 2023 , amortizable intangible assets had a weighted-average remaining useful life of 7 years .

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Senior secured credit facilities, consisting of four components, aggregated to $ 1.4 billion as of August 31, 2023 .

The Company had an aggregate of $ 364.4 million available to draw down under credit facilities as of August 31, 2023 .

This amount consists of $ 273.8 million available on the North American credit facility, $ 25.6 million on the European credit facilities and $65 .0 million on the Mexican credit facilities.

North America –

As of August 31, 2023 , a $ 600.0 million revolving line of credit, maturing August 2026 , secured by substantially all the Company’s U.S.

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As of August 31, 2022, a $ 350.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing, a joint venture in which the Company owns approximately 95 %.

GBX Leasing –

As of August 31, 2023 , a $ 550.0 million nonrecourse 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 87 % 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 which matures in August 2027 .

As of August 31, 2022, lines of credit totaling $ 67.2 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2 % to WIBOR plus 1.6 % and Euro Interbank Offered Rate (EURIBOR) plus 1.5 %, were available for working capital needs of the Company’s European manufacturing operations.

Europe –

As of August 31, 2023 , lines of credit totaling $ 72.8 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2 % to WIBOR plus 1.6 %

and Euro Interbank Offered Rate (EURIBOR) plus 1.5 % to EURIBOR plus 1.9 %, were available for working capital needs of the Company’s European manufacturing operations.

The European lines of credit include $ 35.9 million which are guaranteed by the Company.

European credit facilities are regularly renewed.

Currently, these European credit facilities have maturities that range from February 2023 through October 2023 .

As of August 31, 2022, the Company’s Mexican railcar manufacturing operations had four lines of credit totaling $ 120.0 million.

The first line of credit provides up to $ 30.0 million, of which the Company and its joint venture partner have each guaranteed 50 %.

Advances under this facility bear interest at LIBOR plus 3.75 % to 4.25 %.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024 .

Currently, these European credit facilities have maturities that range from October 2023 through July 2025 .

Mexico –

As of August 31, 2023 , the Company’s Mexican railcar manufacturing operations had three lines of credit totaling $ 175.0 million.

The first line of credit provides up to $ 100.0 million and matures in June 2026 .

Advances under this facility bear interest at SOFR plus 4.25 %.

The second line of credit provides up to $ 45.0 million, of which the Company and its joint venture partner have each guaranteed 50 %.

Advances under this facility bear interest at LIBOR plus 3.75 %.

Advances under this facility bear interest at SOFR plus 2.55 %.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through February 2025 .

The third line of credit provides up to $ 30.0 million, of which the Company and its joint venture partner have each guaranteed 50 %.

Advances under this facility bear interest at a variable rate.

The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024 .

The third line of credit provides up to $ 50.0 million and matures in October 2024 .

Advances under this facility bear interest at LIBOR plus 4.25 %.

The fourth line of credit provided up to $ 5.0 million and matured September 2022 .

The interest rate under this facility was LIBOR plus 2.95 %.

As of August 31,

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In addition, outstanding commitments under the North American credit facility included letters of credit which totaled $ 4.9 million and $ 6.9 million as of August 31, 2023 and 2022 , respectively.

As of August 31, 2022, the Company had an aggregate of $ 147.9 million available to draw down under committed credit facilities.

Note 11 —

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Debt discount and issuance costs

(1) As described in Note 2 –

Summary of Significant Accounting Policies, effective September 1, 2021 , the debt discount associated with convertible senior notes was derecognized upon adoption of ASU 2020-06 using the modified retrospective approach.

Financial results for 2021 were not adjusted.

See discussion below for additional information.

Term loans are primarily composed of:

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The debt bears a floating interest rate of SOFR plus 1.5 % plus 0.10 % as a SOFR adjustment with principal of $ 3.7 million paid quarterly in arrears and a balloon payment of $ 222.6 million due at maturity.

Interest rate swap agreements cover 75 % of the principal balance to swap the floating interest rate to a fixed rate.

Interest rate swap agreements cover approximately 75 % of the principal balance to swap the floating interest rate to fixed rates.

The principal balance as of August 31, 2023 was $ 266.4 million .

$ 275.0 million of senior term debt, with a maturity date of August 2027 , which is secured by a pool of leased railcars.

The original $ 200 million term debt agreement was amended on July 29, 2022 to provide for an incremental $ 75 million term loan and an additional $ 75 million available as a delayed draw until January 2023 , subject to satisfaction of certain conditions.

$ 343.0 million of nonrecourse senior term debt, with a maturity date of August 2027 , which is secured by a pool of leased railcars.

The original term debt agreement was amended in 2022 to provide for an incremental $ 75 million term loan and an additional $ 75 million, which was drawn in 2023.

The debt bears a floating interest rate of SOFR plus 1.625 % plus 0.10 % as a SOFR adjustment, with principal of $ 3.1 million paid quarterly in arrears and a balloon payment of $ 283.7 million due at maturity.

Interest rate swap agreements cover 100 % of the principal balance to swap the floating interest rate to a fixed rate.

Interest rate swap agreements cover nearly 100 % of the principal balance to swap the floating interest rate to fixed rates.

The principal balance as of August 31, 2023 was $ 332.7 million .

$ 323.3 million of senior term debt, which is secured by a portfolio of railcars and associated operating leases and other assets, acquired, and owned by GBXL I.

$ 323.3 million of nonrecourse senior term debt, which is secured by a portfolio of railcars and associated operating leases and other assets owned by GBXL I.

See Note 3 –

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As of August 31, 2023 the Company has reserved approximately 1.1 million shares for issuance upon conversion of these notes.

As described in Note 2 –

Summary of Significant Accounting Policies, effective September 1, 2021 , the Company adopted ASU 2020-06 using the modified retrospective approach under which financial results reported in prior periods were not adjusted.

Prior to the adoption of the standard, the convertible notes were separated into liability and equity components with an associated debt discount.

The debt discount was amortized using the effective interest rate method over the term of the convertible notes until September 1, 2021, when the debt discount associated with these convertible notes was derecognized.

Other notes payable includes $ 1.2 million of unsecured debt with maturity dates ranging from February 2023 to February 2027.

Other notes payable includes $ 1.8 million of unsecured debt with maturity dates ranging from November 2023 to March 2028.

The notes payable, along with the revolving and operating lines of credit, contain certain covenants with respect to the Company and various subsidiaries, the most restrictive of which, among other things, limit the ability to:

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Year ending August 31,

Thereafter (1)

1 The repayment of the $ 47.7 million of 2024 Convertible Notes due February 2024 and the $ 373.8 million of 2028 Convertible Notes due April 2028 is assumed to occur at the scheduled maturity instead of assuming an earlier conversion by the holders.

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The Company’s foreign currency forward exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in accumulated other comprehensive income or loss.

At August 31, 2022 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 $ 73.6 million.

At August 31, 2023 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros aggregated to $ 70.9 million.

The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when in a loss position, or as Accounts receivable, net when in a gain position.

As the contracts mature at various dates through October 2023, any such gain or loss remaining will be recognized in manufacturing revenue or cost of revenue along with the related transactions.

In the event that the underlying transaction does not occur or does not occur in the period designated at the inception of the hedge, the amount classified in accumulated other comprehensive loss would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence.

At August 31, 2022 exchange rates, approximately $ 3.5 million loss would be reclassified to revenue or cost of revenue in the next year.

As the contracts mature at various dates through June 2025, any such gain or loss remaining will be recognized in manufacturing revenue or cost of revenue along with the related transactions.

and foreign exchange at the time of occurrence.

At August 31, 2023 exchange rates, approximately $ 1.6 million of gain would be reclassified to revenue or cost of revenue in the next year.

At August 31, 2023 , interest rate swap agreements maturing from September 2023 through January 2032 had notional amounts that aggregated to $ 654.0 million .

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The 2021 Stock Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, restricted shares, restricted stock units and stock appreciation rights.

In addition to the 1,500 thousand shares reserved for issuance under the 2021 Stock Incentive Plan, up to 466 thousand shares previously reserved for issuance, but not issued or subject to outstanding awards, are available for issuance under the 2021 Stock Incentive Plan, and up to 884 thousand shares that were subject to outstanding awards under the 2017 Amended and Restated Stock Incentive Plan as of the effective date of the 2021 Stock Incentive Plan will also become available for issuance under the 2021 Stock Incentive Plan to the extent such shares are not issued and cease to be subject to such awards following the effective date of the 2021 Stock Incentive Plan.

On August 31, 2022, there were 1,394 thousand shares available for grant compared to 1,618 thousand and 466 thousand shares available for grant as of the years ended August 31, 2021 and 2020, respectively.

In addition to the 1.5 million shares reserved for issuance under the 2021 Stock Incentive Plan, up to 0.5 million shares previously reserved for issuance, but not issued or subject to outstanding awards, are available for issuance under the 2021 Stock Incentive Plan, and up to 0.9 million shares that were subject to outstanding awards under the 2017 Amended and Restated Stock Incentive Plan as of the effective date of the 2021 Stock Incentive Plan will also become available for issuance under the 2021 Stock Incentive Plan to the extent such shares are not issued and cease to be subject to such awards following the effective date of the 2021 Stock Incentive Plan.

On August 31, 2023, there were 1.2 million shares available for grant compared to 1.4 million and 1.6 million shares available for grant as of the years ended August 31, 2022 and 2021, respectively.

There are no stock options or stock appreciation rights outstanding as of August 31, 2023.

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Shares associated with restricted stock unit awards are not considered legally outstanding shares of common stock until they are issued following vesting.

Restricted stock unit awards, including performance-based awards, some of which are entitled to participate in dividends and these awards are considered participating securities and are considered outstanding for earnings per share purposes when the effect is dilutive.

During the years ended August 31, 2022, 2021 and 2020, the Company awarded restricted share and restricted stock unit grants totaling 391 thousand, 538 thousand, and 470 thousand shares, respectively, which include performance-based grants and dividend equivalent rights.

As of August 31, 2022, there were a total of 653 thousand shares associated with unvested performance-based grants.

The actual number of shares that will vest associated with performance-based grants will vary depending on the Company’s performance.

Approximately 653 thousand additional shares may be granted if performance-based restricted stock unit awards vest at maximum levels of performance.

These additional shares are associated with restricted stock unit awards granted during the years ended August 31, 2022, 2021 and 2020.

Restricted stock unit awards, including performance-based awards, are entitled to participate in dividends.

During the years ended August 31, 2023, 2022, and 2021, the Company awarded restricted share and restricted stock unit grants totaling 0.5 million, 0.4 million, and 0.5 million shares, respectively, which include performance-based grants and dividend equivalent rights.

For performance-based awards granted in 2022 and 2021, the performance metrics included an earnings before interest, taxes, depreciation and amortization (EBITDA) metric, weighted 80 %, and a return on invested capital (ROIC) metric, weighted 20 %.

For performance-based awards granted in 2023, the performance metrics included the Company’s total shareholder return relative to a designated peer group (Relative TSR), weighted 20 %, in addition to an EBITDA metric, weighted 60 %, and an ROIC metric, weighted 20 %.

Performance-based award share payouts depend on the extent to which the performance goal has been achieved.

The number of shares that a participant receives is equal to the award granted multiplied by a payout factor, which ranges from 0 % to a maximum of 200 %.

The fair value of awards granted, including performance-based grants that did not contain a Relative TSR market condition, was determined based on the market closing price of the underlying shares on the date of grant.

For the awards granted with a Relative TSR market condition, the Company estimates the fair value using a Monte-Carlo simulation model utilizing the following key assumptions for such awards granted in October 2022:

Expected share price volatility (GBX)

Risk-free rate of return

The fair value of awards granted was $ 12.4 million, $ 18.7 million, and $ 18.0 million for the years ended August 31, 2023, 2022 and 2021, respectively.

The fair value of awards granted is determined based on the market closing price of the underlying shares on the date of grant.

The value, at the date of grant, of stock awarded under restricted share grants and restricted stock unit grants is amortized as compensation expense over the lesser of the vesting period of one to three years or to the recipients eligible retirement date.

The grant date fair value of stock awarded under restricted share grants and restricted stock unit grants is amortized as compensation expense over the vesting period of one to three years .

Compensation expense recognized related to restricted share grants and restricted stock unit grants for the years ended August 31, 2023, 2022 and 2021 was $ 12.1 million, $ 15.5 million, and $ 14.7 million, respectively, and was recorded in Selling and administrative and Cost of revenue on the Consolidated Statements of Income.

Unamortized compensation cost related to restricted stock unit grants was $ 12.8 million as of August 31, 2022.

Total unvested restricted share and restricted stock unit grants were 1,042 thousand and 1,024 thousand as of August 31, 2022 and 2021, respectively.

During the year ended August 31, 2022, a total of 290 thousand restricted stock units vested, including shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

The following table summarizes restricted share and restricted stock unit grant transactions for shares, both vested and unvested, under the 2021 Stock Incentive Plan and the 2017 Amended and Restated Stock Incentive Plan:

(In thousands)

Balance at August 31, 2019 (1)

Balance at August 31, 2020 (1)

Balance at August 31, 2021 (1)

Balance at August 31, 2022 (1)

(1) Balance represents cumulative grants net of forfeitures.

Unamortized compensation cost related to restricted stock unit grants was $ 11.8 million as of August 31, 2023, which is expected to be recognized over a weighted average period of approximately two years.

During the year ended August 31, 2023, a total of 0.3 million restricted stock units vested, including shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

The following table summarizes the activity for the Company’s restricted share and restricted stock unit grants, including performance-based grants, under the 2021 Stock Incentive Plan and the 2017 Amended and Restated Stock Incentive Plan:

(in thousands, except per unit amounts)

Number of Units

Weighted Average Grant Date Fair Value

Outstanding as of August 31, 2022

Outstanding as of August 31, 2023

Share Repurchase Program

The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock.

The share repurchase program has an expiration date of January 31, 2023 and the amount remaining for repurchase is $ 100.0 million.

Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time to time.

The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors.

The Board of Directors has authorized the Company to repurchase in aggregate up to $ 100.0 million of the Company’s common stock.

The program may be modified, suspended, or discontinued at any time without prior notice.

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 share repurchase program does not obligate the Company to acquire any specific number of shares in any period.

There were no shares repurchased under this program during the years ended August 31, 2022, 2021 and 2020.

The prior authorization was set to expire on January 31, 2023.

On January 5, 2023, the Board of Directors authorized the extension of the existing share repurchase program to January 31, 2025 .

During the year ended August 31, 2023, the Company purchased a total of 1.9 million shares for $ 56.9 million, of which 1.8 million shares for $ 53.6 million were purchased under the current authorization of the share repurchase program.

For shares repurchased subsequent to December 31, 2022, the Company has accrued excise tax of $ 0.5 million to Additional paid-in capital for the year ended August 31, 2023.

As of August 31, 2023, the amount remaining for repurchase under the share repurchase program was $ 46.4 million.

There were no shares repurchased under the share repurchase program during the years ended August 31, 2022 and 2021.

Other Share Repurchases

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Restricted stock grants and restricted stock units that are considered participating securities, 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 2.875 % Convertible notes, due 2024 was excluded for the years ended August 31, 2021 and 2020 as the average stock price was less than the applicable conversion price and therefore was anti-dilutive under previous applicable guidance.

No participating securities are included in basic common shares outstanding for the year ended August 31, 2023.

The dilutive effect of the 2.875 % Convertible notes, due 2024 was excluded for the year ended August 31, 2021 as the average stock price was less than the applicable conversion price and therefore was anti-dilutive under previous applicable guidance.

See further discussion below.

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As these notes require cash settlement for the principal, only a premium is potentially dilutive.

These convertible notes were issued in April 2021.

(5) The dilutive effect of the 2.25 % Convertible notes, due 2024 was excluded for the years ended August 31, 2021 and 2020 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive under previous applicable guidance.

The dilutive effect of the 2.25 % Convertible notes, due 2024 was excluded for the year ended August 31, 2021 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive under previous applicable guidance.

These convertible notes were retired in April 2021.

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See Note 2 - Summary of Significant Accounting Policies for additional information.

For the year ended August 31, 2022, diluted EPS was calculated using the more dilutive of two methods.

For the year ended August 31, 2023 and 2022 , diluted EPS was calculated using the more dilutive of two methods.

The first method includes the dilutive effect, using the treasury stock method, associated with restricted stock units that are not considered participating securities and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved.

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Diluted earnings per share

1 Diluted earnings per share was calculated as follows:

Earnings before interest and debt issuance costs on the 2.875 % convertible notes due 2024

Weighted average diluted common shares outstanding

Note 17 —

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The Company purchased $ 8.7 million, $ 11.5 million and $ 13.5 million of railcar components from Axis during the years ended August 31, 2023, 2022 and 2021, respectively.

The Company has a 40 % interest in the common equity of an entity that buys and sells railcar assets that are leased to third parties.

As of August 31, 2022 and 2021 the carrying amount of the investment was $ 0.7 million and $ 3.2 million, respectively, which is classified in Investment in unconsolidated affiliates in the Consolidated Balance Sheets.

Upon sale of railcars to this entity from Greenbrier, 60 % of the related revenue and margin is recognized and 40 % is deferred until the railcars are ultimately sold by the entity.

The Company recognized $ 4.7 million in revenue associated with railcars sold into the leasing warehouse during the year ended August 31, 2020.

The Company had no material revenue with railcars sold into the leasing warehouse during the years ended August 31, 2022 and 2021.

The Company recognized $ 9.3 million with railcars sold out of the leasing warehouse during the year ended August 31, 2022.

The Company had no material revenue with railcars sold out of the leasing warehouse during the years ended August 31, 2021 and 2020.

The Company also provides administrative and remarketing services to this entity and earns management fees for these services which were immaterial for each of the years ended August 31, 2022, 2021 and 2020.

Furman is the owner of a private aircraft managed by a private independent management company.

From time to time, the Company’s business requires charter use of privately-owned aircraft.

In such instances, it is possible that charters may be placed on Mr.

Furman’s aircraft.

The Company placed charters on Mr.

Furman’s aircraft which aggregated to $ 0.9 million, $ 0.2 million and $ 0.3 million for each of the years ended August 31, 2022, 2021 and 2020, respectively.

In May 2020, the Company and its manufacturing partner GIMSA amended its joint venture agreement for its joint ventures in Monclova, Mexico.

In addition to certain temporary changes to the existing fee arrangements, the joint ventures also paid dividends of $ 22.5 million to each of the joint venture partners during the year ended August 31, 2020.

As of August 31, 2020, the Company had a $ 4.5 million note receivable due from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a $ 3.8 million note receivable from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer.

These note receivables were included on the Consolidated Balance Sheets in Accounts receivable, net as of August 31, 2020 and were repaid in 2021.

The Company held a 40 % interest in the common equity of an unconsolidated affiliate that bought and sold railcar assets that are leased to third parties.

Upon sale of railcars to this entity from Greenbrier, 60 % of the related revenue and margin was recognized and 40 % was deferred until the railcars were ultimately sold by the entity.

The Company recognized $ 15.1 million and $ 9.3 million with railcars sold out of the leasing warehouse during the year ended August 31, 2023 and 2022, respectively.

The Company had no material revenue with railcars sold out of the leasing warehouse during the year ended August 31, 2021.

As of August 31, 2023 , the Company no longer holds an investment in this entity.

Note 18 —

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operations and $ 58.8 million, $ 48.2 million and $ 22.1 million, respectively for our foreign operations.

In response to the COVID 19 pandemic, the CARES Act was signed into law in March 2020.

The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).

Corporate taxpayers may carryback net operating losses (“NOLs”) originating in 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act.

The CARES Act also eliminates the existing limitation on taxable income of 80% by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019, or 2020, and allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.

In addition, the CARES Act makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation.

Due to the enactment of the CARES Act, the Company filed a Federal claim to carryback fiscal year 2021 tax losses to the fiscal years 2016 through 2018, allowing the recovery of Federal income taxes previously paid at Federal rates of 35.0 % or 25.7 %, rather than the current Federal rate of 21.0 % in effect beginning with the fiscal year 2019.

The aggregate impact of the CARES Act resulted in a Federal tax benefit of $ 38.5 million.

The carryback resulted in a Federal tax benefit of $ 38.5 million.

On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law.

In general, the provisions of the IRA will be effective beginning with fiscal year 2023, with certain exceptions.

In general, the provisions of the IRA was effective beginning with fiscal year 2023, with certain exceptions.

The IRA includes a new 15% corporate minimum tax as well as a 1% excise tax on corporate stock repurchases applicable to repurchases after December 31, 2022.

The Company is in the process of evaluating the potential impacts of the IRA and does not currently expect the IRA to have a material impact on our effective tax rate.

However, the analysis is ongoing and incomplete, and it is possible that the IRA could have an adverse effect on the Company’s tax liability.

The IRA did not have a material impact on our effective tax rate.

The reconciliation between effective and statutory tax rates on operations is as follows:

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Foreign operations

tax on foreign earnings

Carryback rate benefit

Permanent differences

Base erosion and anti-avoidance tax (BEAT)

Change in valuation allowance

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Noncontrolling interest in flow-through entity

Credits and Other

Effective tax rate

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Deferred tax liabilities:

Original issue discount

Right-of-use asset

Net deferred tax liability

As of August 31, 2022, the Company had $ 104.8 million of state net operating loss carryforwards that will begin to expire in fiscal 2026 , $ 1.2 million of state credit carryforwards that began to expire in 2022 , $ 33.5 million of foreign net operating loss carryforwards that began to expire in fiscal 2022 and $ 26.1 million of foreign net operating loss carryforwards that do not expire.

As of August 31, 2023 , the Company had $ 106.8 million of state net operating loss carryforwards that will begin to expire in 2024 , $ 0.6 million of state credit carryforwards that begin to expire in 2025 , $ 25.1 million of foreign net operating loss carryforwards that begin to expire in calendar 2023 and $ 26.1 million of foreign net operating loss carryforwards that do not expire.

The Company has placed a valuation allowance of $ 9.6 million against the deferred tax assets for which no benefit is anticipated, including those for loss and credit carryforwards not likely to be used before their expiration dates or where the possibility of utilization is remote.

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Federal examination for fiscal years ending before 2016, to state and local examinations before 2015, or to foreign examinations before 2016.

The Company currently has ongoing examinations in the United States, Poland, and Romania.

Unrecognized tax benefits, excluding interest, at August 31, 2023 and 2022 were $ 1.7 million and $ 0.4 million, respectively which if recognized, would affect the effective tax rate.

Accrued interest on unrecognized tax benefits as of August 31, 2022 and August 31, 2021 was $ 0.1 million and $ 0.4 million, respectively, and included a reduction of $ 0.3 million and $ 0.6 million during the period for changes in unrecognized tax benefits.

The Company has no t accrued any penalties on the unrecognized tax benefits, and does not anticipate a significant decrease in unrecognized tax benefits or accrued interest during the next twelve months.

Accrued interest on unrecognized tax benefits as of August 31, 2023 and August 31, 2022 was $ 0.6 million and $ 0.1 million, respectively.

The Company recorded an increase in accrued interest expenses of approximately $ 0.5 million and a reduction of approximately $ 0.3 million for changes in unrecognized tax benefits during the years ended August 31, 2023 and 2022 respectively.

The Company has no t accrued any penalties on the reserves.

The Company does not anticipate a significant decrease in the reserves for uncertain tax positions during the next twelve months.

Interest and penalties related to income taxes are classified as a component of income tax expense.

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Related revenue and margin are eliminated in consolidation and therefore are not included in consolidated results in the Company’s Consolidated Financial Statements.

In the first quarter of 2022 the Company renamed two of its reportable segments to more prominently display the nature of the customer solutions it provides and markets in which it operates.

The new names of its reportable segments are Manufacturing (unchanged), Maintenance Services (previously Wheels, Repair & Parts), and Leasing & Management Services (previously Leasing & Services).

The name changes have no impact on the organization’s reporting structure nor on financial information previously reported.

Separately, effective September 1, 2021, the Company changed its measurement basis for allocating syndication revenue between the Manufacturing and Leasing & Management Services reportable segments.

Segment results for the prior periods have been recast to conform to the current period presentation.

The information in the following table is derived directly from the segments’

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(In millions)

Revenue (1) :

1 Revenue is presented on the basis of geographic location of customers.

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Net loss on extinguishment of debt

Earnings (loss) before income tax and earnings

from unconsolidated affiliates

Earnings (loss) before income tax and earnings from

unconsolidated affiliates

Note 20 —

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Customer concentration is defined as a single customer that accounts for more than 10% of total revenues or accounts receivable.

In 2022, revenue from three customers represented 16 %, 12 % and 11 % of total revenue.

In 2021, revenue from two customers each represented 13 % of total revenue.

In 2023, revenue from two customers represented 21 % and 10 % of total revenue.

In 2022, revenue from three customers each represented 16 %, 12 % and 11 % of total revenue.

In 2021, revenue from two customers each represented 13 % of total revenue.

No other customers accounted for more than 10% of total revenues for the years ended August 31, 2023, 2022, or 2021.

One customer had a balance that represented 12 % of the consolidated accounts receivable balance at August 31, 2022.

No customer had a balance that individually equaled or exceeded 10% of accounts receivable at August 31, 2023.

One customer had a balance that represented 12 % of the consolidated accounts receivable balance at August 31, 2022.

Note 21 —

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Depreciation expense was $ 26.0 million, $ 22.0 million and $ 13.8 million as of August 31, 2023, 2022, and 2021 respectively.

In addition, certain railcar equipment leased-in by the Company on operating leases is subleased to customers under non-cancelable operating leases with lease terms ranging from one to fourteen years .

Operating lease rental revenues included in the Company’s Consolidated Statements of Income as of August 31, 2023, 2022, and 2021 was $ 91.9 million, $ 66.8 million and $ 69.4 million respectively, which included $ 19.3 million, $ 18.1 million, and $ 17.1 million respectively, of revenue as a result of daily, monthly or car hire utilization arrangements.

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The Company recognizes a lease liability and corresponding right-of-use (ROU) asset based on the present value of lease payments.

To determine the present value of lease payments, as most of its leases do not provide a readily determinable implicit rate, the Company’s incremental borrowing rate is used to discount the lease payments based on information available at lease commencement date.

The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when estimating its incremental borrowing rate.

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ROU assets obtained in exchange for new operating lease liabilities

ROU assets disposed of for lease terminations

Note 22 —

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Portland Harbor Superfund Site

The Company’s Portland, Oregon manufacturing facility (the Portland Property) is located adjacent to the Willamette River.

The Company’s former Portland, Oregon manufacturing facility (the Portland Property) is located adjacent to the Willamette River.

In December 2000, the U.S.

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The EPA issued its Record of Decision (ROD) for the Portland Harbor Site on January 6, 2017 and accordingly on October 26, 2017, the AOC was terminated.

Separate from the process described above, which focused on the type of remediation to be performed at the Portland Harbor Site and the schedule for such remediation, 83 parties, including the State of Oregon and the federal government, entered into a non-judicial mediation process to try to allocate costs associated with remediation of the Portland Harbor Site.

Separate from the process described above, which focused on the type of remediation to be performed at the Portland Harbor Site and the schedule for such remediation, 96 parties, including the State of Oregon and the federal government, are participating in a non-judicial, mediated allocation process to try to allocate costs associated with remediation of the Portland Harbor Site.

The Company will continue to participate in the allocation process.

Approximately 110 additional parties signed tolling agreements related to such allocations.

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The EPA typically expects its cost estimates to be accurate within a range of - 30 % to + 50 %, but this ROD states that changes in costs are likely to occur.

The EPA has identified 15 Sediment Decision Units within the ROD cleanup area.

The EPA has identified several Sediment Decision Units within the ROD cleanup area.

One of the units, RM9W, includes the nearshore area of the river sediments offshore of the Portland Property as well as downstream of the facility.

It also includes a portion of the Company’s riverbank.

It also includes a portion of the Portland Property's riverbank.

The ROD does not break down total remediation costs by Sediment Decision Unit.

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Some parties have signed AOCs, including one party with respect to RM9W which includes the area offshore of the Portland Property.

The Company has not signed an AOC in connection with remedial design, but will assist in conducting or funding a portion of the RM9W remedial design.

The Company has not signed an AOC in connection with remedial design, but is assisting in funding a portion of the RM9W remedial design.

The ROD does not address responsibility for the costs of clean-up, nor does it allocate such costs among the potentially responsible parties.

Responsibility for funding and implementing the EPA's selected cleanup remedy will be determined at an unspecified later date.

Based on the investigation to date, the Company believes that it did not contribute in any material way to contaminants of concern in the river sediments or the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to its property precedes the Company’s ownership of the Portland Property.

Based on the investigation to date, the Company believes that it did not contribute in any material way to contaminants of concern in the river sediments or the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to the Portland Property precedes the Company’s ownership of the Portland Property.

Because these environmental investigations are still underway, sufficient information is currently not available to determine the Company’s liability, if any, for the cost of any required remediation or restoration of the Portland Harbor Site or to estimate a range of potential loss.

Based on the results of the pending investigations and future assessments of natural resource damages, the Company may be required to incur costs associated with additional phases of investigation or remedial action, and may be liable for damages to natural resources.

In addition, the Company may be required to perform periodic maintenance dredging in order to continue to launch vessels from its launch ways in Portland, Oregon, on the Willamette River, and the river's classification as a Superfund site could result in some limitations on future dredging and launch activities.

Any of these matters could adversely affect the Company’s business and Consolidated Financial Statements, or the value of the Portland Property.

On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including the Company as well as the U.S.

and the State of Oregon for costs it incurred in assessing alleged natural resource damages to the Columbia River from contaminants deposited in Portland Harbor.

On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including the Company as well as the federal government and the State of Oregon for costs it incurred in assessing alleged natural resource damages to the Columbia River from contaminants deposited in Portland Harbor.

Confederated Tribes and Bands of the Yakama Nation v.

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The case has been stayed until January 14, 2025.

Oregon Department of Environmental Quality (DEQ) Regulation of Portland Manufacturing Operations

Oregon Department of Environmental Quality (DEQ) Regulation of Portland Property

The Company entered into a Voluntary Cleanup Agreement with the Oregon Department of Environmental Quality (DEQ) in which the Company agreed to conduct an investigation of whether, and to what extent, past or present operations at the Portland Property may have released hazardous substances into the environment.

The Company has also signed an Order on Consent with the DEQ to finalize the investigation of potential onsite sources of contamination that may have a release pathway to the Willamette River.

Interim precautionary measures are also required in the order and the Company is discussing with the DEQ potential remedial actions which may be required.

The Company’s aggregate expenditure has not been material, however it could incur significant expenses for remediation.

Some or all of any such outlay may be recoverable from other responsible parties.

Sale of Portland Property

The Company sold the Portland Property in May 2023, but remains potentially liable with respect to the above matters.

Any of these matters could adversely affect the Company's business and Consolidated Financial Statements.

However, any contamination or exacerbation of contamination that occurs after the sale of the property will be the liability of the current and future owners and operators of the Portland Property.

Other Litigation, Commitments and Contingencies

Following conclusion of an investigation, the Company reached a preliminary agreement in principle (“Proposed Settlement”) with the Securities and Exchange Commission (“SEC”) staff pursuant to which the Company would consent, without admitting or denying the SEC’s allegations, to the entry of an administrative order to cease-and-desist from violating certain federal securities laws and would pay a civil penalty of $ 1 million.

The Proposed Settlement relates to disclosures of executive compensation perquisites and related party transactions in the Company’s proxy statements filed with the SEC in connection with annual meetings of shareholders.

None of the violations included in the Proposed Settlement include an allegation of intentional wrongdoing by the Company.

The Proposed Settlement with the SEC staff is subject to approval by the Commissioners of the SEC.

There can be no assurance that the Proposed Settlement will be approved by the Commissioners of the SEC upon the terms as currently proposed or at all.

In consultation with outside advisors, the Company has determined that no amendment to the Company’s previously filed periodic reports, and no restatement of the previously issued financial statements of the Company for the applicable periods, would be required in connection with the matters described above.

The Company believes the Proposed Settlement is in the best interest of the Company and its shareholders.

From time to time, Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcomes of which cannot be predicted with certainty.

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Notes payable as of August 31, 2022

1 Carrying amount disclosed in this table excludes debt discount and debt issuance costs.

The carrying amount of cash and cash equivalents, accounts and notes receivable, revolving notes and accounts payable and accrued liabilities is a reasonable estimate of fair value of these financial instruments.

1 Carrying amount disclosed in this table excludes other notes payable and debt discount and issuance costs.

The carrying amount of cash and cash equivalents, accounts receivable, revolving notes and accounts payable and accrued liabilities is a reasonable estimate of fair value of these financial instruments.

Estimated rates currently available to the Company for debt with similar terms and remaining maturities and current market data are used to estimate the fair value of notes payable.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis