What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-10-24 compared with 2023-10-25 · 482 added, 601 removed, 911 unchanged (54% of the section changed)

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Executive Summary

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;

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 financial results for 2024 reflect a successful year executing on our multi-year strategy outlined last year.

The strategy has three basic tenets:

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(3) 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

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

We delivered strong results during the year, however, supply chain challenges, rail service congestion, inflation, high interest rates, labor shortages and foreign currency fluctuations continued to impact our business for the year ended August 31, 2024.

Despite these challenges, we were able to deliver strong results and accomplish the following in 2024:

• Achieved our second highest annual revenue in our company's history.

• Expanded our Margin as a percentage of Revenue from 11.2% in 2023 to 15.8% in 2024.

• Received new railcar orders for 21,700 units valued at approximately $2.8 billion.

• Increased our owned lease fleet by 2,100, representing a 15.7% increase from the prior year.

• Generated $330 million of Net cash provided by operating activities.

We believe these results demonstrate the benefit of our continued focus on our strategic plan, and we remain focused on increasing recurring revenue, expanding our aggregate gross margin and raising our return on invested capital.

Recurring revenue is defined as Leasing & Management Services revenue excluding the impact of syndication transactions.

Financial Highlights

Despite the challenging operating environment, we accomplished the following in 2024:

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.

• Margin as a percentage of Revenue improved by 4.6% to 15.8% for the year ended August 31, 2024.

The increase from the prior year was driven by operating efficiencies and favorable product mix in our Manufacturing segment.

• Earnings from operations increased by $148.1 million or 84.0% compared to the prior year.

The increase was primarily attributed to an increase in Margin in our Manufacturing and Leasing & Management Services segments during the year ended August 31, 2024.

The prior year also included $46.7 million in Asset impairment, disposal, and exit costs, net.

• Diluted Earnings per common share (EPS) increased by 162% to $4.96 for the year ended August 31, 2024.

• Net cash provided by operating activities increased $258.4 million compared to the prior year.

The increase was primarily attributed to a change in Leased railcars for syndication and a $97.1 million increase in Net earnings for the year ended August 31, 2024.

Manufacturing Backlog

Our backlog remains strong at August 31, 2024 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.

• Our railcar backlog was 26,700 units with an estimated value of $3.4 billion as of August 31, 2024 with expected deliveries reaching 2026 and beyond.

• During 2024, we generated new railcar orders of 21,700 units valued at approximately $2.8 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.

A portion of the orders included in backlog reflects an assumed product mix.

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

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 includes approximately $590 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.

Approximately 3% of backlog units and estimated value as of August 31, 2024 was associated with our Brazilian manufacturing operation 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.

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

Customers may attempt to cancel or modify orders in backlog.

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Financial Overview

Revenue, Cost of revenue, Margin and Earnings from operations (operating profit) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.

Revenue, Cost of revenue, Margin and Earnings from operations (operating profit) presented below exclude intersegment activity that is eliminated in consolidation.

Year Ended August 31,

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Net gain on disposition of equipment

Asset impairment, disposal, and exit costs

Asset impairment, disposal, and exit costs, net

Earnings from operations

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Diluted earnings per common share

Performance for our segments is evaluated based on operating profit.

Performance for our reportable segments is evaluated based on operating profit.

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.

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Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various average selling prices and margins.

The demand for, and mix of, products and services delivered changes from period to period, which causes fluctuations in our results of operations.

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 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 33.2% increase in railcar deliveries and higher material and other input costs in the current year.

Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins.

The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.

The 10.1% decrease in Revenue for the year ended August 31, 2024 as compared to the prior year was primarily due to a 10.2% decrease in Manufacturing Revenue.

The decrease in Manufacturing Revenue was primarily attributed to a 10.4% decrease in deliveries.

The 14.8% decrease in Cost of revenue for the year ended August 31, 2024 as compared to the prior year was primarily due to a 14.1% decrease in Manufacturing Cost of revenue.

The decrease in Manufacturing Cost of revenue was primarily attributed to a 10.4% decrease in deliveries during the year ended August 31, 2024.

Margin as a percentage of Revenue was 15.8% and 11.2% for the years ended August 31, 2024 and 2023, respectively.

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.

Margin as a percentage of Revenue was positively impacted by an increase in Manufacturing Margin percentage from 8.2% to 12.1% primarily attributed to operating efficiencies and favorable product mix during the year ended August 31, 2024.

The $97.6 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2024 as compared to the prior year was primarily due to the following:

• $117.4 million increase in Margin for the year ended August 31, 2024 primarily due to operating efficiencies and a favorable product mix within our Manufacturing segment and an increase in rents associated with a larger lease fleet and improved lease rates in our Leasing & Management Services segment.

• $46.7 million in Asset impairment, disposal and exit costs, net for the year ended August 31, 2023 primarily related to the sale and closure of our Gunderson Facility.

These were partially offset by the following:

• $37.4 million increase in Income tax expense associated with higher pre-tax earnings during the year ended August 31, 2024.

• $15.4 million increase in Interest and foreign exchange primarily attributed to an increase in interest expense from higher borrowings and interest rates for the year ended August 31, 2024.

• $11.8 million increase in Selling and administrative expense was primarily attributed to an increase in employee related costs including higher long-term incentive compensation for the year ended August 31, 2024.

For discussion related to the results of operations and changes in financial condition for 2023 compared to 2022 refer to Part II, Item 7.

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Year Ended August 31,

(In millions, except railcar deliveries)

(In millions, except deliveries)

Cost of revenue

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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.

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of railcars and from the conversion of existing or in-service railcars through our facilities in North America and Europe.

Manufacturing Revenue decreased $344.1 million or 10.2% for the year ended August 31, 2024 compared to the prior year.

The decrease in Revenue was primarily attributed to a 10.4% decrease in deliveries during the year ended August 31, 2024.

Manufacturing Cost of revenue decreased $434.5 million or 14.1% for the year ended August 31, 2024 compared to the prior year.

The decrease in Cost of revenue was primarily attributed to a 10.4% decrease in the volume of deliveries and favorable product mix during the year ended August 31, 2024.

Manufacturing Margin as a percentage of Revenue increased 3.9% for the year ended August 31, 2024 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.

The increase in Margin percentage was primarily attributed to operating efficiencies and favorable product mix during the year ended August 31, 2024.

Manufacturing Operating profit increased $140.7 million or 99.9% for the year ended August 31, 2024 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.

The increase in Operating profit was primarily attributed to an increase in Margin during the year ended August 31, 2024 as well as the prior year including $46.7 million of charges related to the sale and closure of our Gunderson Facility during the year ended August 31, 2023.

Maintenance Services Segment

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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 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 operating at higher volumes.

Our Maintenance Services segment primarily generates revenue from railcar component manufacturing and servicing, providing railcar maintenance services and scrapping wheels and other components.

Maintenance Services Revenue decreased $107.6 million or 26.5% for the year ended August 31, 2024 compared to the prior year.

The decrease was primarily attributed to 11.6% lower volumes in our wheels business due to lower demand, a change in product mix and a $9.1 million decrease due to lower scrap metal volume and pricing.

Maintenance Services Cost of revenue decreased $99.9 million or 27.4% for the year ended August 31, 2024 compared to the prior year.

The decrease was primarily due to operating at lower volumes and a change in product mix during the year ended August 31, 2024.

Maintenance Services Margin as a percentage of Revenue increased 1.2% for the year ended August 31, 2024 compared to the prior year.

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 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.

The increase in Margin percentage was primarily attributed to a favorable change in product mix during the year ended August 31, 2024.

This was partially offset by a decrease in scrap metal pricing during the year ended August 31, 2024.

Maintenance Services Operating profit decreased $9.8 million or 26.6% for the year ended August 31, 2024 compared to the prior year.

The decrease in Operating profit was primarily attributed to operating at lower volumes and a decrease in scrap metal pricing and volume during the year ended August 31, 2024.

Leasing & Management Services Segment

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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.

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, interim rent on leased railcars for syndication and the sale of railcars purchased from third parties with the intent to resell.

Leasing & Management Services Revenue increased $52.4 million or 29.1% for the year ended August 31, 2024 compared to the prior year.

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.

The increase was primarily attributed to an increase of $19.7 million in rents associated with a larger lease fleet and higher lease rates, an $8.9 million increase in the sale of railcars which were purchased from third parties with the intent to resell and a $9.7 million increase in interim rent on leased railcars for syndication during the year ended August 31, 2024.

Leasing & Management Services Cost of revenue increased $17.7 million or 31.9% for the year ended August 31, 2024 compared to the prior year.

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 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.

This was primarily due to higher costs from an increase in the volume of railcars sold that we purchased from third parties and a larger lease fleet during the year ended August 31, 2024.

Leasing & Management Services Margin as a percentage of Revenue decreased 0.6% for the year ended August 31, 2024 compared to the prior year.

Margin as a percentage of Revenue for the year ended August 31, 2024 was negatively impacted by higher sales of railcars that were purchased from third parties which have lower margin percentages.

Leasing & Management Services Operating profit increased $35.7 million or 34.6% for the year ended August 31, 2024 compared to the prior year.

The increase was primarily attributed to higher rents from a larger lease fleet and improved lease rates during the year ended August 31, 2024.

Selling and Administrative

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Selling and administrative expense was $247.1 million or 7.0% of Revenue for the year ended August 31, 2024 and $235.3 million or 6.0% of Revenue for the year ended August 31, 2023.

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

The $11.8 million increase was primarily attributed to an increase in employee related costs including higher long-term incentive compensation during the year ended August 31, 2024.

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 optimize our fleet and to manage risk and liquidity.

Net gain on disposition of equipment typically 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 optimize our lease fleet and to manage risk and liquidity.

Net gain on disposition of equipment was $13.1 million and $17.3 million for the years ended August 31, 2024 and 2023, respectively.

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, 2024.

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.

Asset Impairment, Disposal and Exit Costs, Net

Asset impairment, disposal, and exit costs, net was $46.7 million for the year ended August 31, 2023 related to charges associated with the Gunderson Facility and divestiture of Southwest Steel, partially offset by a gain on disposal of majority interest in the Rayvag joint venture.

Interest and Foreign Exchange

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Interest and other expense

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.

Foreign exchange loss, net

The $15.4 million increase in Interest and foreign exchange expense during the year ended August 31, 2024 compared to the prior year was primarily attributed to an increase in interest expense from higher borrowings and interest rates.

In 2024 our Income tax expense was $62.0 million on $223.7 million of pre-tax earnings for an effective tax rate of 27.7%.

The rate was higher than the U.S statutory tax rate primarily due to the geographic mix of earnings, nondeductible expenses, increased valuation allowance, and U.S.

taxes on profits in foreign jurisdictions, offset by a benefit for additional U.S.

foreign tax credits carried forward to future periods.

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.

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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.

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 before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.

The EU Member States have formally adopted the Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organisation for Economic Co-operation and Development (OECD) Pillar Two Framework.

The OECD Pillar Two Framework must be adopted by each respective country into their tax laws, which are effective for us beginning on September 1, 2024.

We continue to closely monitor additional guidance from the OECD and analyze potential impacts these law changes may have, however we do not expect a material change to our effective tax rate.

Earnings From Unconsolidated Affiliates

Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil.

We record the after-tax results from these unconsolidated affiliates.

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

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

We record the results from these unconsolidated affiliates on an after-tax basis.

Earnings from unconsolidated affiliates were $11.0 million and $9.2 million for the years ended August 31, 2024 and 2023, respectively.

The increase was primarily related to $5.2 million in higher earnings at our Brazil operations during the year ended August 31, 2024.

This was partially offset by $4.5 million in lower earnings related to a temporarily idle facility during the year ended August 31, 2024.

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.

Net earnings attributable to noncontrolling interest were $12.6 million and $13.1 million for the years ended August 31, 2024 and 2023, respectively.

Net earnings attributable to noncontrolling interest 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.

Liquidity and Capital Resources

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(In millions)

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Net cash used in investing activities

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Effect of exchange rate changes

Net decrease in cash and cash equivalents and restricted cash

We have been financed through cash generated from operations and borrowings.

At August 31, 2023 cash and cash equivalents and restricted cash were $302.7 million, a decrease of $256.4 million from $559.1 million at the prior year end.

Net increase (decrease) in cash and cash equivalents and restricted cash

We continue to be financed through cash generated from operations and borrowings.

At August 31, 2024 Cash and cash equivalents and Restricted cash were $368.6 million, an increase of $65.9 million from $302.7 million at the prior year end.

Cash Flows From Operating Activities

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.

The $258.4 million increase in cash from operating activities for the year ended August 31, 2024 compared to the year ended August 31, 2023 was primarily due to a change in Leased railcars for syndication and a $97.1 million increase in Net earnings.

Cash Flows From Investing Activities

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.

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

The $40.4 million increase in cash used in investing activities for the year ended August 31, 2024 was primarily attributable to a $36.2 million increase in capital expenditures compared to the year ended August 31, 2023.

Year Ended August 31,

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Total capital expenditures (gross)

Proceeds from sale of equipment

Proceeds from sales of assets

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, 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.

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

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

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 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 $90 million for 2025.

Gross capital expenditures for 2025 are expected to be approximately $360 million for Leasing & Management Services, approximately $110 million for Manufacturing and approximately $10 million for Maintenance Services.

Capital expenditures for 2025 primarily relate to additions to our lease fleet reflecting our leasing strategy and continued investments into the safety and productivity of our facilities.

Cash Flows From Financing Activities

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.

The $162.4 million increase in cash flow from financing activities for the year ended August 31, 2024 compared to the year ended August 31, 2023 was primarily attributed to a $57.4 million increase in net proceeds from revolving notes, $52.8 million higher proceeds from the issuance of notes payable, net of repayments and a $55.6 million reduction in the repurchase of stock compared to the prior year.

During the year ended August 31, 2024 we issued $178.5 million of asset backed securities and used proceeds to pay down $139.9 million of our GBX Leasing warehouse facility.

We also borrowed $196.6 million on the GBX Leasing

warehouse facility to grow the lease fleet.

In February 2024, we paid $47.7 million to retire our 2024 Convertible Notes.

Dividend & Share Repurchase Program

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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.

The program may be modified, suspended, or discontinued at any time without prior notice and currently has an expiration date of January 31, 2025.

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

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

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, 2024, we purchased a total of 38 thousand shares for $1.3 million.

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, 2024, the amount remaining for repurchase under the share repurchase program was $45.1 million.

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

Cash, Borrowing Availability and Credit Facilities

As of August 31, 2023, we had $281.7 million in Cash and cash equivalents and $364.4 million in available borrowings.

Our current cash balance is part of our strategy to maintain strong liquidity to respond to current uncertainties.

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

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, existed to provide working capital and interim financing of equipment, principally for our U.S.

As of August 31, 2024, we had $351.8 million in Cash and cash equivalents and $345.9 million in available borrowings.

The available balance to draw under committed credit facilities includes $258.3 million on the North American credit facility, $31.6 million on the European credit facilities and $56.0 million on the Mexican credit facilities.

Our senior secured credit facilities, consisting of four components, aggregated to $1.4 billion as of August 31, 2024.

Nonrecourse Credit Facilities

GBX Leasing – As of August 31, 2024, a $550.0 million nonrecourse warehouse credit facility existed to support the operations of GBX Leasing.

Advances under the facility are secured by a pool of leased railcars and bear interest at the Secured Overnight Financing Rate (SOFR) plus 1.85% plus 0.11% as a SOFR adjustment.

As of August 31, 2024, interest rate swap agreements cover 74% of the outstanding balance to swap the floating interest rate to a fixed rate.

The warehouse credit facility was amended in September 2024 to reduce the size of the credit facility by $100.0 million to $450.0 million and to extend the maturity date from August 2027 to September 2029.

The warehouse credit facility currently converts to a term loan in September 2027.

Other Credit Facilities

North America – As of August 31, 2024, a $600.0 million revolving line of credit existed to provide working capital and interim financing of equipment, principally for our U.S.

and Mexican operations.

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.

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.

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 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 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 North America credit facility is secured by substantially all our U.S.

assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities.

Available borrowings 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.

Advances 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.

The North America credit facility matures in August 2026.

Europe – As of August 31, 2024, lines of credit totaling $78.2 million, secured by certain of our European assets, were available for working capital needs of our European manufacturing operations.

The European lines of credit include $33.1 million which are guaranteed by us.

The European credit facilities have variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.10% to WIBOR plus 1.45% and Euro Interbank Offered Rate (EURIBOR) plus 1.90%.

The European credit facilities are regularly renewed and currently have maturities that range from October 2024 through September 2026.

Mexico – As of August 31, 2024, our Mexican railcar manufacturing operations had lines of credit totaling $166.0 million for working capital needs, $66.0 million of which we and our joint venture partner have each guaranteed 50%.

Advances under these facilities bear interest at variable rates that range from SOFR plus 2.22% to SOFR plus 4.25%.

The Mexican credit facilities have maturities that range from February 2025 through January 2027.

As of August 31,

(In millions)

Credit facility balances:

Nonrecourse credit facility balances:

Other credit facility balances:

North America

Total Revolving notes

As of August 31, 2023, outstanding commitments under the North American credit facility included letters of credit which totaled $4.9 million.

Outstanding commitments under the North American credit facility included letters of credit which totaled $5.9 million and $4.9 million as of August 31, 2024 and 2023, respectively.

Other Information

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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.

1 The repayment of 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, 2024.

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.

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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.

For further information, see Note 4 - Divestitures to the Consolidated Financial Statements.

Goodwill - 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 test goodwill for impairment by either performing a qualitative or quantitative assessment.

When we perform a qualitative assessment, we analyze macroeconomic and industry conditions, 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 carrying value of a reporting unit exceeds its respective fair value, a quantitative assessment is performed.

We performed a qualitative assessment for our annual goodwill impairment test during the third quarter of 2024 and determined that it was more likely than not that the fair values of all reporting units with goodwill exceeded their carrying values;

therefore, we concluded that goodwill was not impaired.

When we perform a quantitative assessment, we exercise judgment to develop estimates of the fair values 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.

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 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.

In 2023, we performed a quantitative goodwill impairment test and determined that the estimated fair values of all reporting units with goodwill exceeded their carrying values.

We make certain estimates and assumptions to determine our reporting units and whether the fair value of each reporting unit is greater than its respective carrying 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, 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.

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 7 - Goodwill to the Consolidated Financial Statements.

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

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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.

For further information regarding income taxes, see Note 17 - Income Taxes to the Consolidated Financial Statements.

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

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Judgments used in determining if a liability is estimable are subjective and based on known facts and our historic experience.

If further developments in or resolution of an environmental matter result in facts and circumstances that differ from those assumptions used to develop these reserves, the accrual for environmental remediation could be materially understated or overstated.

Due to the uncertain nature of environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us.

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

For further information regarding our environmental costs, see Note 21 - Commitments and Contingencies to the Consolidated Financial Statements.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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We have audited the accompanying consolidated balance sheets of The Greenbrier Companies, Inc.

and subsidiaries (the Company) as of August 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended August 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2023, in conformity with U.S.

and subsidiaries (the Company) as of August 31, 2024 and August 31, 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended August 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2024 and August 31, 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2024, in conformity with U.S.

generally accepted accounting principles.

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 25, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for convertible instruments and contracts in the Company’s own equity as of September 1, 2021 due to the adoption of Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 24, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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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.

Controls and Procedures, a material weakness was identified as of August 31, 2023 that was remediated during fiscal year 2024.

The description of the material weakness stated 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.

As a result, during the period of fiscal year 2024 in which the material weakness remained unremediated, 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 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

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

• 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

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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.

Portland, Oregon

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25,000 shares authorized;

none outstanding

Common stock - without par value;

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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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Translation adjustment

Reclassification of derivative financial instruments recognized

in net earnings 1

Unrealized gain (loss) on derivative financial instruments 2

Reclassification of derivative financial instruments recognized in net earnings 1

Unrealized gain on derivative financial instruments 2

Other (net of tax effect)

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Balance August 31, 2021

Cumulative effect adjustment due to

adoption of ASU 2016-13 (See

Other comprehensive income, net

Cumulative effect adjustment due to adoption of ASU 2020-06 (See Note 2)

Other comprehensive loss, net

Noncontrolling interest adjustments

Joint venture partner distribution

Investment by joint venture partner

Restricted stock awards (net of

cancellations)

Joint venture partner distribution declared

Restricted stock awards (net of cancellations)

Unamortized restricted stock

Stock based compensation expense

Repurchase of stock

2.875 % Convertible senior notes,

due 2028 - equity component, net

2.875 % Convertible senior notes,

due 2028 issuance costs - equity

component, net of tax

2.875 % Convertible senior notes,

due 2024 - equity component

extinguishment, net of tax

2.25 % Convertible Senior Notes,

due 2024 - equity component, net

Cash dividends ($ 1.08 per share)

Balance August 31, 2022

Cumulative effect adjustment due to

adoption of ASU 2020-06 (See

Other comprehensive loss, net

Other comprehensive income, net

Noncontrolling interest adjustments

Joint venture partner distribution

Restricted stock awards (net of

cancellations)

Joint venture partner distribution declared

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

Other comprehensive income, net

Other comprehensive loss, net

Noncontrolling interest adjustments

Joint venture partner distribution

Restricted stock awards (net of

cancellations)

Joint venture partner distribution declared

Restricted stock awards (net of cancellations)

Unamortized restricted stock

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Cash flows from operating activities

Adjustments to reconcile net earnings to net cash provided by (used in)

operating activities:

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Deferred income taxes

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Asset impairment, disposal, and exit costs, net

Net loss on extinguishment of debt

Accretion of debt discount

Noncontrolling interest adjustments

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Cash distribution to joint venture partner

Investment by joint venture partner

Tax payments for net share settlement of restricted stock

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Effect of exchange rate changes

Decrease in cash and cash equivalents and restricted cash

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

Cash and cash equivalents and restricted cash

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Non-cash activity

Transfer from Leased railcars for syndication and Inventories to

Equipment on operating leases, net

Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net

Capital expenditures accrued in Accounts payable and accrued liabilities

Transfer from Property, plant and equipment, net to

Intangibles and other assets, net for assets moved to Assets held for sale

Change in Accounts payable and accrued liabilities associated with

dividends declared

Change in Accounts payable and accrued liabilities associated with cash

distributions to joint venture partner

Transfer from Property, plant and equipment, net to Intangibles and other assets, net for assets moved to Assets held for sale

Change in Accounts payable and accrued liabilities associated with dividends declared

Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner

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

Notes to Consolidated Financial Statements

Note 1 —

Nature of Operations

Note 1 — Nature of Operations

The Company operates in three reportable segments:

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

Note 2 —

Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

Principles of consolidation - The financial statements include the accounts of the Company and its subsidiaries in which it has a controlling interest.

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Restricted cash - Restricted cash relates to amounts held to support a target minimum rate of return on certain agreements, terms of our credit agreement, and a pass through account for activity related to management services provided for certain third-party customers.

Accounts receivable - Accounts receivable consists of receivables from customers and receivables from related parties (see Note 17 - Related Party Transactions) and is stated net of allowance for doubtful accounts of $ 2.8 million and $ 2.3 million as of August 31, 2023 and 2022, respectively.

Accounts receivable - Accounts receivable consists of receivables from customers and receivables from related parties (see Note 16 - Related Party Transactions to the Consolidated Financial Statements) and is stated net of allowance for doubtful accounts of $ 3.6 million and $ 2.8 million as of August 31, 2024 and 2023, respectively.

As of August 31,

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Finished goods includes completed wheels, parts and railcars in transit or not on lease.

Leased railcars for syndication - Leased railcars for syndication consist of newly-built railcars manufactured at one of the Company’s facilities or railcars purchased from third parties, which have been placed on lease to a customer and which the Company intends to sell to an investor with the lease attached.

These railcars are generally anticipated to be sold within six months of delivery of the last railcar in a group or six months from when the Company acquires the railcar from a third-party and are typically not depreciated during that period as the Company does not believe any economic value of a railcar is lost in the first six months.

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Management periodically reviews useful lives and salvage value estimates based on current scrap prices and what the Company expects to receive upon disposal.

Investment in unconsolidated affiliates - Investment in unconsolidated affiliates includes the Company’s interests in certain investees which are accounted for under the equity method of accounting as the Company has determined that the investment provides the Company with the ability to exercise significant influence, but not control, over the investee.

Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee of at least 20%.

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, 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.

As of August 31, 2024 , 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.

The Company does not consolidate Greenbrier-Maxion for financial reporting purposes and accounts for its interest under the equity method of accounting as the entity's governance provisions require that all significant decisions of Greenbrier-Maxion are subject to shared consent of its shareholders.

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 .

Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment.

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.

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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, 2024 and 2022 .

See Note 5 –

Divestitures for additional information.

See Note 4 - Divestitures to the Consolidated Financial Statements 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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The Company reviews goodwill for impairment annually using either a qualitative assessment or a quantitative goodwill impairment test.

If the qualitative assessment is selected 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 reporting units where the Company performs the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value.

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

is necessary.

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 –

Goodwill for additional information.

No impairment of goodwill was recorded in the years ended August 31, 2024, 2023, and 2022 .

See Note 7 - Goodwill to the Consolidated Financial Statements for additional information.

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

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Noncontrolling interest and Contingently redeemable noncontrolling interest - The Company has a joint venture with Grupo Industrial Monclova, S.A.

(GIMSA) that manufactures new railroad freight cars for the North American marketplace at GIMSA’s existing manufacturing facility located in Frontera, Mexico.

Each party owns a 50 % interest in the joint venture.

The financial results of this operation are consolidated for financial reporting purposes as the Company maintains a controlling interest as evidenced by the right to appoint the majority of the Board of Directors, control over accounting, financing, marketing and engineering and approval and design of products.

The noncontrolling interest related to the partner’s 50 % interest in the joint venture is included in Noncontrolling interest in the equity section of the Company’s Consolidated Balance Sheet.

Greenbrier-Astra Rail was formed in 2017 between the Company’s existing European operations headquartered in Swidnica, Poland and Astra Rail, based in Arad, Romania.

Greenbrier-Astra Rail is controlled by the Company with an approximate 75 % interest.

Astra Rail also received a put option to sell its entire noncontrolling interest to Greenbrier at an exercise price equal to the higher of fair value or a defined EBITDA multiple as measured on the exercise date.

The noncontrolling interest related to the partner’s 50 % interest in the joint venture is included in Noncontrolling interest in the equity section of the Company’s Consolidated Balance Sheet.

Greenbrier-Astra Rail B.V.

was formed in 2017 to combine the Company’s existing European operations headquartered in Swidnica, Poland and Astra Rail Industries S.A., based in Arad, Romania.

Greenbrier-Astra Rail B.V.

is controlled by the Company with an approximate 75 % interest.

Astra Holdings GmbH received a put option to sell its entire noncontrolling interest to the Company at an exercise price equal to the higher of fair value or a defined earnings before interest, taxes, depreciation and amortization (EBITDA) multiple as measured on the exercise date.

During 2022, the option was extended to be exercisable 30 business days prior to and up until June 1, 2026.

The Company consolidates Greenbrier-Astra Rail for financial reporting purposes and includes the noncontrolling interest in the mezzanine section of the Consolidated Balance Sheet in Contingently redeemable noncontrolling interest.

The Company consolidates Greenbrier-Astra Rail B.V.

for financial reporting purposes and includes the noncontrolling interest in the mezzanine section of the Consolidated Balance Sheet in Contingently redeemable noncontrolling interest.

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.

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’

share of results from operations.

Accumulated other comprehensive loss –

Accumulated other comprehensive loss, net of tax as appropriate, consisted of the following:

During the fourth quarter of 2024, the Company recorded a noncash $ 16.2 million redemption value adjustment to Contingently redeemable noncontrolling interest and Retained earnings to reduce the carrying value to the maximum redemption amount.

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

The change in the maximum redemption amount in 2023 and 2024 was primarily attributed to industry and entity-specific indicators which impacted the estimated future cash flows of Greenbrier-Astra Rail B.V.

Net earnings attributable to noncontrolling interest on the Company’s Consolidated Statement of Income represents the Company’s partners’ share of results from operations.

Accumulated other comprehensive loss – Accumulated other comprehensive loss, net of tax as appropriate, consisted of the following:

(In millions)

on Derivative

Comprehensive

Unrealized Gain (Loss) on Derivative Financial Instruments

Foreign Currency Translation Adjustment

Accumulated Other Comprehensive Loss

Balance, August 31, 2023

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other

comprehensive loss

Amounts reclassified from accumulated other comprehensive loss

Balance, August 31, 2024

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Tax expense (benefit)

Revenue recognition –

The Company measures revenue at the amounts that reflect the consideration to which it expects to be entitled in exchange for transferring control of goods and services to customers.

Revenue recognition – The Company measures revenue at the amounts that reflect the consideration to which it expects to be entitled in exchange for transferring control of goods and services to customers.

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

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

The Company’s contracts with customers may include multiple performance obligations (e.g.

railcars, maintenance, management services, etc.).

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Railcars are manufactured in accordance with contracts with customers.

The Company recognizes revenue upon its customers’

acceptance of the completed railcars at a specified delivery point.

The Company recognizes revenue upon its customers’ acceptance of the completed railcars at a specified delivery point.

From time to time, the Company enters into multi-year supply agreements.

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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.

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

This method 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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Interest and other expense

Foreign exchange (gain) loss

Foreign exchange loss, net

Forward exchange contracts - Foreign operations give rise to risks from fluctuations in foreign currency exchange rates.

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Research and development costs incurred for new product development during the years ended August 31, 2024, 2023 and 2022 were $ 5.2 million, $ 4.0 million and $ 5.4 million, respectively, included in Selling and administrative expenses.

Net earnings per share - Basic earnings per common share (EPS) is calculated using weighted average basic common shares outstanding, which include restricted stock grants and restricted stock units that are considered participating securities when the Company is in a net earnings position.

Diluted EPS is calculated using the if-converted method, associated with shares underlying the 2024 and 2028 2.875 % Convertible notes, and 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.

Stock-based compensation –

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

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

Net earnings per share - Basic EPS is calculated using weighted average basic common shares outstanding.

Diluted EPS is calculated using the if-converted method, associated with shares underlying the 2024 and 2028 2.875 % Convertible notes, and the treasury stock method associated with performance based restricted stock units subject to performance criteria.

Stock-based compensation – Stock based compensation expense consists of restricted stock units.

Restricted stock units are accounted for as equity based awards (see Note 14 - Equity to the Consolidated Financial Statements).

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

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requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain.

These estimates may affect the amount of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements.

These estimates may affect the amount of assets, liabilities, revenues and expenses

reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements.

Estimates and assumptions are periodically evaluated and may be adjusted in future periods.

Actual results could differ from those estimates.

Reclassifications - Certain immaterial reclassifications have been made to the accompanying prior year Consolidated Financial Statements to conform to the current year presentation.

Initial Adoption of Accounting Policies

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued Accounting Standard Update 2016-13, Financial Instruments –

Credit Losses (ASU 2016-13).

The Company adopted this guidance using a modified retrospective approach through a cumulative effect adjustment, which decreased opening retained earnings by $ 0.5 million on September 1, 2020.

Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued Accounting Standard Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s own equity and modifies the guidance on diluted EPS calculations as a result of these changes.

Convertible Instruments and Contracts in an Entity’s Own Equity

The Company adopted this guidance effective September 1, 2021 on a modified retrospective basis and recorded a cumulative effect adjustment to increase Retained earnings by $ 5 million.

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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.

Note 3 –

Asset Backed Securities

GBX Leasing 2022-1 LLC (GBXL I) was formed as a wholly owned special purpose entity (SPE) of GBX Leasing to securitize the leasing assets of GBX Leasing.

On February 9, 2022, GBXL I (Issuer) issued $ 323.3 million of term notes secured by a portfolio of railcars and associated operating leases and other assets, acquired and owned by GBXL I.

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

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).

The GBXL Notes bear interest at fixed rates of 2.87 % and 3.45 % for the Class A Notes and Class B Notes, respectively.

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 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.

While the legal maturity date is in 2052 , the cash flows generated from the railcar assets will pay down the GBXL Notes in line with the agreement, which based on expected cash flow payments, would result in repayment in advance of the legal maturity date.

If the principal amount of the GBXL Notes has not been repaid in full by the anticipated repayment date, then the Issuer will also be required to pay additional interest to the holders at a rate equal to 4.00 % per annum.

The GBXL Notes are obligations of the Issuer only and are nonrecourse to Greenbrier.

The GBXL Notes are subject to a Master Indenture between the Issuer and U.S.

Bank Trust Company, National Association, as trustee, as supplemented by a Series 2022-1 Supplement dated February 9, 2022.

The GBXL Notes may be subject to acceleration upon the occurrence of certain events of default.

The following table summarizes the Issuer's net carrying amount of the assets transferred and the related debt.

As of August 31,

(In millions)

Restricted cash

Equipment on operating leases, net

Notes payable, net

Note 4 –

Revenue Recognition

Recent Accounting Pronouncements

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application to all periods presented upon adoption.

The Company is currently evaluating the impact that ASU 2023-07 will have on its consolidated financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statement disclosures.

Note 3 – Revenue Recognition

Contract balances

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:

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

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

(In millions)

Balance sheet

classification

Balance sheet classification

August 31, 2024

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Deferred revenue

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.

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

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Revenue type:

Manufacturing –

Railcar sales

Manufacturing –

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.

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

Manufacturing – Railcar sales

Manufacturing – 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 2025 while the remaining amount is expected to be recognized in 2026 and beyond.

Sustainable conversions represent orders to modify existing railcars and are expected to be recognized in 2025.

Services includes management and maintenance services of which approximately 61 % are expected to be performed through 2029 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.

Note 4 – Divestitures

In November 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.

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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 —

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

The Company deconsolidated Rayvag and its noncontrolling interest 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.

Total Asset impairment, disposal, and exit costs, net were $ 46.7 million for the year ended August 31, 2023.

There were no Asset impairment, disposal, and exit costs, net for the years ended August 31, 2024 and 2022.

Note 5 — Inventories

As of August 31,

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Balance at end of period

Note 7 —

Property, Plant and Equipment, net

Note 6 — Property, Plant and Equipment, net

As of August 31,

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Depreciation expense was $ 72.4 million, $ 71.5 million and $ 70.7 million for the years ended August 31, 2024, 2023 and 2022 , respectively.

Note 8 —

Note 7 — Goodwill

Changes in the carrying value of goodwill are as follows:

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(In millions)

Gross goodwill balance before accumulated goodwill impairment losses and other

Gross goodwill balance before accumulated goodwill impairment losses and other reductions

Accumulated goodwill impairment losses

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The Company performed its annual goodwill impairment test during the third quarter of 2024.

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.

The Company utilized the qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its respective 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 the qualitative assessment, the Company determined that it was more likely than not that the fair value of each reporting unit with goodwill exceeded its respective carrying value and a quantitative impairment test was not necessary;

therefore, the Company concluded that goodwill was not impaired.

As of August 31, 2024 , 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 $ 42.6 million related to the Wheels & Parts reporting unit.

Note 9 —

Intangibles and Other Assets, net

Intangible assets that are determined to have finite lives are amortized over their useful lives.

Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment.

The following table summarizes the Company’s identifiable intangible and other assets balance:

Note 8 — Intangibles and Other Assets, net

The following table summarizes the Company’s identifiable intangible and other assets balance:

As of August 31,

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Amortization expense for the years ending August 31, 2025, 2026, 2027, 2028 and 2029 is expected to be $ 6.6 million, $ 6.1 million, $ 5.2 million, $ 3.8 million and $ 2.6 million, respectively.

Note 10 —

Revolving Notes

Note 9 — Revolving Notes

Senior secured credit facilities, consisting of four components, aggregated to $ 1.4 billion as of August 31, 2024 .

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This amount consists of $ 258.3 million available on the North American credit facility, $ 31.6 million on the European credit facilities and $ 56.0 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.

Nonrecourse credit facilities:

GBX Leasing – As of August 31, 2024 , a $ 550.0 million nonrecourse warehouse credit facility existed to support the operations of GBX Leasing.

Advances under the warehouse credit facility are secured by a pool of leased railcars and bear interest at SOFR plus 1.85 % plus 0.11 % as a SOFR adjustment.

As of August 31, 2024, interest rate swap agreements cover 74 % of the outstanding balance to swap the floating interest rate to a fixed rate.

The warehouse credit facility was amended in September 2024 to reduce the size of the credit facility by $ 100.0 million to $ 450.0 million and to extend the maturity date from August 2027 to September 2029 .

The warehouse credit facility currently converts to a term loan in September 2027.

Other credit facilities:

North America – As of August 31, 2024 , a $ 600.0 million revolving line of credit existed to provide working capital and interim financing of equipment, principally for the Company’s U.S.

and Mexican operations.

Advances under this North American credit 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.

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 .

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 North America credit facility is secured by substantially all the Company’s U.S.

assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities.

Advances 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.

The North America credit facility matures in August 2026 .

Europe – As of August 31, 2024 , lines of credit totaling $ 78.2 million secured by certain of the Company’s European assets, were available for working capital needs of the Company’s European manufacturing operations.

The European lines of credit include $ 33.1 million which are guaranteed by the Company.

European credit facilities are regularly renewed.

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 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 European credit facilities have variable rates that range from WIBOR plus 1.10 % to WIBOR plus 1.45 % and EURIBOR plus 1.90 %.

European credit facilities are regularly renewed and currently have maturities that range from October 2024 through September 2026 .

Mexico – As of August 31, 2024 , the Company’s Mexican railcar manufacturing operations had lines of credit totaling $ 166.0 million for working capital needs, $ 66.0 million of which the Company and its joint venture partner have each guaranteed 50 %.

Advances under these facilities bear interest at variable rates that range from SOFR plus 2.22 % to SOFR plus 4.25 %.

The Mexican credit facilities have maturities that range from February 2025 through January 2027 .

Revolving notes consisted of the following balances:

As of August 31,

(In millions)

Credit facility balances:

Nonrecourse credit facility balances:

Other credit facility balances:

North America

Total Revolving notes

As of August 31, 2024, repayments of Revolving notes are expected to be $ 154.4 million, $ 2.3 million, and $ 194.9 million for the years ending August 31, 2025, 2026, and 2027, respectively.

In addition, outstanding commitments under the North American credit facility included letters of credit which totaled $ 5.9 million and $ 4.9 million as of August 31, 2024 and 2023 , respectively.

Note 11 —

Accounts Payable and Accrued Liabilities

Note 10 — Accounts Payable and Accrued Liabilities

As of August 31,

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Accrued warranty

Note 12 —

Warranty Accrual

Note 11 — Warranty Accrual

As of August 31,

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Balance at end of period

Note 13 —

Notes Payable, net

Note 12 — Notes Payable, net

As of August 31,

(In millions)

Leasing nonrecourse term loans

Senior term debt

2.875 % Convertible senior notes, due 2028

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Debt discount and issuance costs

Term loans are primarily composed of:

$ 291.9 million of senior term debt, with a maturity date of August 2026 .

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 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 .

$ 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.

Leasing nonrecourse term loans include:

• N onrecourse senior term debt, secured by a pool of leased railcars.

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, 2024 was $ 320.5 million .

$ 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 –

Asset Backed Securities for additional information .

• Asset-backed term notes, as discussed below.

The principal balance as of August 31, 2024 was $ 471.6 million.

Convertible senior notes, due 2028 (2028 Convertible Notes), bear interest at a fixed rate of 2.875 %, paid semiannually in arrears on April 15 th and October 15 th .

Issuance costs are amortized using the effective interest rate method through 2028 and the amortization expense is included in Interest and Foreign exchange on the Company's Consolidated Statement of Income.

As of August 31, 2023 , the effective interest rate was 5.75 %.

The convertible notes mature on April 15, 2028 , unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.

The convertible notes are senior unsecured obligations and rank equally with other senior unsecured debt.

The notes are convertible into shares of the Company’s common stock, at an initial conversion rate of 18.0317 shares of common stock per $ 1,000 principal amount which is equivalent to an initial conversion price of approximately $ 55.46 per share.

The conversion rate and the resulting conversion price are subject to adjustment in certain events, such as distributions, dividends or stock splits.

Conversion of the par value of the note will be settled in cash, with any premium convertible in cash or shares at the Company’s option.

Upon a conversion of the notes, the Company may elect to pay or deliver, as the case may be, cash and, if applicable, shares of the Company’s common stock, as provided in the 2028 Notes Indenture (as defined below).

As of August 31, 2023 , the Company has reserved approximately 8.8 million shares for issuance upon conversion of these notes.

The 2028 Convertible Notes are subject to an indenture entered into on April 20, 2021 by the Company and Wells Fargo Bank, National Association, as trustee, as amended and restated by the first supplemental indenture dated June 1, 2021 (2028 Notes Indenture).

The 2028 Convertible Notes are convertible at the option of the holders prior to January 15, 2028 , under certain circumstances as described in the 2028 Notes Indenture.

Additionally, the Company may elect to call the notes on or after April 15, 2025 and on or before the 40 th trading day prior to April 15, 2028 , at a cash redemption price described in the 2028 Notes Indenture if the stock price exceeds 130 % of the conversion price during certain trading days as defined in the 2028 Notes Indenture.

Calling any Convertible Note for redemption will constitute a make-whole fundamental change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Convertible senior notes, due 2024 (2024 Convertible Notes), bear interest at a fixed rate of 2.875 %, paid semi-annually in arrears on February 1 st and August 1 st .

Issuance costs are amortized using the effective interest rate method through 2024 and the amortization expense is included in Interest and Foreign exchange on the Company's Consolidated Statement of Income.

As of August 31, 2023 , the effective interest rate was 4.99 %.

The convertible notes mature on February 1, 2024 , unless earlier repurchased by the Company or converted in accordance with their terms.

Upon the satisfaction of certain conditions, holders may convert at their option at any time prior to the business day immediately preceding the stated maturity date.

The convertible notes are senior unsecured obligations and rank equally with other senior unsecured debt.

The convertible notes are convertible into shares of the Company’s common stock, at an initial conversion rate of 16.6234 shares per $ 1,000 principal amount of the notes (which is equal to an initial conversion price of $ 60.16 per share).

The initial conversion rate and conversion price are subject to adjustment upon the occurrence of certain events, such as distributions, dividends or stock splits.

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

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

Senior term debt bears a floating interest rate of SOFR plus 1.50 % 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 upon maturity in August 2026 .

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, 2024 was $ 251.7 million .

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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subsidiaries, including but not limited to loans, advances, equity investments and guarantees;

enter into mergers, consolidations or sales of substantially all the Company’s assets;

and enter into new lines of business.

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Year ending August 31,

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.

Note 14 —

Derivative Instruments

1 The repayment of 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.

Convertible notes

Convertible senior notes, due 2028 (2028 Convertible Notes), bear interest at a fixed rate of 2.875 %, paid semiannually in arrears on April 15 th and October 15 th .

Issuance costs are amortized using the effective interest rate method through 2028 and the amortization expense is included in Interest and foreign exchange on the Company's Consolidated Statements of Income.

As of August 31, 2024 , the effective interest rate was 5.75 %.

The convertible notes mature on April 15, 2028 , unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.

The convertible notes are senior unsecured obligations and rank equally with other senior unsecured debt.

The conversion rate and the resulting conversion price are subject to adjustment in certain events, such as distributions, dividends or stock splits.

Conversion of the par value of the note will be settled in cash, with any premium convertible in cash or shares at the Company’s option.

As of August 31, 2024 , the Company has reserved approximately 8.2 million shares for issuance upon conversion of these notes.

The 2028 Convertible Notes are convertible at the option of the holders prior to January 15, 2028 , under certain circumstances as described in the 2028 Notes Indenture.

The Company's 2.875 % Convertible senior notes, due 2024 (2024 Convertible Notes), matured on February 1, 2024 .

The outstanding principal balance of $ 47.7 million plus accrued interest was settled in cash on the maturity date to retire the 2024 Convertible Notes.

Asset-backed term notes

GBX Leasing 2022-1 LLC (GBXL I or Issuer) was formed as a wholly owned special purpose entity (SPE) of GBX Leasing to securitize the leasing assets of GBX Leasing.

GBXL I issued $ 323.3 million of term notes in February 2022 (2022 GBXL Notes) and $ 178.5 million of term notes in November 2023 (2023 GBXL Notes), which are secured by a portfolio of railcars and associated operating leases and other assets, acquired and owned by GBXL I.

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

Issued debt of GBXL I includes:

• GBXL I Series 2022-1 Class A Secured Railcar Equipment Notes (2022 Class A Notes) with a principal balance of $ 274.8 million as of August 31, 2024 and GBXL I Series 2022-1 Class B Secured Railcar Equipment Notes (2022 Class B Notes) with a principal balance of $ 20.7 million as of August 31, 2024, collectively the 2022 GBXL Notes;

• GBXL I Series 2023-1 Class A Secured Railcar Equipment Notes (2023 Class A Notes) with a principal balance of $ 156.7 million as of August 31, 2024 and GBXL I Series 2023-1 Class B Secured Railcar Equipment Notes (2023 Class B Notes) with a principal balance of $ 19.4 million as of August 31, 2024, collectively the 2023 GBXL Notes.

GBX Leasing used the net proceeds received from the issuance of the 2023 GBXL Notes to pay down the GBX Leasing warehouse credit facility.

The 2022 GBXL Notes bear interest at fixed rates of 2.87 % and 3.45 % for the Class A Notes and Class B Notes, respectively.

The 2022 GBXL Notes are payable monthly , with a contractual maturity date of February 20, 2052 and an anticipated repayment date of January 20, 2029 .

While the contractual maturity date is in 2052 , the cash flows generated from the railcar assets will pay down the 2022 GBXL Notes in line with the agreement, which based on expected cash flow payments, would result in repayment in advance of the contractual maturity date.

The 2023 GBXL Notes bear interest at fixed rates of 6.42 % and 7.28 % for the 2023 Class A Notes and 2023 Class B Notes, respectively.

The 2023 GBXL Notes are payable monthly , with a contractual maturity date of November 20, 2053 and an anticipated repayment date of November 20, 2030 .

While the contractual maturity date is in 2053 , the cash flows generated from the railcar assets will pay down the 2023 GBXL Notes in line with the agreement, which based on expected cash flow payments, would result in repayment in advance of the contractual maturity date.

If the principal amount of the 2023 GBXL Notes and 2022 GBXL Notes has not been repaid in full by the anticipated repayment date, then the Issuer will also be required to pay additional interest to the holders at a rate equal to 4.00 % per annum.

The GBXL Notes are obligations of the Issuer only and are nonrecourse to Greenbrier.

The GBXL Notes are subject to a Master Indenture between the Issuer and U.S.

Bank Trust Company, National Association, as trustee, as supplemented by the Series 2022-1 Supplement dated February 9, 2022 and the Series 2023-1 Supplement dated November 20, 2023.

The GBXL Notes may be subject to acceleration upon the occurrence of certain events of default.

The following table summarizes the Issuer's net carrying amount of the assets transferred and the related debt.

As of August 31,

(In millions)

Restricted cash

Equipment on operating leases, net

Notes payable, net

Note 13 — Derivative Instruments

Foreign operations give rise to market risks from changes in foreign currency exchange rates.

1 unchanged sentence

Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt.

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, 2024 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros aggregated to $ 143.9 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 June 2025, 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, 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 .

As the contracts mature at various dates through March 2027, any such gain or loss remaining will be recognized in manufacturing 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, 2024 exchange rates, approximately $ 3.0 million would be credited to revenue in the next year.

At August 31, 2024 , interest rate swap agreements maturing from August 2025 through January 2032 had notional amounts that aggregated to $ 653.1 million .

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

5 unchanged sentences

(In millions)

Balance sheet

Balance sheet caption

Derivatives designated as hedging instruments

Foreign forward

exchange contracts

receivable, net

Accounts payable

Interest rate swap

receivable, net

Accounts payable

Foreign forward exchange contracts

Accounts receivable, net

Accounts payable and accrued liabilities

Interest rate swap contracts

Accounts receivable, net

Accounts payable and accrued liabilities

Derivatives not designated as hedging instruments

Foreign forward

exchange contracts

receivable, net

Accounts payable

Foreign forward exchange contracts

Accounts receivable, net

Accounts payable and accrued liabilities

The Effect of Derivative Instruments on the Consolidated Statements of Income

Derivatives in cash flow

hedging relationships

Location of gain (loss)

recognized in income on derivative

Gain (loss) recognized in income on

derivatives Years ended August 31,

Derivatives in cash flow hedging relationships

Location of gain (loss) recognized in income on derivative

Gain (loss) recognized in income on derivatives

Years ended August 31,

Foreign forward exchange contract

Interest and foreign exchange

Derivatives in

cash flow hedging

relationships

recognized in

OCI on derivatives

Derivatives in cash flow hedging relationships

Gain (loss) recognized in OCI on derivatives

Years ended August 31,

reclassified from

OCI into income

reclassified from

accumulated OCI

Location of gain (loss) reclassified from accumulated OCI into income

Gain (loss) reclassified from accumulated OCI into income

Years ended August 31,

Location of gain

(loss) in income

on derivative

excluded from

effectiveness testing)

recognized on

derivative (amount

excluded from

effectiveness testing)

Location of gain (loss) in income on derivative

(amount excluded from effectiveness testing)

Gain (loss) recognized on derivative

(amount excluded from effectiveness testing)

Years ended August 31,

Foreign forward

exchange contracts

Foreign forward

exchange contracts

Foreign forward exchange contracts

Cost of revenue

Interest rate swap

Interest rate swap contracts

Interest and foreign exchange

The following table presents the amounts in the Consolidated Statements of Income in which the effects of the cash flow hedges are recorded and the effects of the cash flow hedge activity on these line items for the years ended August 31, 2024, 2023 and 2022:

1 unchanged sentence

(In millions)

Amount of gain

(loss) on cash

Amount of gain

(loss) on cash

Amount of gain

(loss) on cash

Amount of gain (loss) on cash flow hedge activity

Cost of revenue

Interest and foreign exchange

Note 15 —

Note 14 — Equity

Stock Incentive Plan

3 unchanged sentences

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.

On August 31, 2024 , there were 1.0 million shares available for grant compared to 1.2 million and 1.4 million shares available for grant as of August 31, 2023 and 2022, respectively.

There are no stock options, restricted shares, or stock appreciation rights outstanding as of August 31, 2024.

The Company currently grants restricted stock units.

1 unchanged sentence

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 %.

During the years ended August 31, 2024, 2023, and 2022 , the Company awarded restricted stock unit grants totaling 0.4 million, 0.5 million, and 0.4 million shares, respectively, which include performance based grants and dividend equivalent rights.

For performance based awards granted in 2022, the performance metrics included an EBITDA metric, weighted 80 %, and a return on invested capital (ROIC) metric, weighted 20 %.

For performance based awards granted in 2023 and 2024, 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.

1 unchanged sentence

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:

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:

For the Year Ended August 31,

Expected share price volatility (GBX)

1 unchanged sentence

The fair value of awards granted was $ 17.3 million, $ 12.4 million, and $ 18.7 million for the years ended August 31, 2024, 2023 and 2022 , respectively.

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.

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

Compensation expense recognized related to restricted stock unit grants for the years ended August 31, 2024, 2023 and 2022 was $ 17.1 million, $ 12.1 million, and $ 15.5 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 $ 16.7 million as of August 31, 2024, which is expected to be recognized over a weighted average period of approximately two years.

During the year ended August 31, 2024 , a total of 0.4 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:

The following table summarizes the activity for the Company’s 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)

4 unchanged sentences

Share Repurchase Program

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.

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 and currently has an expiration date of January 31, 2025 .

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.

1 unchanged sentence

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

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, 2024 , the Company purchased a total of 38 thousand shares for $ 1.3 million.

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.

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

As of August 31, 2024 , the amount remaining for repurchase under the share repurchase program was $ 45.1 million.

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

Other Share Repurchases

The Company repurchased $ 20.0 million of its common stock during 2021.

These shares were repurchased, in privately negotiated transactions, as part of the Company’s debt refinancing in April 2021 and were not associated with the Company’s publicly announced share repurchase program.

Note 16 —

Earnings Per Share

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

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

Accrued excise tax of $ 0.5 million is included within Accounts payable and accrued liabilities on the Consolidated Balance Sheets as of August 31, 2024 and 2023.

Note 15 — Earnings Per Share

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

Year Ended August 31,

3 unchanged sentences

Dilutive effect of 2.875 % Convertible notes, due 2028 2

Dilutive effect of 2.25 % Convertible notes, due 2024 5

Dilutive effect of restricted stock units 3

Weighted average diluted common shares outstanding

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.

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.

The dilutive effect of the 2.875 % Convertible notes due 2024 was excluded for the year ended August 31, 2022 as they were considered anti-dilutive under the “if converted”

method as further discussed below.

1 The dilutive effect of the 2.875 % Convertible notes due 2024 was excluded for the year ended August 31, 2022 as they were considered anti-dilutive under the “if converted” method as further discussed below.

These notes were retired on February 1, 2024.

2 The dilutive effect of the 2.875 % Convertible notes, due 2028 was excluded for the years ended August 31, 2024, 2023 and 2022 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive.

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

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.

Restricted stock units that are not considered participating securities and restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved, are included in weighted average diluted common shares outstanding when the Company is in a net earnings position.

Basic earnings per common share (EPS) is computed by dividing Net earnings attributable to Greenbrier by weighted average basic common shares outstanding, which includes restricted stock grants and restricted stock units that are considered participating securities when the Company is in a net earnings position.

The Company's approach for calculating diluted EPS was modified beginning September 1, 2021 upon the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

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

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.

The second method supplements the first by also including the “if converted”

effect of the 2.875 % Convertible notes due 2024 and shares underlying the 2.875 % Convertible notes due 2028, when there is a conversion premium.

Under the “if converted”

method, debt issuance and interest costs, both net of tax, associated with the convertible notes due 2024 are added back to net earnings and the share count is increased by the shares underlying the convertible notes.

For the years ended August 31, 2022 and 2021 , diluted EPS was calculated using the treasury stock method associated with shares underlying the 2.875 % Convertible notes due 2024, 2.25 % convertible notes due 2024 , 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.

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

Basic EPS is computed by dividing Net earnings attributable to Greenbrier by weighted average basic common shares outstanding.

For the years ended August 31, 2024, 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 and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved.

The second method supplements the first by also including the “if converted” effect of the 2.875 % Convertible notes due 2024 and shares underlying the 2.875 % Convertible notes due 2028, when there is a conversion premium.

Under the “if converted” method, debt issuance and interest costs, both net of tax, associated with the convertible notes due 2024 are added back to net earnings and the share count is increased by the shares underlying the convertible notes.

(In millions, except number of shares which are reflected in

5 unchanged sentences

Net earnings attributable to Greenbrier

Interest and debt issuance costs on the 2.875 %

convertible notes due 2024, net of tax

Earnings before interest and debt issuance costs

on the 2.875 % convertible notes due 2024

Interest and debt issuance costs on the 2.875 % convertible notes due 2024, net of tax

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

Weighted average diluted common shares outstanding

3 unchanged sentences

Weighted average diluted common shares outstanding

Note 17 —

Related Party Transactions

Note 16 — Related Party Transactions

The Company has a 41.9 % interest in Axis, a joint venture.

1 unchanged sentence

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.

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

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 —

Note 17 — Income Taxes

Components of income tax expense (benefit) were as follows:

3 unchanged sentences

Income tax expense (benefit)

Earnings (loss) before income tax and earnings from unconsolidated affiliates for the years ended August 31, 2023, 2022 and 2021 were $ 32.2 million, $ 12.4 million and ($ 30.7 million), respectively, for our domestic U.S.

Earnings before income tax and earnings from unconsolidated affiliates for the years ended August 31, 2024, 2023 and 2022 were $ 111.4 million, $ 32.2 million and $ 12.4 million, respectively, for our domestic U.S.

operations and $ 112.3 million, $ 58.8 million and $ 48.2 million, respectively for our foreign operations.

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 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 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 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:

4 unchanged sentences

tax on foreign earnings

impact of foreign branch

Carryback rate benefit

2 unchanged sentences

Change in valuation allowance

Uncertain tax positions

Unrecognized tax benefits

Noncontrolling interest in flow-through entity

Credits and Other

Effective tax rate

Due to the enactment of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, 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 rates of 35.0 % or 25.7 %, rather than the current Federal rate of

21.0 % in effect beginning with the fiscal year 2019.

As of August 31, 2024, income taxes receivable includes a balance of $ 22.8 million related to the carryback of the 2021 loss.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities were as follows:

13 unchanged sentences

Net deferred tax liability

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.

The net decrease in the total valuation allowance was approximately $ 0.3 million for the year ended August 31, 2023.

As of August 31, 2024, the Company had $ 67.4 million of federal NOL carryforwards that do not expire, $ 15.4 million of federal credit carryforwards that will begin to expire in 2028, $ 193.0 million of state net operating loss carryforwards that will begin to expire in 2029 , $ 0.9 million of state credit carryforwards that will begin to expire in 2025 , $ 9.9 million of foreign net operating loss carryforwards that begin to expire in calendar 2024 and $ 26.2 million of foreign net operating loss carryforwards that do not expire.

The Company has placed a valuation allowance of $ 15.9 million against the deferred tax assets for which a benefit is not more likely than not to be realized, including those for loss and credit carryforwards unlikely to be used before their expiration dates or where the possibility of utilization is remote.

The net increase in the total valuation allowance was approximately $ 6.3 million for the year ended August 31, 2024.

The Company's cumulative undistributed foreign earnings, if repatriated, would be accompanied by foreign withholdings taxes.

4 unchanged sentences

(In millions)

Unrecognized Tax Benefit –

Opening Balance

Gross increases –

tax positions in prior period

Gross decreases –

tax positions in prior period

Unrecognized Tax Benefit – Opening Balance

Gross increases – tax positions in prior period

Gross decreases – tax positions in prior period

Lapse of statute of limitations

Unrecognized Tax Benefit –

Ending Balance

Unrecognized Tax Benefit – Ending Balance

All unrecognized tax benefits, when recognized, would impact the effective tax rate.

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

As of August 31, 2024 and 2023, the total amount of accrued interest was $ 0.8 million and $ 0.6 million, respectively.

expense for the years ended August 31, 2024, 2023 and 2022 included interest expense (benefit) related to unrecognized tax benefits of $ 0.2 million, $ 0.5 million and ($ 0.3 ) million, respectively.

The Company has not accrued any penalties on the unrecognized tax benefits and does not anticipate a significant decrease in unrecognized tax benefits during the next twelve months.

The Company is subject to taxation in the U.S.

2 unchanged sentences

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, 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.

Benefits from the realization of unrecognized tax benefits for deductible differences attributable to ordinary operations will be recognized as a reduction of income tax expense.

Note 19 —

Segment Information

The Company currently has ongoing examinations in the U.S., Poland, and Romania.

Note 18 — Segment Information

The Company operates in three reportable segments:

7 unchanged sentences

Intersegment sales and transfers are valued as if the sales or transfers were to third parties.

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

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

internal financial reports used for corporate management purposes.

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

The information in the following tables is derived directly from the segments’ internal financial reports used for corporate management purposes.

For the year ended August 31, 2024:

34 unchanged sentences

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

Reconciliation of Earnings from operations to Earnings (loss) before income tax and earnings from unconsolidated affiliates:

Reconciliation of Earnings from operations to Earnings before income tax and earnings from unconsolidated affiliates:

Year Ended August 31,

2 unchanged sentences

Interest and foreign exchange

Net loss on extinguishment of debt

Earnings (loss) before income tax and earnings from

unconsolidated affiliates

Note 20 —

Customer Concentration

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

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.

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 —

Lease Commitments

Earnings before income tax and earnings from unconsolidated affiliates

Note 19 — Customer Concentration

Customer concentration is defined as a single customer that accounts for more than 10% of Consolidated Revenue or Accounts receivable, net.

In 2024 , revenue from one customer represented 10 % of Consolidated Revenue.

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

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

No other customers accounted for more than 10% of Consolidated Revenue for the years ended August 31, 2024, 2023, or 2022 .

One customer had a balance that individually equaled or exceeded 10% of Accounts receivable, net, representing 14 % of the Consolidated Accounts receivable, net balance at August 31, 2024.

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

Note 20 — Lease Commitments

Equipment on operating leases is reported net of accumulated depreciation of $ 93.4 million, $ 68.0 million and $ 48.6 million as of August 31, 2024, 2023, and 2022 , respectively.

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 thirteen 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.

Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases at August 31, 2023, will mature as follows:

Depreciation expense was $ 36.0 million, $ 26.0 million and $ 22.0 million for the years ended August 31, 2024, 2023, and 2022 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 ten years .

Operating lease rental revenues included in the Company’s Consolidated Statements of Income for the years ended August 31, 2024, 2023, and 2022 was $ 121.1 million, $ 91.9 million and $ 66.8 million respectively, which included $ 19.9 million, $ 19.3 million, and $ 18.1 million respectively, of revenue as a result of daily, monthly or car hire utilization arrangements.

Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases as of August 31, 2024, will mature as follows:

(In millions)

The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements.

As of and for the twelve months ended August 31, 2023, 2022, and 2021, finance leases were not a material component of the Company's lease portfolio.

The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 75 years , with some including options to extend up to 8 years .

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 the lease commencement date.

As of and for the years ended August 31, 2024, 2023, and 2022, finance leases were not a material component of the Company's lease portfolio.

The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 74 years , with some including options to extend up to 7 years .

The Company recognizes a lease liability and corresponding ROU asset based on the present value of lease payments.

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.

The components of operating lease costs were as follows:

Twelve Months Ended August 31,

For the Year Ended August 31,

(In millions)

1 unchanged sentence

Short-term lease expense

Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at August 31, 2023 will mature as follows:

Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms as of August 31, 2024 will mature as follows:

(In millions)

2 unchanged sentences

Total lease obligations

The table below presents additional information related to the Company’s leases:

The table below presents additional information related to the Company’s operating leases as of August 31, 2024:

Weighted average remaining lease term

Operating leases

Weighted average discount rate

Operating leases

Supplemental cash flow information related to leases were as follows:

(In millions)

Twelve months ended August 31, 2023

For the Year Ended

August 31, 2024

Cash paid for amounts included in the measurement of lease liabilities

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ROU assets obtained in exchange for new operating lease liabilities

Note 22 —

Commitments and Contingencies

Note 21 — Commitments and Contingencies

Portland Harbor Superfund Site

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

In December 2000, the U.S.

Environmental Protection Agency (EPA) classified portions of the Willamette River bed known as the Portland Harbor, including the portion fronting the Company’s manufacturing facility, as a federal "National Priority List" or "Superfund" site due to sediment contamination (the Portland Harbor Site).

Environmental Protection Agency (EPA) classified portions of the Willamette River bed known as the Portland Harbor, including the portion fronting the Portland Property, as a federal "National Priority List" or "Superfund" site due to sediment contamination (the Portland Harbor Site).

The Company and more than 140 other parties have received a "General Notice" of potential liability from the EPA relating to the Portland Harbor Site.

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The Company bore a percentage of the total costs incurred by the LWG in connection with the investigation.

The Company’s aggregate expenditure during the 17-year period was not material.

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

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, 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.

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, approximately 100 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.

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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 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.

The EPA has identified several work areas within the ROD cleanup area.

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

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

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The EPA requested that potentially responsible parties enter AOCs during 2019 agreeing to conduct remedial design studies.

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

Some parties have signed AOCs, including one party with respect to RM9W.

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

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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 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.

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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.

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.

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As of August 31, 2024 , the Company had outstanding letters of credit aggregating to $ 5.9 million associated with performance guarantees, facility leases and workers compensation insurance.

Note 23 –

Fair Value Measures

Note 22 – Fair Value Measures

Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis.

Fair value, for this disclosure, is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring a fair value as follows:

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring a fair value as follows:

Level 1 - observable inputs such as unadjusted quoted prices in active markets for identical instruments;

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See Note 13 - Derivative Instruments for further discussion.

Note 24 –

Fair Value of Financial Instruments

Note 23 – Fair Value of Financial Instruments

The estimated fair values of financial instruments and the methods and assumptions used to estimate such fair values are as follows:

7 unchanged sentences

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