Greenbrier Companies Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ken Hoexter - BofA Global Research - Analyst : Hey, great. Good afternoon. Lorie, congratulations, some phenomenal improvements over the last few years. The strong margin gain, the 17%, I'm not sure if you can parse that to the old category just so we can kind of understand what's going on with the manufacturing. But maybe just delve into, if only on a combined basis, what drove it. I guess you talked a little bit about mix, product mix that might shift in the back half. We see pricing, especially on the new orders, kind of is up. So maybe you can talk about what drove the margin gains. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 08, 2025 / 10:00PM, GBX.N - Q1 2025 Greenbrier Companies Inc Earnings Call And then, Brian, in your commentary, you noted the slowdown was temporary. But in the press release, it noted demand is easing slightly for certain railcar types and in some markets. So I just want to understand. It sounds like you're saying it was temporary and inflected in the press release maybe saying it's maybe potential for slowing. So if I can just get an understanding in there, too.

Question: Ken Hoexter - BofA Global Research - Analyst : No, it does. It's a great explanation. And then just if I can sneak one more in. Just it looks like the backlog came down, right? So you went from -- you've gone down from, what, $3.8 billion, $3.7 billion, $3.4 billion down to $3 billion. Is that kind of the tentativeness you're talking about and maybe it bounces back? Or do you think just in this environment, we're starting -- we're going to kind of draw down on that backlog?

Question: Ken Hoexter - BofA Global Research - Analyst : Great. Appreciate the time. Thanks, guys.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thanks for walking through the incremental recovery and optimism in the order flow over the last -- and inquiries over the last several weeks here. Can we talk a little bit more of the production plan as you have it guided? I know that can get different than deliveries with some of what goes on the balance sheet and what goes out in syndication and the timing of that. But as guided today, how does the production plan look versus what you did last quarter into the second half? And when do we get to the point where you need better orders to come through to sustain that or have to make a decision to taper that to protect margins? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 08, 2025 / 10:00PM, GBX.N - Q1 2025 Greenbrier Companies Inc Earnings Call

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : And to be clear on that -- go ahead. I'm sorry.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : So it sounds like the inquiry and order rate you've had recently is supportive of that backlog if it continues. Or do we need to see it pick up further from the last few weeks or 1.5 months to really support the delivery guidance?

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thank you. Two guidance clarifications, then I'll pass it on. The tapering from the gross margin where you are in this quarter to where the guidance is, how much of that is the mix impact you've talked about from going to more commodity car types? Are there other pieces in that? Or is there just some conservatism with the second half from not knowing exactly what the orders and car types look like? And then maybe that could be better if things go as planned. And to the second point, you made some comments on liquidity, working capital. I mean, it sounded like the views on cash flow were a bit more constructive than we've heard from you recently. Any clarification around what that means for operating cash flow or free cash flow or however you'd like to frame it? Thank you.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thank you all.

Question: Ken Hoexter - BofA Global Research - Analyst : Hey, thanks for the quick one. Maybe just to summarize what Bascome was kind of hitting on, the guidance, right? So if you -- such a strong beat this quarter. You didn't raise fiscal '25. So I guess, Justin, you just threw out there it's just conservatism. Or maybe what gets you back into range? What do we need to see that you're not raising the target at this point given the strong first-quarter performance?

Question: Ken Hoexter - BofA Global Research - Analyst : Okay. Thanks, guys. Appreciate it. Thanks, guys.