Greenbrier Companies Q3 2025 Earnings Report

Greenbrier Companies EPS Results

• Actual EPS: $1.86
• Consensus EPS: $0.99
• Beat/Miss: Beat by +$0.87
• One Year Ago EPS: $1.06

Greenbrier Companies Revenue Results

• Actual Revenue: $842.70 million
• Expected Revenue: $785.72 million
• Beat/Miss: Beat by +$56.98 million
• YoY Revenue Growth: +2.70%

Greenbrier Companies Announcement Details

• Quarter: Q3 2025
• Date: 7/1/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 1, 2025
• Conference Call Time: 5:00PM ET

The Greenbrier Companies (NYSE:GBX) (NYSE: GBX) is a leading supplier of equipment and services to the global freight rail transportation market. Headquartered in Lake Oswego, Oregon, Greenbrier specializes in the design, engineering and manufacturing of a diverse range of railcars, including intermodal, tank, gondola, covered hopper and boxcars. The company also builds marine barges and offshore vessels for both commercial and defense applications through its Greenbrier Marine division. Greenbrier’s vertically integrated operations enable it to support its customers throughout the entire asset lifecycle, from initial concept and production to aftermarket maintenance and refurbishment.

Since its founding in 1981, Greenbrier has expanded from a single leasing operation into a multinational enterprise with manufacturing and repair facilities across North America, Europe and Latin America. The company’s product offering is supported by advanced engineering centers that employ 1,000+ engineers, metallurgists and technical specialists. Leveraging industry‐leading simulation and testing capabilities, Greenbrier develops railcar designs that prioritize safety, durability and fuel efficiency, responding to evolving regulatory standards and customer requirements.

In addition to new car production, Greenbrier provides comprehensive aftermarket services, which include parts distribution, component remanufacturing and full‐service repair at a network of more than 80 locations. Its proprietary repair technologies and predictive maintenance tools help railroads optimize fleet performance and minimize downtime. Through strategic joint ventures and partnerships, the company extends its reach into emerging markets and offers localized support in countries such as Mexico, Brazil, Poland and China.

Under the leadership of President and CEO John F. Walsh, Greenbrier continues to pursue growth through innovation, operational efficiency and sustainability initiatives. The company has invested in lightweight materials and aerodynamic designs to reduce fuel consumption and greenhouse gas emissions from rail transport. With a diversified customer base that includes North American Class I railroads, short lines and leasing companies, Greenbrier is positioned to benefit from secular trends in intermodal freight, energy transportation and infrastructure modernization around the world.

Greenbrier Companies Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Greenbrier reported net earnings of $60.1 million (EPS $1.86) in Q3, with an 18 percent gross margin and ROIC within its long‐term target.
• Positive Sentiment: Our European footprint rationalization delivered its last wagon ahead of schedule and is expected to save at least $10 million annually, while North American insourcing expansion nears completion with full benefits in fiscal 2026.
• Positive Sentiment: Leasing and fleet management generated nearly $165 million in recurring revenue over the last four quarters (up ~50 percent) with 98 percent utilization, putting us halfway to our goal of doubling recurring revenues by FY 2028.
• Positive Sentiment: We renewed $850 million in bank facilities and now have nearly $770 million of liquidity, the highest since 2023, with no significant maturities until 2027.
• Positive Sentiment: We raised full-year guidance, increasing our aggregate gross margin midpoint by 75 basis points to 18 percent and operating margin midpoint by 35 basis points, while maintaining delivery and revenue targets.

Presentation

[Operator]

Hello, and welcome to the Greenbrier Companies Third Quarter twenty twenty five Earnings Conference Call. Following today's presentation, we will conduct a question and answer session. Until that time, all lines will be in a listen only mode. At the request of Greenbrier Companies, this conference call is being recorded for instant replay purposes. At this time, I would like to turn the conference over to Mr. Justin Roberts, Vice President of Financial Operations, The Americas. Mr. Roberts, you may begin.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Thank you, Kim. Good afternoon, everyone, and welcome to our third quarter twenty twenty five conference call. Today, I am joined by Lori Tukorius, Greenbrier's CEO and President Brian Comstock, Executive Vice President and President of The Americas and Michael Donfres, Senior Vice President and Chief Financial Officer. Following our update on Greenbrier's Q3 performance and our outlook for the remainder of fiscal twenty twenty five, we will open up the call for questions. Our earnings release and supplemental slide presentation can be found on the IR section of our website.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Matters discussed on today's conference call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2025 and beyond to differ materially from those expressed in any forward looking statement made by or on behalf of Greenbrier. Throughout the call today, we will refer to recurring revenue throughout our comments. Recurring revenue is defined as leasing and fleet management revenue excluding the impact of syndication activity. And with that, I'll hand the call over to Laurie.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Thank you, Justin. Good afternoon, everyone, and thank you for joining us. As we begin today, I'm pleased to report that Greenbrier's operational execution resulted in strong financial performance for our third quarter ended 05/31/2025. Net earnings of $60,100,000 or $1.86 per share increased sequentially and year over year. Our aggregate gross margin stands at an impressive 18%, marking our seventh consecutive quarter at or above our mid teens long term target.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

We also achieved a return on invested capital or ROIC that falls within our long term target range. I am very proud of our team throughout the organization. Our innovation and excellence extends from the shop floor to our headquarters and across all Greenbrier's global sites. The team's flexibility and responsiveness to uneven market conditions are a competitive advantage for Greenbrier. Two recent examples of our efficiency initiatives are our European footprint rationalization and our North American insourcing project.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

I'm pleased to share that we delivered our last freight wagon from the Arad, Romania facility in late May ahead of initial expectations. Our aggregate production capacity in Europe remains largely unchanged and may increase as we continue investing in the remaining locations. Once the capacity rationalization activity is completed, we expect to realize savings of at least $10,000,000 annually. In North America, the expansion of our in sourcing capacity in Mexico nears completion. The full value of the initiative will be realized as production scales through fiscal twenty twenty six and beyond.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Additionally, we're continuing to reduce overhead throughout our global manufacturing network. Our leasing and fleet management operation maintains a disciplined approach to growing our lease fleet, ensuring predictable revenue and cash flow. We are nearly halfway to meeting our goal of doubling recurring revenues by fiscal twenty twenty eight. Greenbrier renewed and extended two bank facilities totaling $850,000,000 in May. Michael will provide more details in his remarks, but I want to highlight that our debt profile now features more non recourse borrowing to support our lease fleet growth.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Our balance sheet is in very good shape and liquidity is at its highest level since 2023. A healthy liquidity position is a critical enabler of our strategy. It allows us to navigate various market conditions and act opportunistically. Gribar has a very long history and has operated through various macro backdrops. As progress continues towards deals with America's most important trade partners, USMCA compliant products like our new railcars remain free of direct tariffs.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Also, the Senate's passage of the budget bill today includes tax policy that we expect will energize the markets for capital goods like railcars. As U. S. Tax and trade policy becomes more certain, this will be a welcome tailwind for Greenbrier and our customers. Our experienced and agile team will flex our manufacturing capacity to rapidly respond to changes in demand and maximize our operating efficiency.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

We are positioned to achieve our strategic plan and expect escalating value creation as the demand for our products and services grows. Looking ahead, we see a strong finish to our fiscal year and are optimistic about market conditions in the medium to long term. Lastly, I'm pleased to note that we repurchased approximately 22,000,000 of shares during the quarter. Along with our consistent dividend, this demonstrates the continued confidence of our Board and leadership in our long term strategy, affirming our commitment to return value to our shareholders while investing in the business. And with that, I'll turn the call over to Brian Comstock.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Thanks, Lori, and good afternoon, everyone. In Q3, we delivered 5,600 new railcars, and our Q3 manufacturing gross margin of 13.6% remained steady from Q2. I am proud of the focus and performance of the manufacturing team. This quarter, I visited two of our facilities in Central Mexico. The energy, collaboration and innovation occurring at these key operations is highly encouraging.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Across our network, our focus remains on reducing costs and controlling what we can. Leasing and Fleet Management had another quarter of good performance. Recurring revenue reached nearly $165,000,000 over the last four quarters, representing nearly 50% growth from our starting point of January a little over two years ago. Fleet utilization also remained high at 98%. Greenbrier's leased fleet grew modestly from the prior quarter.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

This reflects opportunistic additions to the fleet as well as the thoughtful nature of our approach. Our intent remains to invest up to $300,000,000 annually on a net basis with railcar fleet additions that meet our strict return parameters and concentration criteria. Net fleet investments are expected to come in lower this year, resulting from a shift in customer activity and product mix. We are building a balanced railcar portfolio in a disciplined manner. This requires us to be shrewd and patient.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

The quality of our fleet, its utilization rate, railcar lease renewal volume, and meaningful progress to our recurring revenue target demonstrate the value of that approach. Lease renewal trends remain strong. We entered fiscal twenty twenty five with about 10% of our leases up for renewal and have successfully renewed most units. We are confident that we will successfully renew or remarket all units as railcar availability in the North American railcar fleet is expected to remain tight due to supply side shrinkage from fewer builds and increased scrapping levels. We generated strong liquidity and margins through syndication of 1,700 units in the quarter.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

The timing of syndication activity remains driven by customer delivery requirements and production scheduling. Turning to the new railcar market, Greenbrier secured orders of 3,900 units worth more than $500,000,000 in the quarter. While inquiries have been slow to translate meaningfully, order activity has gradually improved and our sales pipeline is strong. Customers are seeking clarity on U. S.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Trade policy and waiting for commodity prices and other key economic indicators to reach a level of equilibrium. Our global new railcar backlog remains healthy at nearly 19,000 units, providing industry leading visibility in our new railcar markets. This allows us to manage production lines and volumes effectively and supports a reliable revenue outlook. We expect aggregate gross margin percentage to remain solidly in our mid teens long term target range as we leverage the operating efficiencies gained over the last two years. The North American fleet's average age for a railcar exceeds twenty years, the highest level in a decade and a key driver for steady growth in the railcar maintenance market.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Programmatic railcar restoration activity, not included in our backlog or deliveries, continues to perform well. In Europe, railcars are being ordered for projects driven by underlying necessity, but activity will be muted until the economy's trajectory improves. There are pockets of activity, such as railcars needed for infrastructure investment in Germany, and we remain confident in the medium and long term prospects for European economic recovery. As the European economy grows, the freight rail industry will be needed to support expansion. In Brazil, demand is modestly increasing as customers complete infrastructure investments and shift to purchasing railcars.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Brazil may stand to benefit from U. S. Tariff activity as trading routes are reordered. And if that occurs, we expect subsequent benefits to the freight rail sector. As you know, we've been here before.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

And though even more challenging times before, our deeply experienced management team knows how to operate through all kinds of economic conditions and industry cycles. We will effectively navigate short term market volatility and deliver strong performances. We are successfully executing our strategic plan and have either exceeded or are on track to meet each target in that plan. That is a testament to the work and dedication of our colleagues at Greenbrier. I could not be prouder of the entire team. With that, I'll hand the call over to Michael.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

Thank you, Brian. I'm pleased with our financial performance in the third quarter of twenty twenty five as we continue to execute our strategic plan. I'm proud of the team's effort to continue enhancing operational efficiency, which has delivered favorable gross margin and bottom line results. Greenbrier remains in a strong financial position. Revenue of $843,000,000 improved by 11% sequentially, and we remain on track to achieve our revenue guidance for the year.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

Aggregate gross margin remained robust at 18% as we continue to see favorable railcar delivery mix, improved operating efficiency, increased syndication activity and the benefit of higher recurring revenue. This represents the seventh consecutive quarter meeting or exceeding our mid teens gross margin target. Operating income of $93,000,000 or 11% of revenue benefited from strong performance including gains on sale related to lease fleet optimization. Foreign exchange was favorable related to the strengthening foreign currency. Our tax rate of 23% in the quarter was better than expected, primarily due to the strengthening Mexican peso.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

Diluted EPS was $1.86 and EBITDA for the quarter was 129,000,000 or 15% of revenue. For the twelve months ending 05/31/2025, our return on invested capital, ROIC was 12.9% and continues to be within our 2026 target of 10% to 14%. Moving on to our balance sheet. Greenbrier Q3 liquidity was nearly $770,000,000 consisting of almost $300,000,000 in cash and more than $470,000,000 in available borrowing capacity. I'm pleased to highlight that on May 21, we renewed our $600,000,000 domestic revolving credit facility and a $250,000,000 term loan.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

This extends maturities into 2030 with no significant maturities until 2027. I'd like to express my appreciation for the team's effort and commitment in getting these deals done. We generated nearly $140,000,000 in operating cash flow for the quarter, driven by strong operating performance and working capital efficiencies. We expect liquidity to remain robust, reflecting positive operating results, ongoing working capital efficiency improvements and increased borrowing capacity. Now switching to capital allocation, we remain disciplined and committed to returning capital to our shareholders through a combination of dividends and stock buybacks.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

Greenbrier's Board of Directors declared a dividend of $0.32 per share. This is our forty fifth consecutive quarterly dividend and it's a direct reflection of the confidence we have in our business. Additionally, during the quarter, we repurchased nearly $22,000,000 in shares leaving $78,000,000 remaining in our share repurchase authorization. We will continue to utilize this capacity opportunistically and within the framework of a broader capital allocation strategy. Finally, we are updating our guidance for the remainder of fiscal twenty twenty five.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

We are raising aggregate gross margin percent 75 basis points at the midpoint to a range of 17.7% to 18.3% from our prior guidance. We are also raising our operating margin percent to a range of 10.6% to 11%, which is 35 basis points higher at the midpoint from our prior guidance. In addition, we are affirming our delivery and revenue guidance. We expect investments in manufacturing to be around 145,000,000 and gross investment in leasing and fleet management of $270,000,000 and proceeds of equipment and sales of sales around $75,000,000 This updated guidance reflects better visibility into the mix and disposition of our production plan for the fourth quarter. In conclusion, our third quarter results reflect strong execution, improved efficiency and disciplined capital deployment, all while delivering returns to our shareholders.

[Michael Donfris, SVP & CFO at The Greenbrier Companies]

We're well positioned heading into the final months of the fiscal year and I remain confident in our team's ability to deliver on our strategic priorities. And now we'll open it up for questions.

[Operator]

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please take up your handset before pressing the keys. Our first question comes from Bascome Majors with Susquehanna.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

Thanks for taking my questions. You've been more precise and quantitative with guidance, and we appreciate that. Although there are some pretty meaningful moving parts sort of below the operating income line. I was hoping we could walk through just with one quarter left in the, the fiscal year and talk through, you know, some of what you might expect at least directionally on the interest FX line, the unconsolidated affiliates not controlling interest as we try to kind of bridge down to EPS after three very strong quarters? Thank you.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Yes. Thanks, Bascome. Great to hear from you on this Tuesday afternoon. Broadly from an interest expense line item, we would expect pure interest expense to be probably in that 22% to 25% range, maybe towards the upper end of that range in the quarter. The thing that causes headwinds are FX, which as you've seen throughout the year can be very large positives or very large negatives.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

And in the most recent quarter, we had a pretty big benefit from that, I think about $5,000,000 pretax, which after the volatility on a nine months basis gets us to about $1,000,000 of upside. So, it's been a journey, a wild ride a little bit from that perspective. But we don't would say that we don't expect or project a lot of volatility in the peso or euro. I think if we did that, you wouldn't be talking to us necessarily right now. We might be on a beach somewhere.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

So that's our best visibility from a guidance perspective for Q4. With regards to our kind of below the line item areas, I think we would say that we're probably tracking in line with what we've seen probably largely this year for unconsolidated affiliates and probably in line with what you saw in the first quarter for non controlling interest. It's kind of our best bet based on production schedules and timing of syndication activity right now.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

And I would say on maybe earnings from unconsolidated affiliates, it's looking at the overall average for the nine months, yeah?

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Yeah, yes.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

Alright. Thank you for that. So, you know, maybe zooming back. I mean, you've been facing more challenged order levels for some time now. Although I think that the commentary on North America was maybe modestly optimistic.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

It felt like the way to characterize that. Just with what we're seeing as we close out this year, do you think that production rate is when you're comfortable with deeper into next year? And regardless of the answer to that, when do you get to the point where you need to make decisions on kind of reducing, production rates if if if orders don't improve? Or or or or is what we're seeing right now reflecting those decisions already? Thank you.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Laurie, you want to go first on this?

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

I'll be Yes. You follow-up, Brian. I would just say, Bascome, again, as Justice said, nice to hear your voice. We have been adjusting production rates and production lines.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

I would say probably this entire fiscal year, we've been adjusting towards what is the market demand, working with our customers to make certain that we are feathering that appropriately, to maintain the visibility that strong backlog gives us. So 19,000 cars of backlog gives us really nice visibility. And we're able to weave in, as Brian will talk about, more current orders on top of the existing backlog.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Yeah, I think that's it's Brian Bascome. That's right, Laurie. If you look at production rates, we have taken and adjusted production rates down. Some of that starts to come into focus here in late well, in late Q3, started to come into focus as well as Q4. But as we look out into the future, combined with the backlog, the sales pipeline and inquiry levels are definitely up.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

We've talked to a lot of the big shippers in the space. There is a tremendous amount of attrition that is going on kind of universally throughout the North American fleet, particularly the boxcar fleet. I think they're losing somewhere between 6,000 to 8,000 cars a year and those aren't being replaced. So the pent up demand towards the back half of the year, we think is going to be fairly robust. It's just it's not if, it's just the timing of when.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

And so we're continuing to just monitor the production lines and our backlog as we kind of balance that future demand that we see coming back, spiking back versus what we're dealing with today.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

So high level, it sounds like there's some optimism that the second half of fiscal second year fiscal twenty twenty six can show some recovery as orders improve into maybe a more certain environment. Is that fair?

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Yes. That's exactly what I'm asking.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Yes. We're already seeing some positive signs broadly, but we continue to have very as Brian said, very strong order inquiry activity and then it's just translating that into firm activity. And at the end of the day, we do see just frankly just as the fleet is aging, cars will need to be ordered.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

Thank you all.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Thanks, Bascome.

[Operator]

Our next question comes from Ken Hoexter with Bank of America.

[Ken Hoexter, Managing Director at Bank of America]

Hey, great. Happy fourth of July week. I want to kind of follow-up on that a little bit, right? So the $18,900 it's the lowest backlog you've had since the second quarter of twenty fourteen. I just want to understand, I mean, I guess, the locomotive side, from a locomotive manufacturer, we keep hearing that same theme, right, Justin, that the locomotives are getting older and older each year, and they're able to kind of refurb them and extend the life.

[Ken Hoexter, Managing Director at Bank of America]

Laurie, what I guess, what's the confidence in terms of getting those orders in given the backlog is now at such a historic low point? And maybe dig into a little bit of the mix of deliveries versus leased cars, but I'll let's talk about that in a second. Let me just dig on the backlog first.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Sure, Ken. And thanks for making me feel old. It feels like we've certainly had this level this is a very robust level of backlog. I didn't appreciate that it would be considered low. And I think I'm just thinking back to my early days of Greenbrier.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

I have tremendous confidence in our commercial team and the products that we bring to the market. As Brian said, we've had the opportunity to talk to a lot of customers here for the North American market and then I was over in Europe a month or so ago. We're hearing the same thing from many of these customers. They desire railcars. They just need a little bit of clarity around, tariffs and trade policy to make that commitment if they don't already have expansions or other activities underway.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

So, we do think that there's gonna be, as soon as you know, maybe as soon as the big beautiful bill gets completed or just a little bit of time with settled down trade talks, that that demand is going to convert into orders.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Yeah, maybe I'll tack on to that as well because there are a few things in the legislation that we think are gonna be potential catalysts. You've got 45Z, which is the renewable fuels bill that looks like it's gonna get through and be very beneficial to the ethanol and soybean crush side of the world. That's going to create some demand as well as kind of the bonus I guess, bonus depreciation or expensing. We think that similar to the effects it had last time, it's going to have some positive impact on backlog. But setting that aside, the other part of the backlog that I think is new that people don't really appreciate because we don't really talk about it that much.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

But there's several thousand cars that are not counted in that backlog that are programmatic railcar restoration activity. It's something we started a couple years ago. It's a big part of our production and it's very meaningful. So if you think about our production rates of just say 20,000 cars a year of new cars, that may not include and does not include maybe as many as 3,000 cars a year that are going through these restoration programs.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

And the other thing I was gonna add on is what's nice about the last few years is it's really been diverse demand. Haven't seen particular car type that's driving, whether it was in the past, sand cars or crude cars or ethanol cars. This has been broad based demand, so it's allowed us to maintain multiple varieties of lines running.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Yep.

[Ken Hoexter, Managing Director at Bank of America]

I guess on the reefer because, I mean, that's a big driver for, let's say, Wabtec on the locomotive side. Is there is that a scaling business? Because that would explain why the fleet can keep getting older. Or maybe we don't need 6,000, 8,000 boxcars a year if we can kind of refurb some of them. Is that something that numerically is that something you're going to break out in terms of what that contributes on the manufacturing side?

[Ken Hoexter, Managing Director at Bank of America]

Or is that higher margin and that's why margins are going up?

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

I'll leave that part of the question to Justin and maybe give a little bit more clarification on the difference between locomotive refurb and what we're doing. So a lot of these cars that we're talking about that are falling off the cliff are aging out. So there isn't any level of refurbishment and or rehabilitation that's gonna bring those cars back. Those are truly gonna exit the fleet, and they do need to be replaced. Now on boxcars, think about it, if there's 7,000 a year going out, the replacement is probably about 5,000 because of cubic capacity increases.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

On the railcar restoration, these are things like re jacketing pressure cars, refurbishment GP cars. So these are cars that are ten, fifteen years old that are coming into their requalification life and they do have very high margins.

[Ken Hoexter, Managing Director at Bank of America]

Okay. So let me get back to the other part of my first question, which was the mix of deliveries, right? So 5,600 and you've been growing the lease business nicely, but it went up, what, 200 cars on the owned fleet. You sold off 1,700 out of your leased fleet and 3,900 was new production. So if you aim to keep the leased fleet and CapEx is down, do we see that production, I guess decelerate or not necessarily?

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Well, I think part of that is we're becoming a little more active in the used car market as well. And as I mean, I think it's we can say that there's definitely been quieter demand and there's been a little more direct sale activity versus leased activity over the last few months. And so as we are committed to growing the leasing business, and we're also committed to continue to originate good deals and put those in our cars, but also to balance that with our syndication partners. The best way we can kind of dance between these range offs effectively is to be a little more active in the used car market. So that's where we see an opportunity to grow the fleet and maybe a little more aggressively in the year ahead.

[Ken Hoexter, Managing Director at Bank of America]

Perfect. Great job on the ongoing savings. Laurie, that was great to hear on the European that as you keep closing these facilities, the ongoing savings. So appreciate the insights. Thanks, guys.

[Lorie Tekorius, CEO, President & Director at The Greenbrier Companies]

Thank you.

[Brian Comstock, EVP & President - The Americas at The Greenbrier Companies]

Thank you.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Thanks, Jen.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Justin Roberts for any closing remarks.

[Justin Roberts, VP - Financial Operations at The Greenbrier Companies]

Thank you very much for your time and attention. And we hope you have a safe and happy Independence Day. Thank you very much.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Justin Roberts, VP - Financial Operations
• Lorie Tekorius, CEO, President & Director
• Brian Comstock, EVP & President - The Americas
• Michael Donfris, SVP & CFO

Analysts

• Bascome Majors, Senior Equity Research Analyst at Susquehanna
• Ken Hoexter, Managing Director at Bank of America