Executive Summary We operate in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. Our segments are operationally integrated. The Manufacturing segment, which currently operates from facilities in theU.S. ,Mexico ,Poland ,Romania andTurkey , produces double-stack intermodal railcars, tank cars, conventional railcars, automotive railcar products and marine vessels. The Wheels, Repair & Parts segment performs wheel and axle servicing; railcar repair, refurbishment and maintenance; as well as production of a variety of parts for the rail industry inNorth America . The Leasing & Services segment owns approximately 9,300 railcars and provides management services for approximately 385,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies inNorth America as ofNovember 30, 2019 . Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer inBrazil and a lease financing warehouse. Our total manufacturing backlog of railcar units, for direct sale or lease to a third party, as ofNovember 30, 2019 was approximately 28,500 units with an estimated value of$3.09 billion . Approximately 4% of backlog units and 2% of estimated backlog value as ofNovember 30, 2019 was associated with our Brazilian manufacturing operations which is accounted for under the equity method. Backlog units for lease may be syndicated to third parties or held in our own 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. Marine backlog as ofNovember 30, 2019 was$80 million . Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Subsequent to the quarter, we agreed in principle to remove 575 units in backlog in exchange for financial consideration. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time. We cannot guarantee that our reported backlog will convert to revenue in any particular period, if at all. 25
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THE GREENBRIER COMPANIES, INC. Three Months EndedNovember 30, 2019 Compared to Three Months EndedNovember 30, 2018 Overview Revenue, cost of revenue, margin and operating profit presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation. Three Months Ended November 30, (In thousands) 2019 2018 Revenue: Manufacturing$ 657,367 $ 471,789 Wheels, Repair & Parts 86,608 108,543 Leasing & Services 25,384 24,191 769,359 604,523 Cost of revenue: Manufacturing 581,912 417,805 Wheels, Repair & Parts 81,892 100,978 Leasing & Services 13,366 13,207 677,170 531,990 Margin: Manufacturing 75,455 53,984 Wheels, Repair & Parts 4,716 7,565 Leasing & Services 12,018 10,984 92,189 72,533 Selling and administrative 54,364 50,432 Net gain on disposition of equipment (3,959 ) (14,353 ) Earnings from operations 41,784 36,454 Interest and foreign exchange 12,852 4,404 Earnings before income taxes and earnings from unconsolidated affiliates 28,932 32,050 Income tax expense (5,994 ) (9,135 ) Earnings before earnings from unconsolidated affiliates 22,938 22,915 Earnings from unconsolidated affiliates 1,073 467 Net earnings 24,011 23,382 Net earnings attributable to noncontrolling interest (16,342 ) (5,426 ) Net earnings attributable to Greenbrier$ 7,669 $ 17,956 Diluted earnings per common share$ 0.23 $ 0.54
Performance for our segments is evaluated based on Earnings from operations (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. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.
Three Months Ended November 30, (In thousands) 2019 2018 Operating profit (loss): Manufacturing$ 53,143 $ 36,855 Wheels, Repair & Parts 1,114 3,247 Leasing & Services 9,777 17,513 Corporate (22,250 ) (21,161 )$41,784 $36,454 26
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