)

Greenbrier Reports First Quarter Results

Date

Fri, Jan 5, 2018 06:00 AM

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LAKE OSWEGO, Ore., Jan. 5, 2018 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) today reported financial results for its first fiscal quarter ended November 30, 2017.

The Greenbrier Companies Logo (PRNewsfoto/The Greenbrier Companies, Inc.)

First Quarter Highlights

  • Net earnings attributable to Greenbrier for the quarter were $26.3 million, or $0.83 per diluted share, on revenue of $559.5 million
  • Quarterly results included $3.4 million ($2.3 million after-tax or $0.07 per diluted share) of expense related to resolution of litigation in a foreign jurisdiction.  Additionally, the tax rate for the quarter was 33.3% attributable to discrete items and the geographic mix of earnings.  Compared to the previous annual tax rate guidance of 29%, the impact of the higher quarterly rate is $0.07 per diluted share.
  • Adjusted EBITDA for the quarter was $76.9 million, or 13.7% of revenue.
  • Orders for 3,200 diversified railcars were received during this quarter, valued at over $290 million.
  • New railcar backlog as of November 30, 2017 was 26,500 units with an estimated value of $2.56 billion.
  • New railcar deliveries totaled 4,400 units for the quarter.
  • Board declares a quarterly dividend of $0.23 per share, payable on February 16, 2018 to shareholders as of January 26, 2018.

William A. Furman, Chairman and CEO, said, "Greenbrier advanced several key initiatives during the quarter and is on track to achieve our goals for the year.  While the new railcar market in North America is challenging, broad-based demand for Greenbrier's products and services remains steady and we expect will trend higher as we advance through fiscal 2018.  During the recent quarter, Greenbrier received 3,200 orders for a broad range of railcar types including covered hoppers, tanks, automotive carrying units and our first orders for open top hoppers for use in aggregate service.  Greenbrier's disciplined balance sheet management has resulted in a strong cash position and very low net debt, enabling us to invest strategically and return capital to shareholders. Good backlog visibility combined with a strong balance sheet provides the flexibility we need to build railcars when and where customers need them, across four continents."

Furman concluded, "Based on first quarter results, we are confident in our guidance for the year. As fiscal 2018 progresses, we will continue integration of our new manufacturing investments and will continue to expand internationally.  Greenbrier is well positioned to achieve its ambitious business objectives for fiscal 2018 as growth in North American and international markets drives increased revenues, deliveries and EPS compared to fiscal 2017."

Business Outlook

Based on current business trends, industry forecasts and production schedules for fiscal 2018, and excluding the expected benefits of the recent tax reform act, Greenbrier believes:

  • Deliveries will be approximately 20,000 – 22,000 units including Greenbrier-Maxion (Brazil) which will account for up to 10% of deliveries
  • Revenue will be $2.4$2.6 billion
  • Diluted EPS will be $4.00

As noted in the "Safe Harbor" statement, there are risks to achieving this guidance.  Certain orders and backlog in this release are subject to customary documentation and completion of terms.

Financial Summary

 

Q1 FY18

Q4 FY17

Sequential Comparison – Main Drivers

Revenue

$559.5M

$611.4M

Down 8.5% primarily due to lower volume of deliveries due to timing of syndications

Gross margin

16.0%

16.3%

Down 30 bps due to product mix shifts

Selling and

administrative expense

$47.0M

$47.1M

Down modestly due to lower employee related costs; includes foreign legal settlement expense

Gain on disposition

of equipment

($19.2M)

($4.9M)

Increase reflects rebalancing of lease portfolio

Adjusted EBITDA

$76.9M

$73.3M

Higher operating margin

Effective tax rate

33.3%

20.7%

Reflects foreign discrete items and a change in the geographic mix of earnings 

Loss from

unconsolidated affiliates

($2.9M)

($6.5M) (1)

Continued operating challenges at GBW

Net earnings attributable

to noncontrolling interest

($7.1M)

($8.5M)

Driven primarily by lower deliveries and timing of railcar syndications at our GIMSA JV

Adjusted net earnings attributable to Greenbrier

$26.3M

$27.3M

 

Adjusted diluted EPS

$0.83

$0.86

 

(1) Includes $3.5 million, net of tax, or $0.11 per share, impact associated with a non-cash goodwill impairment charge recorded by GBW.

 

Segment Summary

 

Q1 FY18

Q4 FY17

Sequential Comparison – Main Drivers

Manufacturing

  Revenue

$451.5M

$508.5M

Down 11.2% due to lower volume of deliveries

  Gross margin

15.6%

16.3%

Down 70 bps primarily due to product mix shifts

  Operating margin (1)

11.7%

13.5%

 

  Deliveries (2)

4,000

5,200

 

Wheels & Parts

  Revenue

$78.0M

$75.1M

Up 3.9% primarily attributable to higher wheel and component volume

  Gross margin

7.1%

7.0%

Up 10 bps due to higher volume

  Operating margin (1)

3.1%

3.0%

 

Leasing & Services

  Revenue

$30.0M

$27.8M

Up 7.9% due to higher volume of externally sourced railcar syndications

  Gross margin

43.9%

42.1%

Up 180 bps primarily due to higher interim rent

  Operating margin (1) (3)

93.8%

27.2%

Driven by higher level of gains on disposition of equipment due to rebalancing of lease fleet

  Lease fleet utilization

91.8%

92.1%

 

(1) See supplemental segment information on page 9 for additional information.

(2) Excludes Brazil deliveries which are not consolidated into manufacturing revenue and margins.

(3) Includes Net gain on disposition of equipment, which is excluded from gross margin.

Conference Call

Greenbrier will host a teleconference to discuss its first quarter 2018 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website. 
Teleconference details are as follows:

  • January 5, 2018
  • 8:00 a.m. Pacific Standard Time
  • Phone: 1-630-395-0143, Password: "Greenbrier"
  • Real-time Audio Access:  ("Newsroom" at http://www.gbrx.com)

Please access the site 10 minutes prior to the start time. 

About Greenbrier

Greenbrier­­, headquartered in Lake Oswego, Oregon, is a leading international supplier of equipment and services to global freight transportation markets. Greenbrier designs, builds and markets freight railcars and marine barges in North America. Greenbrier Europe is an end-to-end freight railcar manufacturing, engineering and repair business with operations in Poland and Romania that serves customers across Europe and in the nations of the GCC. Greenbrier builds freight railcars and rail castings in Brazil through two separate strategic partnerships. We are a leading provider of wheel services, parts, railcar management & regulatory compliance services and leasing services to railroads and related transportation industries in North America.  Greenbrier offers freight railcar repair, refurbishment and retrofitting services in North America through a joint venture partnership with Watco Companies, LLC. Through other unconsolidated joint ventures, we produce industrial and rail castings, tank heads and other components. Greenbrier owns a lease fleet of over 8,000 railcars and performs management services for 353,000 railcars. Learn more about Greenbrier at www.gbrx.com.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:  This press release may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words such as "anticipates," "believes," "forecast," "potential," "goal," "contemplates," "expects," "intends," "plans," "projects," "hopes," "seeks," "estimates," "strategy," "could," "would," "should," "likely," "will," "may," "can," "designed to," "future," "foreseeable future" and similar expressions to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog and awards that are not indicative of Greenbrier's financial results; uncertainty or changes in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of Greenbrier's indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; policies and priorities of the federal government regarding international trade, taxation and infrastructure; sovereign risk to contracts, exchange rates or property rights; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, costs or inefficiencies associated with expansion, start-up, or changing of production lines or changes in production rates, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; integration of current or future acquisitions and establishment of joint ventures; succession planning; discovery of defects in railcars or services resulting in increased warranty costs or litigation; physical damage or product or service liability claims that exceed Greenbrier's insurance coverage; train derailments or other accidents or claims that could subject Greenbrier to legal claims; actions or inactions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other railcar or railroad regulation; and issues arising from investigations of whistleblower complaints; all as may be discussed in more detail under the headings "Risk Factors" and "Forward Looking Statements" in Greenbrier's Annual Report on Form 10-K for the fiscal year ended August 31, 2017 and Greenbrier's other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. Except as otherwise required by law, Greenbrier does not assume any obligation to update any forward-looking statements.

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

 
 

November 30,

        2017

   August 31,

       2017

     May 31,

        2017

 February 28,

       2017

November 30,

        2016

Assets

         

   Cash and cash equivalents

$    591,406

$    611,466

$    465,413

$    545,752

$    233,790

   Restricted cash

8,839

8,892

8,753

8,696

8,642

   Accounts receivable, net 

315,393

279,964

267,830

295,844

237,037

   Inventories

411,371

400,127

414,012

381,439

402,064

   Leased railcars for syndication

130,991

91,272

149,119

98,398

102,686

   Equipment on operating leases, net

274,598

315,941

315,976

298,269

305,586

   Property, plant and equipment, net

426,961

428,021

330,471

325,325

327,170

   Investment in unconsolidated affiliates

101,529

108,255

110,058

90,762

93,330

   Intangibles and other assets, net

83,819

85,177

68,930

68,228

63,780

   Goodwill

67,783

68,590

43,265

43,265

43,265

 

$ 2,412,690

$ 2,397,705

$ 2,173,827

$ 2,155,978

$ 1,817,350

           

Liabilities and Equity

         

   Revolving notes

$         6,885

$         4,324

$                -

$                -

$                -

   Accounts payable and accrued liabilities

441,373

415,061

339,001

372,321

345,776

   Deferred income taxes

69,984

75,791

80,482

65,589

54,123

   Deferred revenue

120,044

129,260

82,006

85,441

85,358

   Notes payable, net

558,987

558,228

532,638

532,596

300,331

Contingently redeemable noncontrolling interest

35,209

36,148

-

-

-

   Total equity - Greenbrier

1,032,557

1,018,130

986,221

942,084

880,725

   Noncontrolling interest

147,651

160,763

153,479

157,947

151,037

   Total equity

1,180,208

1,178,893

1,139,700

1,100,031

1,031,762

 

$ 2,412,690

$ 2,397,705

$ 2,173,827

$ 2,155,978

$ 1,817,350

 

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts, unaudited)

 
 

Three Months Ended

November 30,

 
     

2017

 

2016

 

Revenue

           

   Manufacturing

 

$

451,485

 

$         454,033

 

   Wheels & Parts

   

78,011

 

69,635

 

   Leasing & Services

   

30,039

 

28,646

 
     

559,535

 

552,314

 

Cost of revenue

           

   Manufacturing

   

380,850

 

356,555

 

   Wheels & Parts

   

72,506

 

64,978

 

   Leasing & Services

   

16,865

 

18,030

 
     

470,221

 

439,563

 
             

Margin

   

89,314

 

112,751

 
             

Selling and administrative

   

47,043

 

41,213

 

Net gain on disposition of equipment

   

(19,171)

 

(1,122)

 

Earnings from operations

   

61,442

 

72,660

 
             

Other costs

           

Interest and foreign exchange

   

7,020

 

1,724

 

Earnings before income tax and loss from unconsolidated affiliates

   

54,422

 

70,936

 

Income tax expense

   

(18,135)

 

(20,386)

 

Earnings before loss from unconsolidated affiliates

   

36,287

 

50,550

 

Loss from unconsolidated affiliates

   

(2,910)

 

(2,584)

 
             

Net earnings

   

33,377

 

47,966

 

Net earnings attributable to noncontrolling interest

   

(7,124)

 

(23,004)

 
             

Net earnings attributable to Greenbrier

 

$

26,253

 

$           24,962

 
             

Basic earnings per common share:

 

$

0.90

 

$                0.86

 
             

Diluted earnings per common share:

 

$

0.83

 

$                0.79

 
             

Weighted average common shares:

           

Basic

   

29,332

 

29,097

 

Diluted

   

32,696

 

32,412

 
             

Dividends declared per common share

 

$

0.23

 

$                0.21

 

 

THE GREENBRIER COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited) 

 
     

Three Months Ended
November 30,

 
     

2017

 

2016

 
             

Cash flows from operating activities:

           

    Net earnings

 

$

33,377

 

$         47,966

 

    Adjustments to reconcile net earnings to net cash

      provided by (used in) operating activities:

           

      Deferred income taxes

   

(5,865)

 

2,756

 

      Depreciation and amortization

   

18,370

 

15,595

 

      Net gain on disposition of equipment

   

(19,171)

 

(1,122)

 

      Accretion of debt discount

   

1,024

 

-

 

      Stock based compensation expense

   

5,939

 

5,343

 

     Noncontrolling interest adjustments

   

(875)

 

(3,781)

 

      Other

   

477

 

229

 

      Decrease (increase) in assets:

           

          Accounts receivable, net

   

(35,510)

 

(5,256)

 

          Inventories

   

(16,311)

 

(39,108)

 

          Leased railcars for syndication

   

(35,541)

 

34,295

 

          Other

   

6,304

 

8,893

 

    Increase (decrease) in liabilities:

           

          Accounts payable and accrued liabilities

   

16,676

 

(22,873)

 

          Deferred revenue

   

(8,548)

 

(11,111)

 

    Net cash provided by (used in) operating activities

   

(39,654)

 

31,826

 

Cash flows from investing activities:

           

    Proceeds from sales of assets

   

75,060

 

9,189

 

    Capital expenditures

   

(29,893)

 

(12,584)

 

    Decrease in restricted cash

   

53

 

15,637

 

   Cash distribution from unconsolidated affiliates

   

-

 

550

 

    Investment in and advances to unconsolidated affiliates

   

-

 

(550)

 

    Net cash provided by investing activities

   

45,220

 

12,242

 

Cash flows from financing activities:

           

    Net changes in revolving notes with maturities of 90 days or less

   

2,561

 

-

 

    Proceeds from issuance of notes payable

   

2,138

 

-

 

   Repayments of notes payable

   

(2,809)

 

(1,750)

 

   Investment by joint venture partner

   

6,500

 

-

 

    Cash distribution to joint venture partner

   

(26,900)

 

(11,185)

 

    Dividends

   

(319)

 

(6,147)

 

    Tax payments for net share settlement of restricted stock

   

(5,061)

 

(2,820)

 

    Excess tax deficiency from restricted stock awards

   

-

 

(2,464)

 

    Net cash used in financing activities

   

(23,890)

 

(24,366)

 

    Effect of exchange rate changes

   

(1,736)

 

(8,591)

 

    Increase (decrease) in cash and cash equivalents

   

(20,060)

 

11,111

 

Cash and cash equivalents

           

Beginning of period

   

611,466

 

222,679

 

End of period

 

$

591,406

 

$       233,790

 
             
             

 

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

(In thousands, except per share amounts, unaudited)

 

Operating Results by Quarter for 2017 are as follows:

 
 

First

 

Second

 

Third

 

Fourth

 

Total

 
                     

Revenue

                   

   Manufacturing

$          454,033

 

$       445,504

 

$       317,104

 

$       508,547

 

$   1,725,188

 

   Wheels & Parts

69,635

 

82,714

 

85,231

 

75,099

 

312,679

 

   Leasing & Services

28,646

 

38,064

 

36,826

 

27,761

 

131,297

 
 

552,314

 

566,282

 

439,161

 

611,407

 

2,169,164

 

Cost of revenue

                   

   Manufacturing

356,555

 

346,653

 

245,228

 

425,531

 

1,373,967

 

   Wheels & Parts

64,978

 

75,497

 

77,985

 

69,876

 

288,336

 

   Leasing & Services

18,030

 

25,207

 

26,247

 

16,078

 

85,562

 
 

439,563

 

447,357

 

349,460

 

511,485

 

1,747,865

 
                     

Margin

112,751

 

118,925

 

89,701

 

99,922

 

421,299

 
                     

Selling and administrative expense

41,213

 

39,495

 

42,810

 

47,089

 

170,607

 

Net gain on disposition of equipment

(1,122)

 

(2,090)

 

(1,581)

 

(4,947)

 

(9,740)

 

Earnings from operations

72,660

 

81,520

 

48,472

 

57,780

 

260,432

 
                     

Other costs

                   

   Interest and foreign exchange

1,724

 

5,673

 

7,894

 

8,901

 

24,192

 

Earnings before income tax and earnings (loss) from unconsolidated affiliates          

70,936

 

75,847

 

40,578

 

48,879

 

236,240

 

Income tax expense

(20,386)

 

(24,858)

 

(8,656)

 

(10,114)

 

(64,014)

 

Earnings before earnings (loss) from unconsolidated affiliates          

50,550

 

50,989

 

31,922

 

38,765

 

172,226

 

Earnings (loss) from unconsolidated affiliates

(2,584)

 

(1,988)

 

(681)

 

(6,511)

 

(11,764)

 

Net earnings

47,966

 

49,001

 

31,241

 

32,254

 

160,462

 

Net earnings attributable to noncontrolling interest

(23,004)

 

(14,465)

 

1,582

 

(8,508)

 

(44,395)

 

Net earnings attributable to Greenbrier

$           24,962

 

$         34,536

 

$         32,823

 

$        23,746

 

$      116,067

 
                     

Basic earnings per common share (1)

$                  0.86

 

$                    1.19

 

$                 1.12

 

$                 0.81

 

$               3.97

 

Diluted earnings per common share (1)

$                  0.79

 

$                    1.09

 

$                 1.03

 

$                 0.75

 

$               3.65

 
   

(1)

Quarterly amounts do not total to the year to date amount as each period is calculated discretely. Diluted earnings per common share excludes the dilutive effect of the 2024 Convertible Notes, since the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive, but includes restricted stock units that are subject to performance criteria, for which actual levels of performance above target have been achieved, using the treasury stock method when dilutive and the dilutive effect of shares underlying the 2018 Convertible Notes using the "if converted" method in which debt issuance and interest costs, net of tax, were added back to net earnings.

 

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION
 (In thousands, unaudited)

 

Segment Information

 

Three months ended November 30, 2017:

                 
 

Revenue

 

Earnings (loss) from operations

 

(In thousands)

External

 

Intersegment

 

  Total

 

External

 

Intersegment

 

Total

 

Manufacturing

$           451,485

 

$             16,804

 

$         468,289

 

$           52,969

 

$               4,186

 

$      57,155

 

Wheels & Parts

78,011

 

7,732

 

85,743

 

2,418

 

748

 

3,166

 

Leasing & Services

30,039

 

1,605

 

31,644

 

28,190

 

1,372

 

29,562

 

Eliminations

-

 

(26,141)

 

(26,141)

 

-

 

(6,306)

 

(6,306)

 

Corporate

-

 

-

 

-

 

(22,135)

 

-

 

(22,135)

 
 

$           559,535

 

$                      -

 

$         559,535

 

$           61,442

 

$                       -

 

$       61,442

 
                   

Three months ended August 31, 2017:

                 
                   
 

Revenue

 

Earnings (loss) from operations

 
 

External

 

Intersegment

 

  Total

 

External

 

Intersegment

 

Total

 

Manufacturing

$           508,547

 

$                       -

 

$         508,547

 

$           68,723

 

$                       -

 

$       68,723

 

Wheels & Parts

75,099

 

7,468

 

82,567

 

2,282

 

341

 

2,623

 

Leasing & Services

27,761

 

3,772

 

31,533

 

7,541

 

3,497

 

11,038

 

Eliminations

-

 

(11,240)

 

(11,240)

 

-

 

(3,838)

 

(3,838)

 

Corporate

-

 

-

 

-

 

(20,766)

 

-

 

(20,766)

 
 

$           611,407

 

$                       -

 

$         611,407

 

$           57,780

 

$                       -

 

$      57,780

 

 

     

Total assets

   

 

(In thousands)

   

November 30,

2017

 

August 31,

2017

   

Manufacturing

$               915,918

 

$             914,450

   

Wheels & Parts

262,349

 

236,315

   

Leasing & Services 

535,847

 

535,323

   

Unallocated

698,576

 

711,617

   
 

$            2,412,690

 

$          2,397,705

   

The results of operations for GBW, which are shown below, are not reflected in the above tables as the investment is accounted for under the equity method of accounting.

 

As of and for the

Three Months Ended     

 
 

November 30,
 
2017    

 

August 31,
2017 

 
 

Revenue

$                 58,000

 

$                56,300

 
 

Loss from operations

$                 (5,700)

 

$               (15,400)

 
 

Total assets

$               204,300

 

$              206,000

 
           
           

During the three months ended August 31, 2017, GBW performed an interim goodwill test as sales and profitability trends declined beyond what was anticipated. As a result, GBW recorded a pre-tax impairment loss of $11.2 million. GBW is accounted for under the equity method of accounting, therefore our share of the non-cash impairment loss recognized by GBW was $3.5 million after-tax ($0.11 per share) and is included as part of Earnings (loss) from unconsolidated affiliates on our Consolidated Statement of Income.

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION
(In thousands, excluding backlog and delivery units, unaudited)

 

Reconciliation of Net earnings to Adjusted EBITDA

     
 

Three Months Ended

 
 

November 30,
2017

 

August 31,

2017

 

Net earnings

$               33,377

 

$               32,254

 

Interest and foreign exchange

7,020

 

8,901

 

Income tax expense

18,135

 

10,114

 

Depreciation and amortization

18,370

 

18,513

 

GBW goodwill impairment

-

 

3,522

 
             

Adjusted EBITDA

$               76,902

 

$            73,304

 

 

     

Three Months
Ended

November 30,
2017

 

Backlog Activity (units)

       

Beginning backlog

28,600

 

Orders received (1)

3,200

 

Production held as Leased railcars for syndication

(1,400)

 

Production sold directly to third parties (1)

(3,900)

 

Ending backlog

26,500

 
     

Delivery Information (units)

   

Production sold directly to third parties (1)

3,900

 

Sales of Leased railcars for syndication

500

 

Total deliveries

4,400

 
   

(1)

Includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method

 

 

THE GREENBRIER COMPANIES, INC.

SUPPLEMENTAL INFORMATION

 (In thousands, except per share amounts, unaudited)

 

Reconciliation of common shares outstanding, adjusted net earnings attributable to Greenbrier and adjusted diluted earnings per share

 

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

 

Three Months Ended

 

November 30,

2017

    August 31,
 2017

Weighted average basic common shares outstanding (1)

29,332

29,323

Dilutive effect of convertible notes (2)

3,331

3,321

Dilutive effect of performance awards (3)

33

58

Weighted average diluted common shares outstanding

32,696

32,702

     

(1)

Restricted stock grants and restricted stock units, including some grants subject to certain performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position.

   

(2)

The dilutive effect of the 2018 Convertible notes are included in the Weighted average diluted common shares outstanding as they were considered dilutive under the "if converted" method as further discussed below.

   

(3)

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

Diluted earnings per share was calculated using the more dilutive of two approaches.  The first approach includes the dilutive effect of using the treasury stock method, associated with shares underlying the 2024 Convertible notes and performance based restricted stock units that are subject to performance criteria, for which actual levels of performance above target have been achieved. The second approach supplements the first by including the "if converted" effect of the 2018 Convertible notes. Under the "if converted method" debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes.  The 2024 Convertible notes are included in the calculation of both approaches using the treasury stock method when the average stock price is greater than the applicable conversion price.

 

         Three Months Ended

 

November 30,
2017

August 31,

2017

Net earnings attributable to Greenbrier

$           26,253

$         23,746

GBW goodwill impairment

                N/A

3,522

Adjusted net earnings attributable to Greenbrier

$           26,253

$          27,268

   
 

Three Months Ended

 

November 30,
2017

August 31,

2017

Net earnings attributable to Greenbrier

$        26,253

$        23,746

Add back:

   

Interest and debt issuance costs on the 2018 Convertible notes, net of tax

733

733

Earnings before interest and debt issuance costs on convertible notes

$        26,986

$         24,479

Weighted average diluted common shares outstanding

32,696

32,702

     

Diluted earnings per share

$             0.83

$                 0.75

GBW goodwill impairment(1)

                N/A

0.11

Adjusted diluted earnings per share

$             0.83

$             0.86

   

(1)

GBW goodwill impairment of $3.5 million, net of tax, divided by weighted average diluted common shares outstanding of 32,702 for the three months ended August 31, 2017.

 

SOURCE The Greenbrier Companies, Inc. (GBX)