Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The number of shares of the registrant’s common stock, without par value, outstanding on ~~March~~December 31, 2021 was ~~32,825,126~~32,546,113 shares.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events and include any statement that does not relate to any historical or current fact. We use words such as “anticipates,” “believes,” ~~“forecast,~~“can,” “could,” “designed to,” “estimates,” “expects,” “foresee,” “future,” “intends,” “likely,” “may,” “potential,” ~~“expects,” “intends,” “plans,”~~ “seeks,~~” “estimates,” “could,” “would,~~” “should,” ~~“likely,~~“strategy,” “will,” ~~“may,~~“would,” ~~“can,” “future,” “preliminary”~~ and similar expressions to identify forward-looking statements. Forward-looking statements are not guarantees of future performance.

Forward-looking statements are based on currently available operating, financial and market information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to:

The foregoing risks are described in more detail in Part I Item 1A “Risk Factors” in our most recent Annual Report on Form 10-K ~~and subsequent Quarterly Report on Form 10-Q~~ which are incorporated herein by reference. You are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements. All references to years refer to the fiscal years ended August 31^st unless otherwise noted.

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


	February 28, 2021			August 31, 2020			November 30, 2021			August 31, 2021
Assets
Cash and cash equivalents	$	593,499		$	833,745		$	410.8		$	646.8
Restricted cash		8,614			8,342			27.1			24.6
Accounts receivable, net		236,171			230,488			393.3			306.4
Income tax receivable		62,103			9,109			106.2			112.1
Inventories		522,984			529,529			631.4			573.6
Leased railcars for syndication		109,287			107,671			99.1			51.6
Equipment on operating leases, net		445,451			350,442			751.3			609.8
Property, plant and equipment, net		687,468			711,524			654.4			670.2
Investment in unconsolidated affiliates		70,820			72,354			83.1			79.9
Intangibles and other assets, net		190,283			190,322			183.0			183.6
Goodwill		132,685			130,308			130.3			132.1
	$	3,059,365		$	3,173,834		$	3,470.0		$	3,390.7
Liabilities and Equity
Revolving notes	$	275,839		$	351,526		$	516.3		$	372.2
Accounts payable and accrued liabilities		448,571			463,880			540.4			569.8
Deferred income taxes		24,798			7,701			51.3			73.3
Deferred revenue		42,572			42,467			36.6			42.8
Notes payable, net		793,189			804,088			895.7			826.5

Commitments and contingencies (Note 14)

Contingently redeemable noncontrolling interest		30,037			31,117			29.7			29.7

Equity:
Greenbrier
Preferred stock - without par value; 25,000 shares authorized; NaN outstanding		—			—			—			—
Common stock - without par value; 50,000 shares authorized; 32,825 and 32,701 shares outstanding at February 28, 2021 and August 31, 2020		—			—
Common stock - without par value; 50,000 shares authorized; 32,546 and 32,397 shares outstanding at November 30, 2021 and August 31, 2021								—			—
Additional paid-in capital		466,994			460,400			408.5			469.7
Retained earnings		848,192			885,460			888.7			881.7
Accumulated other comprehensive loss		(46,684	)		(52,817	)		(59.9	)		(43.7	)
Total equity – Greenbrier		1,268,502			1,293,043			1,237.3			1,307.7
Noncontrolling interest		175,857			180,012			162.7			168.7
Total equity		1,444,359			1,473,055			1,400.0			1,476.4
	$	3,059,365		$	3,173,834		$	3,470.0		$	3,390.7

(In millions, except number of shares which are reflected in thousands ~~except~~and per share amounts, unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended November 30,
	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021			2020
Revenue
Manufacturing	$	202,094		$	489,943		$	510,816		$	1,147,310		$	452.5		$	304.5
Wheels, Repair & Parts		71,623			91,225			137,179			177,833
Leasing & Services		21,905			42,680			50,616			68,064
Maintenance Services														72.4			65.6
Leasing & Management Services														25.8			32.9
		295,622			623,848			698,611			1,393,207			550.7			403.0
Cost of revenue
Manufacturing		201,771			422,309			482,661			1,004,221			421.6			280.9
Wheels, Repair & Parts		66,667			84,373			129,651			166,265
Leasing & Services		9,513			30,830			27,957			44,196
Maintenance Services														71.2			63.0
Leasing & Management Services														10.3			18.4
		277,951			537,512			640,269			1,214,682			503.1			362.3
Margin		17,671			86,336			58,342			178,525			47.6			40.7
Selling and administrative expense		43,425			54,597			87,132			108,961			44.3			43.7
Net gain on disposition of equipment		(27	)		(6,697	)		(949	)		(10,656	)		(8.5	)		(0.9	)
Earnings (loss) from operations		(25,727	)		38,436			(27,841	)		80,220			11.8			(2.1	)
Other costs
Interest and foreign exchange		9,568			12,609			20,671			25,461			12.6			11.1
Earnings (loss) before income tax and earnings (loss) from unconsolidated affiliates		(35,295	)		25,827			(48,512	)		54,759
Income tax benefit (expense)		21,752			(7,463	)		29,084			(13,457	)
Loss before income tax and earnings (loss) from unconsolidated affiliates														(0.8	)		(13.2	)
Income tax benefit														1.4			7.3
Earnings (loss) before earnings (loss) from unconsolidated affiliates		(13,543	)		18,364			(19,428	)		41,302			0.6			(5.9	)
Earnings (loss) from unconsolidated affiliates		(378	)		1,651			(1,122	)		2,724			5.0			(0.8	)
Net earnings (loss)		(13,921	)		20,015			(20,550	)		44,026			5.6			(6.7	)
Net (earnings) loss attributable to noncontrolling interest		4,856			(6,386	)		1,513			(22,728	)		5.2			(3.3	)
Net earnings (loss) attributable to Greenbrier	$	(9,065	)	$	13,629		$	(19,037	)	$	21,298		$	10.8		$	(10.0	)
Basic earnings (loss) per common share	$	(0.28	)	$	0.42		$	(0.58	)	$	0.65		$	0.33		$	(0.30	)
Diluted earnings (loss) per common share	$	(0.28	)	$	0.41		$	(0.58	)	$	0.64		$	0.32		$	(0.30	)
Weighted average common shares:
Basic		32,810			32,661			32,766			32,645			32,510			32,723
Diluted		32,810			33,482			32,766			33,382			33,570			32,723


	Three Months Ended						Six Months Ended						Three Months Ended November 30,
	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021			2020
Net earnings (loss)	$	(13,921	)	$	20,015		$	(20,550	)	$	44,026		$	5.6		$	(6.7	)

Other comprehensive income (loss)
Translation adjustment		597			(703	)		4,464			(2,286	)		(13.9	)		3.9
Reclassification of derivative financial instruments recognized in net earnings (loss) ¹		1,274			168			2,515			477			1.0			1.2
Unrealized loss on derivative financial instruments ²		(142	)		(3,638	)		(895	)		(1,484	)		(3.2	)		(0.7	)
Other (net of tax effect)		52			242			53			(221	)		(0.1	)		—
		1,781			(3,931	)		6,137			(3,514	)		(16.2	)		4.4
Comprehensive income (loss)		(12,140	)		16,084			(14,413	)		40,512
Comprehensive loss														(10.6	)		(2.3	)
Comprehensive (income) loss attributable to noncontrolling interest		4,849			(6,384	)		1,509			(22,720	)		5.2			(3.3	)
Comprehensive income (loss) attributable to Greenbrier	$	(7,291	)	$	9,700		$	(12,904	)	$	17,792
Comprehensive loss attributable to Greenbrier													$	(5.4	)	$	(5.6	)

Attributable to Greenbrier

Common
Stock
Shares

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Equity -
Greenbrier

Noncontrolling
Interest

Total
Equity

Contingently
Redeemable
Noncontrolling
Interest

Balance August 31, 2020

32,701

$
460,400

$
885,460

$
(52,817
)
$
1,293,043

$
180,012

$
1,473,055

$
31,117

Cumulative effect adjustment due
   to adoption of ASU 2016-13
   (see Note 1)

—

—

(509
)

—

(509
)

—

(509
)

—

Net loss

—

—

(19,037
)

—

(19,037
)

(433
)

(19,470
)

(1,080
)
Other comprehensive income, net

—

—

—

6,133

6,133

4

6,137

—

Noncontrolling interest adjustments

—

—

—

—

—

(1,285
)

(1,285
)

—

Joint venture partner
   distribution declared

—

—

—

—

—

(2,441
)

(2,441
)

—

Restricted stock awards (net of
   cancellations)

124

15,497

—

—

15,497

—

15,497

—

Unamortized restricted stock

—

(17,854
)

—

—

(17,854
)

—

(17,854
)

—

Restricted stock amortization

—

8,951

—

—

8,951

—

8,951

—

Cash dividends ($0.54 per share)

—

—

(17,722
)

—

(17,722
)

—

(17,722
)

—

Balance February 28, 2021

32,825

$
466,994

$
848,192

$
(46,684
)
$
1,268,502

$
175,857

$
1,444,359

$
30,037

Attributable to Greenbrier

Common
Stock
Shares

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Equity -
Greenbrier

Noncontrolling
Interest

Total
Equity

Contingently
Redeemable
Noncontrolling
Interest

Balance November 30, 2020

32,824

$
462,498

$
866,367

$
(48,458
)
$
1,280,407

$
180,455

$
1,460,862

$
30,711

Net loss

—

—

(9,065
)

—

(9,065
)

(4,182
)

(13,247
)

(674
)
Other comprehensive income, net

—

—

—

1,774

1,774

7

1,781

—

Noncontrolling interest
   adjustments

—

—

—

—

—

(14
)

(14
)

—

Joint venture partner
   distribution declared

—

—

—

—

—

(409
)

(409
)

—

Noncontrolling interest acquired

—

—

—

—

—

—

—

—

Restricted stock awards (net of
   cancellations)

1

1,301

—

—

1,301

—

1,301

—

Unamortized restricted stock

—

(1,321
)

—

—

(1,321
)

—

(1,321
)

—

Restricted stock amortization

—

4,516

—

—

4,516

—

4,516

—

Cash dividends ($0.27 per share)

—

—

(9,110
)

—

(9,110
)

—

(9,110
)

—

Balance February 28, 2021

32,825

$
466,994

$
848,192

$
(46,684
)
$
1,268,502

$
175,857

$
1,444,359

$
30,037

Attributable to Greenbrier

Common
Stock
Shares

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Equity -
Greenbrier

Noncontrolling
Interest

Total
Equity

Contingently
Redeemable
Noncontrolling
Interest

Balance August 31, 2019

32,488

$
453,943

$
867,602

$
(44,815
)
$
1,276,730

$
164,967

$
1,441,697

$
31,564

Cumulative effect adjustment
   due to adoption of ASU
   2016-02 (See Note 1)

—

—

4,393

—

4,393

—

4,393

—

Net earnings

—

—

21,298

—

21,298

23,510

44,808

(782
)
Other comprehensive loss, net

—

—

—

(3,506
)

(3,506
)

(8
)

(3,514
)

—

Noncontrolling interest
   adjustments

—

—

—

—

—

9,038

9,038

—

Joint venture partner
   distribution declared

—

—

—

—

—

(8,172
)

(8,172
)

—

Noncontrolling interest acquired

—

—

—

—

—

12,075

12,075

—

Restricted stock awards (net of
   cancellations)

154

11,114

—

—

11,114

—

11,114

—

Unamortized restricted stock

—

(13,008
)

—

—

(13,008
)

—

(13,008
)

—

Restricted stock amortization

—

6,859

—

—

6,859

—

6,859

—

Cash dividends ($0.52 per
   share)

—

—

(17,408
)

—

(17,408
)

—

(17,408
)

—

Balance February 29, 2020

32,642

$
458,908

$
875,885

$
(48,321
)
$
1,286,472

$
201,410

$
1,487,882

$
30,782

Attributable to Greenbrier

Common
Stock
Shares

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Equity -
Greenbrier

Noncontrolling
Interest

Total
Equity

Contingently
Redeemable
Noncontrolling
Interest

Balance November 30, 2019

32,596

$
454,900

$
871,300

$
(44,392
)
$
1,281,808

$
191,050

$
1,472,858

$
31,723

Net earnings

—

—

13,629

—

13,629

7,327

20,956

(941
)
Other comprehensive loss, net

—

—

—

(3,929
)

(3,929
)

(2
)

(3,931
)

—

Noncontrolling interest
   adjustments

—

—

—

—

—

7,302

7,302

—

Joint venture partner
   distribution declared

—

—

—

—

—

(4,267
)

(4,267
)

—

Restricted stock awards (net of
   cancellations)

46

1,642

—

—

1,642

—

1,642

—

Unamortized restricted stock

—

(1,667
)

—

—

(1,667
)

—

(1,667
)

—

Restricted stock amortization

—

4,033

—

—

4,033

—

4,033

—

Cash dividends ($0.27 per
   share)

—

—

(9,044
)

—

(9,044
)

—

(9,044
)

—

Balance February 29, 2020

32,642

$
458,908

$
875,885

$
(48,321
)
$
1,286,472

$
201,410

$
1,487,882

$
30,782


	Six Months Ended						Three Months Ended November 30,
	February 28, 2021			February 29, 2020			2021			2020
Cash flows from operating activities
Net earnings (loss)	$	(20,550	)	$	44,026		$	5.6		$	(6.7	)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Deferred income taxes		16,969			(6,714	)		(4.8	)		2.3
Depreciation and amortization		50,868			59,338			25.4			26.0
Net gain on disposition of equipment		(949	)		(10,656	)		(8.5	)		(0.9	)
Accretion of debt discount		2,857			2,718			—			1.4
Stock based compensation expense		8,951			7,237			1.1			4.4
Noncontrolling interest adjustments		(1,285	)		9,038			(0.3	)		(1.3	)
Other		1,135			(39	)		0.7			0.6
Decrease (increase) in assets:
Accounts receivable, net		(10,735	)		47,282			(86.9	)		(6.4	)
Income tax receivable		(52,994	)		(1,173	)
Inventories		(35,005	)		(55,158	)		(64.4	)		13.4
Leased railcars for syndication		(37,988	)		(123,033	)		(29.5	)		6.2
Other assets		(2,895	)		(39,433	)		(5.9	)		2.2
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities		(13,257	)		(67,988	)		(24.1	)		(27.2	)
Deferred revenue		104			1,381			(5.1	)		(5.4	)
Net cash used in operating activities		(94,774	)		(133,174	)
Net cash provided by (used in) operating activities								(196.7	)		8.6
Cash flows from investing activities
Proceeds from sales of assets		11,336			41,827			28.0			8.7
Capital expenditures		(50,353	)		(40,834	)		(186.9	)		(38.6	)
Investments in and advances to / repayments from unconsolidated affiliates		4,523			(1,500	)		0.2			4.5
Cash distribution from unconsolidated affiliates and other		488			11,273			—			0.5
Net cash provided by (used in) investing activities		(34,006	)		10,766
Net cash used in investing activities								(158.7	)		(24.9	)
Cash flows from financing activities
Net change in revolving notes with maturities of 90 days or less		98,442			10,246			147.6			(9.7	)
Proceeds from revolving notes with maturities longer than 90 days		112,000			—			—			110.0
Repayments of revolving notes with maturities longer than 90 days		(286,000	)		—			—			(175.0	)
Repayments of notes payable		(14,990	)		(17,120	)		(2.0	)		(8.9	)
Debt issuance costs								(1.2	)		—
Dividends		(18,046	)		(17,312	)		(9.3	)		(9.2	)
Cash distribution to joint venture partner		(3,646	)		(8,706	)		(1.0	)		(2.8	)
Tax payments for net share settlement of restricted stock		(2,357	)		(1,895	)		(3.4	)		(2.3	)
Net cash used in financing activities		(114,597	)		(34,787	)
Net cash provided by (used in) financing activities								130.7			(97.9	)
Effect of exchange rate changes		3,403			(2,824	)		(8.8	)		5.2
Decrease in cash and cash equivalents and restricted cash		(239,974	)		(160,019	)		(233.5	)		(109.0	)
Cash and cash equivalents and restricted cash
Beginning of period		842,087			338,487			671.4			842.1
End of period	$	602,113		$	178,468		$	437.9		$	733.1
Balance sheet reconciliation
Cash and cash equivalents	$	593,499		$	169,899		$	410.8		$	724.6
Restricted cash		8,614			8,569			27.1			8.5
Total cash and cash equivalents and restricted cash as presented above	$	602,113		$	178,468		$	437.9		$	733.1
Cash paid during the period for
Cash (received) paid during the period for
Interest	$	15,755		$	11,608		$	10.6		$	6.3
Income taxes, net	$	7,132		$	25,503		$	(0.7	)	$	5.2
Non-cash activity
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net	$	77,953		$	55,739
Transfers between Leased railcars for syndication and Inventories and Equipment on operating leases, net							$	(13.8	)	$	75.7
Capital expenditures accrued in Accounts payable and accrued liabilities	$	846		$	3,237		$	1.6		$	1.8
Change in Accounts payable and accrued liabilities associated with dividends declared	$	324		$	(96	)	$	(0.6	)	$	(0.6	)
Conversion of unconsolidated affiliate note receivable to Investment in unconsolidated affiliates	$	—		$	4,760
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner	$	1,205		$	535		$	0.4		$	0.8

Note 1 – Interim Financial Statements

The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and its subsidiaries (Greenbrier or the Company) as of ~~February 28,~~November 30, 2021 and for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 and ~~February 29,~~ 2020 have been prepared to reflect all adjustments (consisting of normal recurring accruals) that, in the opinion of management, are necessary for a fair presentation of the financial position, operating results and cash flows for the periods indicated. The results of operations for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 are not necessarily indicative of the results to be expected for the entire year ending August 31, ~~2021.~~ 2022.

Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these unaudited financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended August 31, ~~2020.~~2021.

In the first quarter of 2022 the Company renamed two of its reportable segments to more prominently display the nature of the customer solutions it provides and markets in which it operates. The new names of its reportable segments are Manufacturing (unchanged), Maintenance Services (previously Wheels, Repair & Parts), and Leasing & Management Services (previously Leasing & Services). The name changes have no impact on the organization’s reporting structure nor on financial information previously reported. However, effective September 1, 2021, the Company also changed its measurement basis for allocating syndication revenue between the Manufacturing and Leasing & Management Services reportable segments. This change in measurement reflects the information currently used by management to assess the Company's operating performance in accordance with its refined leasing strategy and has no impact to the Company’s total consolidated revenue. Segment results for the prior periods have been recast to conform to the current period presentation.

Management Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (GAAP) 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, revenue 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 prior year balances in order to conform to the current year’s presentation.~~

Initial Adoption of Accounting Standards

~~Measurement of Credit Losses on Financial Instruments~~

~~In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update 2016-13,~~ ~~Financial Instruments – Credit Losses~~ (ASU 2016-13). This update introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new guidance applies to loans, accounts receivable, trade receivables, other financial assets measured at amortized cost, loan commitments and other off-balance sheet credit exposures. The new guidance also applies to debt securities and other financial assets measured at fair value through other comprehensive income (loss). The new guidance is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance beginning September 1, 2020. The Company estimated the expected lifetime credit loss by pooling financial instruments based on similar characteristics. Expected losses were then estimated using historical loss information and aging considerations, as well as other information such as the current and future economic conditions of its customers and the end markets in which they operate. 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. The ongoing application of ASU 2016-13 is not expected to materially impact the Company’s consolidated financial statements.

~~Prospective Accounting Changes~~

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, 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. The Company ~~expects~~adopted this ~~change~~guidance effective September 1, 2021 on a modified retrospective basis and recorded a cumulative effect adjustment to ~~reduce reported~~increase Retained earnings by $5 million. The impact of adoption also resulted in a reduction to Additional paid in capital of approximately $59 million related to amounts attributable to conversion options that had previously been recorded in equity and the associated derecognition of related deferred tax liabilities of $17 million. Additionally, the Company recorded an increase to its convertible notes balance by an aggregate amount of approximately $71 million as a result of derecognizing the debt discount. The adoption of this guidance also decreased the amount of non-cash interest expense ~~increase reported~~to be recognized in future periods as a result of eliminating the discount associated with the equity component. The Company did not incur any impact to liquidity or cash flows. As of September 1, 2021, when calculating net ~~income, and result in a reclassification~~earnings attributable to Greenbrier per share of ~~certain convertible balance sheet amounts from stockholders’ equity to liabilities as it relates to~~common stock, the ~~Company’s convertible senior notes. Additionally, ASU 2020-06 requires the application of~~Company uses the if-converted method as required under ASU 2020-06 to ~~calculate~~determine the ~~impact~~dilutive effect of its convertible ~~instruments on diluted EPS,~~notes.

which is expected to be incrementally dilutive compared to the Company’s current accounting treatment. The guidance in this ASU can be adopted using either a full or modified retrospective approach and becomes effective for annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

Simplification of Accounting for Income Taxes

In December 2019, the FASB issued Accounting Standard Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 for: recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The ASU also improves consistent application of GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The ~~standard~~Company adopted this guidance September 1, 2021 with no impact to the Company's consolidated financial statements. The ongoing application of ASU 2019-12 is ~~effective~~not expected to materially impact the Company's consolidated financial statements.

Prospective Accounting Changes

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for ~~fiscal years beginning~~applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The elective amendments provide expedients to contract modification, affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by this guidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December ~~15, 2020. Early adoption is permitted.~~31, 2022. The guidance can be applied immediately through December 31, 2022. The Company expects to adopt this standard when LIBOR is ~~currently evaluating~~discontinued if there is a mismatch in our interest rate swap and derivatives for a period of time. The Company does not expect a material impact to its financial condition, results of operations or disclosures based on the ~~impact of this guidance on its consolidated financial statements~~current debt portfolio and ~~disclosures.~~capital structure.

Note 2 – Revenue Recognition

Contract balances

Contract assets primarily consist of unbilled receivables related to marine vessel construction ~~and railcar repair services,~~ for which the respective contracts do not yet permit billing at the reporting ~~date.~~date, and railcar repair and conversion inventories. Contract liabilities primarily consist of customer prepayments for manufacturing, maintenance, and other management-type services, for which the Company has not yet satisfied the related performance obligations.

The contract balances are as follows:

(in thousands)	Balance sheet classification	February 28, 2021		August 31, 2020		$ change

(in millions)								Balance sheet classification	November 30, 2021		August 31, 2021		$ change
Contract assets	Accounts receivable, net	$	26,954	$	430	$	26,524	Accounts receivable, net	$	9.1	$	5.9	$	3.2
Contract assets	Inventories	$	9,137	$	7,081	$	2,056	Inventories	$	11.7	$	6.7	$	5.0
Contract liabilities ¹	Deferred revenue	$	34,824	$	27,009	$	7,815	Deferred revenue	$	30.6	$	36.4	$	(5.8	)

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

¹	~~Contract liabilities balance includes deferred revenue within the scope of Topic 606.~~

For the three ~~and six~~ months ended ~~February 28,~~November 30, 2021, the Company recognized ~~$2.9~~$9.6 million ~~and $5.6 million, respectively,~~ of revenue that was included in Contract liabilities as of ~~November 30, 2020 and~~ August 31, ~~2020.~~2021.

Performance obligations

As of ~~February 28,~~November 30, 2021, the Company has entered into contracts with customers for which revenue has not yet been recognized. The following table outlines estimated revenue related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.


(in millions)	November 30, 2021
Revenue type:
Manufacturing – Railcar sales	$	2,471.3
Manufacturing – Marine	$	61.5
Manufacturing – Conversions	$	212.0
Management services	$	128.2
Other	$	11.1

Manufacturing – Railcars intended for syndication 1	$	370.3

1 Not a performance obligation as defined in Topic 606.

(in millions)

February 28,
2021

Revenue type:

Manufacturing – Railcar sales

$
2,125.1

Manufacturing – Marine

$
53.3

Services

$
129.7

Other

$
61.5

Manufacturing – Railcars intended for syndication¹

$
229.3

¹	~~Not a performance obligation as defined in Topic 606~~

Based on current production and delivery schedules and existing contracts, approximately ~~$0.6~~$1.3 billion of Railcar sales are expected to be recognized in the remaining ~~six~~nine months of ~~2021~~2022 while the remaining amount is expected to be recognized into 2024. 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.

Revenue amounts reflected in Railcars intended for syndication may be syndicated to third parties or held in the Company’s fleet depending on a variety of factors.

Marine revenue is expected to be recognized through ~~2022~~2023 as vessel construction is completed.

~~Services~~Conversions represent modernization orders to existing or in-service railcars and are expected to be recognized through 2023.

Management services includes management and maintenance services of which approximately ~~48%~~51% are expected to be performed through ~~2025~~2026 and the remaining amount through 2037.

Note 3 – Inventories

Inventories are valued at the lower of cost or net realizable value using the first-in first-out method. Work-in-process includes material, labor and overhead. Finished goods includes completed wheels, parts and railcars not on lease or in transit. The following table summarizes the Company’s inventory balance:


(in millions)	November 30, 2021			August 31, 2021
Manufacturing supplies and raw materials	$	471.3		$	352.8
Work-in-process		117.1			167.3
Finished goods		58.2			73.4
Excess and obsolete adjustment		(15.2	)		(19.9	)
	$	631.4		$	573.6

(In thousands)

February 28,
2021

August 31,
2020

Manufacturing supplies and raw materials

$
291,698

$
263,080

Work-in-process

104,467

116,909

Finished goods

148,008

173,761

Excess and obsolete adjustment

(21,189
)

(24,221
)

$
522,984

$
529,529

Note 4 – 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:


(in millions)	November 30, 2021			August 31, 2021
Intangible assets subject to amortization:
Customer relationships	$	89.8		$	89.8
Accumulated amortization		(65.9	)		(64.1	)
Other intangibles		41.9			40.3
Accumulated amortization		(14.0	)		(13.0	)
		51.8			53.0
Intangible assets not subject to amortization		2.4			2.4
Prepaid and other assets		24.3			26.7
Operating lease ROU assets		42.4			39.8
Nonqualified savings plan investments		47.7			47.7
Debt issuance costs, net		9.0			8.6
Assets held for sale		5.4			5.4
Total Intangible and other assets, net	$	183.0		$	183.6

(In thousands)

February 28,
2021

August 31,
2020

Intangible assets subject to amortization:

Customer relationships

$
89,722

$
89,722

Accumulated amortization

(60,328
)

(56,509
)
Other intangibles

39,090

37,798

Accumulated amortization

(11,194
)

(10,595
)

57,290

60,416

Intangible assets not subject to amortization

2,473

2,474

Prepaid and other assets

21,939

22,026

Operating lease ROU assets

55,868

62,389

Nonqualified savings plan investments

44,150

35,744

Revolving notes issuance costs, net

3,150

3,623

Assets held for sale

5,413

3,650

Total Intangible and other assets, net

$
190,283

$
190,322

Amortization expense was ~~$2.9~~$3.1 million and ~~$5.7~~$2.8 million for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 and ~~$2.7 million and $5.5 million for the three and six months ended February 29, 2020.~~2020 respectively. Amortization expense for the years ending August 31, ~~2021,~~ 2022, 2023, 2024, 2025 and ~~2025~~2026 is expected to be ~~$11.5~~$8.9 million, ~~$8.1~~$7.6 million, ~~$6.8~~$7.3 million, ~~$6.6~~$6.0 million and ~~$5.7~~$5.8 million, respectively.

Note 5 – Revolving Notes

Senior secured credit facilities, consisting of 34 components, aggregated to ~~$738.8 million~~$1.1 billion as of ~~February 28,~~November 30, 2021.

As of ~~February 28,~~November 30, 2021, a ~~$600.0~~$600.0 million revolving line of credit, maturing ~~June 2024,~~August 2026, secured by substantially all the Company’s U.S. assets ~~in the~~ ~~U.S.~~ not otherwise pledged as security for term loans or the warehouse credit facility, 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 LIBOR plus ~~1.50%~~1.50% or Prime plus ~~0.50%~~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.

As of ~~February 28,~~November 30, 2021, a $300.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing, a joint venture in which the Company owns approximately 95%. Advances under this facility bear interest at LIBOR plus 2.0%. The warehouse credit facility converts to a term loan in April 2023 and matures in April 2025.

As of November 30, 2021, lines of credit totaling ~~$68.8~~$73.8 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus ~~1.2%~~1.2% to WIBOR plus ~~1.5%~~1.5% and Euro Interbank Offered Rate (EURIBOR) plus ~~1.1%~~1.1%, were available for working capital needs of the Company’s European manufacturing operations. The European lines of credit include ~~$35.0~~$37.4 million ~~of facilities~~ which are guaranteed by the Company. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from June ~~2021~~2022 through ~~September 2022.~~October 2023.

As of ~~February 28,~~November 30, 2021, the Company’s Mexican railcar manufacturing operations had 34 lines of credit totaling ~~$70.0 million.~~$120.0 million for working capital needs. The first line of credit provides up to ~~$30.0 million and matures in June 2024. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%. The second line of credit provides up to $35.0~~$30.0 million, of which the Company and its joint venture partner have each guaranteed ~~50%~~50%. Advances under this facility bear interest at LIBOR plus ~~3.75%~~3.75% to 4.25%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June ~~2021.~~2024. The ~~third~~second line of credit provides up to ~~$5.0~~$35.0 million, of which the Company and ~~matures in September 2022.~~its joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus ~~2.95% and are~~3.70%. The Mexican railcar manufacturing joint venture will be able to ~~be used for working capital needs.~~

~~As of February 28, 2021, outstanding commitments~~draw amounts available under ~~the senior secured credit facilities consisted of $27.9 million in letters~~this facility through June 2023. The third line of credit provides up to $50.0 million and ~~$210.0~~matures in October 2024. Advances under this facility bear interest at LIBOR plus 4.25%. The fourth line of credit provides up to $5.0 million and matures in ~~borrowings~~September 2022. Advances under this facility bear interest at LIBOR plus 2.95%.

Credit facility balances:


(in millions)	November 30, 2021		August 31, 2021

North America	$	160.0	$	160.0
GBX Leasing		293.0		147.0
Europe		48.3		50.2
Mexico		15.0		15.0
Total Revolving notes	$	516.3	$	372.2

Outstanding commitments under the North American credit facility ~~$34.8~~included letters of credit which totaled $6.7 million ~~outstanding under the European credit facilities~~ and ~~$31.0~~$8.4 million ~~outstanding under the Mexican credit facilities.~~ as of November 30, 2021 and August 31, 2021, respectively.

As of ~~February 28,~~November 30, 2021, the Company had an aggregate of ~~$115.4~~$199.0 million available to draw down under committed credit facilities.

As of August 31, 2020, outstanding commitments under the senior secured credit facilities consisted of $28.7 million in letters of credit and $275.0 million in borrowings under the North American credit facility, $46.5 million outstanding under the European credit facilities and $30.0 million outstanding under the Mexican credit facilities.

Note 6 – Accounts Payable and Accrued Liabilities

(In thousands)

February 28,
2021

August 31,
2020

Trade payables

$
146,017

$
148,971

Other accrued liabilities

104,604

100,168

Operating lease liabilities

58,162

64,509

Accrued payroll and related liabilities

97,099

105,008

Accrued warranty

42,689

45,224

$
448,571

$
463,880


(in millions)	November 30, 2021		August 31, 2021
Trade payables	$	262.3	$	265.1
Other accrued liabilities		93.0		109.1
Operating lease liabilities		45.0		42.6
Accrued payroll and related liabilities		112.6		125.1
Accrued warranty		27.5		27.9
	$	540.4	$	569.8

Note 7 – Warranty Accruals

Warranty costs are estimated and charged to operations to cover a defined warranty period. The estimated warranty cost is based on the history of warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historical information for similar product types. The warranty accruals, included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, are reviewed periodically and updated based on warranty trends and expirations of warranty periods.

Warranty accrual activity:


	Three Months Ended November 30,
(in millions)	2021			2020
Balance at beginning of period	$	27.9		$	45.2
Charged to cost of revenue, net		0.9			2.0
Payments		(1.0	)		(1.4	)
Currency translation effect		(0.3	)		(0.1	)
Balance at end of period	$	27.5		$	45.7

Three Months Ended

Six Months Ended

(In thousands)

February 28,
2021

February 29,
2020

February 28,
2021

February 29,
2020

Balance at beginning of period

$
45,620

$
47,110

$
45,224

$
46,678

Charged to cost of revenue, net

(603
)

884

1,351

3,262

Payments

(2,429
)

(1,136
)

(3,844
)

(3,135
)
Currency translation effect

101

(8
)

(42
)

45

Balance at end of period

$
42,689

$
46,850

$
42,689

$
46,850

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


(in millions)	Unrealized Gain (Loss) on Derivative Financial Instruments			Foreign Currency Translation Adjustment			Other			Accumulated Other Comprehensive Loss
Balance, August 31, 2021	$	(7.4	)	$	(35.8	)	$	(0.5	)	$	(43.7	)
Other comprehensive gain (loss) before reclassifications		(3.2	)		(13.9	)		(0.1	)		(17.2	)
Amounts reclassified from Accumulated other comprehensive loss		1.0			—			—			1.0
Balance, November 30, 2021	$	(9.6	)	$	(49.7	)	$	(0.6	)	$	(59.9	)

(In thousands)

Unrealized
Gain (Loss)
on Derivative
Financial
Instruments

Foreign
Currency
Translation
Adjustment

Other

Accumulated
Other
Comprehensive
Loss

Balance, August 31, 2020

$
(11,970
)

$
(39,816
)

$
(1,031
)

$
(52,817
)
Other comprehensive loss before
   reclassifications

(895
)

4,460

53

3,618

Amounts reclassified from
   Accumulated other
   comprehensive loss

2,515

—

—

2,515

Balance, February 28, 2021

$
(10,350
)

$
(35,356
)

$
(978
)

$
(46,684
)

The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Operations, with financial statement caption, were as follows:

Three Months Ended

(In thousands)

February 28,
2021

February 29,
2020

Financial Statement Caption
(Gain) loss on derivative financial
instruments:

Foreign exchange contracts

$
385

$
(140
)

Revenue and Cost of
revenue
Interest rate swap contracts

1,263

369

Interest and foreign
exchange
Total before tax

1,648

229

Income tax

(374
)

(61
)

Net of tax

$
1,274

$
168

The shares used in the computation of basic and diluted earnings (loss) per common share are reconciled as follows:


	Three Months Ended				Six Months Ended				Three Months Ended November 30,
(In thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Weighted average basic common shares outstanding ⁽¹⁾		32,810		32,661		32,766		32,645		32,510		32,723
Dilutive effect of 2.875% convertible notes ⁽²⁾⁽³⁾		0		0		0		0
Dilutive effect of 2.25% convertible notes ⁽²⁾⁽⁴⁾		0		0		0		0
Dilutive effect of restricted stock units ⁽²⁾⁽⁵⁾		—		821		—		737
Dilutive effect of 2.875% convertible notes due 2024 (2) (3)										—		—
Dilutive effect of 2.875% convertible notes due 2028 (4)										—	N/A
Dilutive effect of 2.25% convertible notes due 2024 (2) (5)									N/A			—
Dilutive effect of restricted stock units (2) (6)										1,060		—
Weighted average diluted common shares outstanding		32,810		33,482		32,766		33,382		33,570		32,723

(1) 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.

(2) The dilutive effect of common stock equivalents was excluded from the share calculation for the three months ended November 30, 2020 due to a net loss.

(3) The dilutive effect of the 2.875% Convertible notes due 2024 was excluded for the three months ended November 30, 2021 as they were considered anti-dilutive under the “if converted” method as further discussed below.

(4) The dilutive effect of the 2.875% Convertible notes due 2028 was excluded for the three months ended November 30, 2021 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 the premium is dilutive under the "if converted" method as further discussed below. These convertible notes were issued in April 2021.

(5) The 2.25% Convertible notes due 2024 were retired in April 2021.

(6) 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.

~~Diluted EPS is calculated~~ using the treasury stock method, associated with ~~shares underlying the 2.875% convertible notes, 2.25% convertible notes,~~ 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 three months ended November 30, 2020, 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. The dilutive effect of common stock equivalents was excluded from the share calculation for the three months ended November 30, 2020 due to a net loss.

Three Months Ended

Six Months Ended

February 28,
2021

February 29,
2020

February 28,
2021

February 29,
2020

Net earnings (loss) attributable to Greenbrier

$
(9,065
)

$
13,629

$
(19,037
)

$
21,298

Weighted average diluted common shares outstanding

32,810

33,482

32,766

33,382

Diluted earnings (loss) per share

$
(0.28
)

$
0.41

$
(0.58
)

$
0.64


	Three Months Ended November 30,
(in millions, except shares which are reflected in thousands, and per share amounts)	2021		2020
Net earnings (loss) attributable to Greenbrier	$	10.8	$	(10.0	)
Weighted average diluted common shares outstanding		33,570		32,723
Diluted earnings (loss) per share	$	0.32	$	(0.30	)

The value of stock based compensation awards is amortized as compensation expense from the date of grant through the earlier of the vesting period or in some instances the recipient’s eligible retirement date. Stock based compensation expense consists of restricted stock unit ~~restricted stock and phantom stock unit~~ awards.

Stock based compensation expense was ~~$4.5~~$1.1 million and ~~$9.0~~$4.4 million for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 ~~respectively~~ and ~~$4.1 million and $7.2 million for the three and six months ended February 29,~~ 2020, respectively. Compensation expense is recorded in Selling and administrative expense and Cost of revenue on the Consolidated Statements of Operations.

Note 11 – Derivative Instruments

Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign currency forward exchange contracts with established financial institutions are utilized to hedge a portion of that risk. 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 ~~February 28,~~November 30, 2021 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to ~~$199.9~~$120.9 million. The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when ~~there is~~in a loss position, or as Accounts receivable, net when ~~there is~~in a ~~gain.~~gain position. As the contracts mature at various dates through ~~November 2022,~~October 2023, 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 ~~February 28,~~November 30, 2021 exchange rates, approximately ~~$1.0~~$5.4 million would be reclassified to revenue or cost of revenue in the next year.

At ~~February 28,~~November 30, 2021, an interest rate swap agreement maturing in September 2023 had a notional amount of ~~$103.6~~$99.4 million and an interest rate swap agreement maturing June 2024 had a notional amount of ~~$140.6~~$135.0 million. The fair value of the contracts ~~are~~is included on the Consolidated Balance Sheets in Accounts payable and accrued liabilities when ~~there is~~in a loss position, or in Accounts receivable, net when ~~there is~~in a ~~gain.~~gain position. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from Accumulated other comprehensive loss and charged or credited to interest expense. At ~~February 28,~~November 30, 2021 interest rates, approximately ~~$5.0~~$4.5 million would be reclassified to interest expense in the next year.

Fair Values of Derivative Instruments

(in millions)


	Asset Derivatives					Liability Derivatives
		November 30, 2021		August 31, 2021			November 30, 2021		August 31, 2021
	Balance sheet location	Fair Value		Fair Value		Balance sheet location	Fair Value		Fair Value
Derivatives designated as hedging instruments
Foreign forward exchange contracts	Accounts receivable, net	$	—	$	0.1	Accounts payable and accrued liabilities	$	5.7	$	0.3
Interest rate swap contracts	Accounts receivable, net		—		—	Accounts payable and accrued liabilities		7.1		10.0
		$	—	$	0.1		$	12.8	$	10.3
Derivatives not designated as hedging instruments
Foreign forward exchange contracts	Accounts receivable, net	$	—	$	—	Accounts payable and accrued liabilities	$	0.1	$	0.1

Asset Derivatives

Liability Derivatives

February 28,
2021

August 31,
2020

February 28,
2021

August 31,
2020

(In thousands)

Balance sheet location

Fair Value

Fair Value

Balance sheet location

Fair Value

Fair Value

Derivatives designated
   as hedging
   instruments

Foreign forward
   exchange contracts

Accounts receivable,
net

$
6

$
560

Accounts payable and
accrued liabilities

$
731

$
3

Interest rate swap
   contracts

Accounts receivable,
net

—

—

Accounts payable and
accrued liabilities

12,154

15,904

$
6

$
560

$
12,885

$
15,907

Derivatives not
   designated as
   hedging instruments

Foreign forward
   exchange contracts

Accounts receivable,
net

$
—

$
22

Accounts payable and
accrued liabilities

$
18

$
—

The Effect of Derivative Instruments on the Statements of Operations

~~Three Months Ended February 28, 2021 and February 29, 2020~~(in millions)


Derivatives in cash flow hedging relationships	Location of gain (loss) recognized in income on derivatives	Gain (loss) recognized in income on derivatives three months ended November 30,
		2021			2020
Foreign forward exchange contract	Interest and foreign exchange	$	(0.3	)	$	(0.1	)


Derivatives in cash flow hedging relationships	Gain (loss) recognized in OCI on derivatives three months ended November 30,						Location of gain (loss) reclassified from accumulated OCI into income	Gain (loss) reclassified from accumulated OCI into income three months ended November 30,						Location of gain (loss) on derivative (amount excluded from effectiveness testing)	Gain (loss) recognized on derivative (amount excluded from effectiveness testing) three months ended November 30,
	2021			2020				2021			2020				2021		2020
Foreign forward exchange contracts	$	(4.6	)	$	(1.0	)	Revenue	$	(0.2	)	$	(0.3	)	Revenue	$	0.2	$	0.1
Foreign forward exchange contracts		(1.3	)		—		Cost of revenue		—			—		Cost of revenue		0.1		—
Interest rate swap contracts		1.7			0.3		Interest and foreign exchange		(1.3	)		(1.3	)	Interest and foreign exchange		—		—
	$	(4.2	)	$	(0.7	)		$	(1.5	)	$	(1.6	)		$	0.3	$	0.1

Derivatives in cash flow hedging relationships

Location of gain (loss)
recognized in income
on derivatives

Gain (loss) recognized in income on
derivatives three months ended

February 28,
2021

February 29,
2020

Foreign forward exchange contract

Interest and foreign exchange

$
(9
)

$
(165
)

The following table presents the amounts in the Consolidated Statements of Operations 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 three months ended ~~February 28,~~November 30, 2021 and ~~February 29,~~ 2020:

Derivatives in cash flow hedging relationships

Location of gain (loss)
recognized in income
on derivatives

Gain (loss) recognized in income on
derivatives six months ended

February 28,
2021

February 29,
2020

Foreign forward exchange contract

Interest and foreign exchange

$
(132
)

$
(94
)

The Company operates in 3 reportable segments: Manufacturing; ~~Wheels, Repair & Parts;~~Maintenance Services; and Leasing & Management Services.

The accounting policies of the segments are described in the summary of significant accounting policies in the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended August 31, ~~2020.~~2021. Performance is evaluated based on Earnings (loss) from operations. 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. The Company does not allocate Interest and foreign exchange or Income tax benefit (expense) for either external or internal reporting purposes. 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.

For the three months ended ~~February 28,~~November 30, 2021:

	Revenue								Earnings (loss) from operations
(In thousands)	External		Intersegment			Total			External			Intersegment			Total
																		Revenue								Earnings (loss) from operations
(in millions)																		External		Intersegment			Total			External			Intersegment			Total
Manufacturing	$	202,094	$	2,425		$	204,519		$	(17,216	)	$	100		$	(17,116	)	$	452.5	$	39.4		$	491.9		$	12.3		$	0.3		$	12.6
Wheels, Repair & Parts		71,623		1,603			73,226			2,433			(14	)		2,419
Leasing & Services		21,905		1,113			23,018			6,420			634			7,054
Maintenance Services																			72.4		2.7			75.1			(1.1	)		—			(1.1	)
Leasing & Management Services																			25.8		0.3			26.1			17.2			—			17.2
Eliminations		—		(5,141	)		(5,141	)		—			(720	)		(720	)		—		(42.4	)		(42.4	)		—			(0.3	)		(0.3	)
Corporate		—		—			—			(17,364	)		—			(17,364	)		—		—			—			(16.6	)		—			(16.6	)
	$	295,622	$	—		$	295,622		$	(25,727	)	$	—		$	(25,727	)	$	550.7	$	—		$	550.7		$	11.8		$	—		$	11.8

~~For the six months ended February 28, 2021:~~

Revenue

Earnings (loss) from operations

(In thousands)

External

Intersegment

Total

External

Intersegment

Total

Manufacturing

$
510,816

$
23,016

$
533,832

$
(7,530
)

$
2,605

$
(4,925
)
Wheels, Repair & Parts

137,179

1,904

139,083

2,233

(23
)

2,210

Leasing & Services

50,616

5,778

56,394

12,310

4,919

17,229

Eliminations

—

(30,698
)

(30,698
)

—

(7,501
)

(7,501
)
Corporate

—

—

—

(34,854
)

—

(34,854
)

$
698,611

$
—

$
698,611

$
(27,841
)

$
—

$
(27,841
)

For the three months ended ~~February 29,~~November 30, 2020:


	Revenue								Earnings (loss) from operations
(in millions)	External		Intersegment			Total			External			Intersegment			Total
Manufacturing	$	304.5	$	20.6		$	325.1		$	5.4		$	2.5		$	7.9
Maintenance Services		65.6		0.3			65.9			(0.2	)		—			(0.2	)
Leasing & Management Services		32.9		0.4			33.3			10.1			—			10.1
Eliminations		—		(21.3	)		(21.3	)		—			(2.5	)		(2.5	)
Corporate		—		—			—			(17.4	)		—			(17.4	)
	$	403.0	$	—		$	403.0		$	(2.1	)	$	—		$	(2.1	)


	Total assets
(in millions)	November 30, 2021		August 31, 2021
Manufacturing	$	1,550.3	$	1,493.5
Maintenance Services		261.5		260.9
Leasing & Management Services		1,219.9		949.4
Unallocated, including cash		438.3		686.9
	$	3,470.0	$	3,390.7

Revenue

Earnings (loss) from operations

(In thousands)

External

Intersegment

Total

External

Intersegment

Total

Manufacturing

$
489,943

$
21

$
489,964

$
46,105

$
1

$
46,106

Wheels, Repair & Parts

91,225

5,133

96,358

3,320

(168
)

3,152

Leasing & Services

42,680

15,240

57,920

12,793

14,384

27,177

Eliminations

—

(20,394
)

(20,394
)

—

(14,217
)

(14,217
)
Corporate

—

—

—

(23,782
)

—

(23,782
)

$
623,848

$
—

$
623,848

$
38,436

$
—

$
38,436

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

Three Months Ended

Six Months Ended

(In thousands)

February 28,
2021

February 29,
2020

February 28,
2021

February 29,
2020

Earnings (loss) from operations

$
(25,727
)

$
38,436

$
(27,841
)

$
80,220

Interest and foreign exchange

9,568

12,609

20,671

25,461

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

$
(35,295
)

$
25,827

$
(48,512
)

$
54,759

Equipment on operating leases is reported net of accumulated depreciation of ~~$33.6~~$38.4 million and ~~$33.4~~$34.4 million as of ~~February 28,~~November 30, 2021 and August 31, ~~2020,~~2021, respectively. Depreciation expense was ~~$3.2~~$5.1 million and ~~$6.8~~$3.9 million for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 ~~respectively~~ and ~~$3.0 million and $6.6 million for the three and six months ended February 29,~~ 2020, 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 ~~fifteen years.~~approximately fourteen years. Operating lease rental revenues included in the Company’s Statements of Operations for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 and 2020 was ~~$12.3~~$15.0 million and ~~$24.1~~$11.8 million, respectively, which included ~~$3.8~~$4.5 million and ~~$7.4~~$3.6 million, respectively, of revenue as a result of daily, monthly or car hire utilization arrangements. Operating lease rental revenues included in the Company’s Statements of Operations for the three and six months ended February 29, 2020 was $9.8 million and $21.2 million, respectively, which included $2.8 million and $6.5 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 ~~February 28,~~November 30, 2021, will mature as follows:


(in millions)
Remaining nine months of 2022	$	29.6
2023		32.4
2024		26.0
2025		18.0
2026		14.7
Thereafter		32.3
	$	153.0

(in thousands)

Remaining six months of 2021

$
17,049

2022

30,183

2023

25,421

2024

22,777

2025

12,638

Thereafter

27,870

$
135,938

Lessee

The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements. As of and for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 and ~~February 29,~~ 2020, 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 77 years, with some including options to extend up to 15 ~~years.~~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 lease commencement date. 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:

(in thousands)	Three Months Ended				Six Months Ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
									Three Months Ended November 30,
(in millions)									2021		2020
Operating lease expense	$	3,625	$	3,424	$	7,493	$	6,850	$	2.7	$	3.8
Short-term lease expense		1,280		3,217		2,586		4,730		1.2		1.3
Total	$	4,905	$	6,641	$	10,079	$	11,580	$	3.9	$	5.1

Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at ~~February 28,~~November 30, 2021 will mature as follows:


(in millions)
Remaining nine months of 2022	$	8.0
2023		9.9
2024		8.7
2025		6.1
2026		4.9
Thereafter		12.9
Total lease payments	$	50.5
Less: Imputed interest		(5.5	)
Total lease obligations	$	45.0

(in thousands)

Remaining six months of 2021

$
6,492

2022

12,414

2023

11,983

2024

10,848

2025

6,324

Thereafter

17,409

Total lease payments

$
65,470

Less: Imputed interest

(7,308
)
Total lease obligations

$
58,162

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

Supplemental cash flow information related to leases were as follows:


(in millions)	Three months ended November 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2.8
ROU assets obtained in exchange for new operating lease liabilities	$	5.1
ROU assets disposed of for lease terminations	$	-

(in thousands)

Six months ended
February 28,
2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
7,327

ROU assets obtained in exchange for new operating lease liabilities

$
30

The Company’s 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). 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. The letter advised the Company that it may be liable for the costs of investigation and remediation (which liability may be joint and several with other potentially responsible parties) as well as for natural resource damages resulting from releases of hazardous substances to the site. Ten private and public entities, including the Company (the Lower Willamette Group or LWG), signed an Administrative Order on Consent (AOC) to perform a remedial investigation/feasibility study (RI/FS) of the Portland Harbor Site under EPA oversight, and several additional entities did not sign such consent, but nevertheless contributed financially to the effort. The EPA-mandated RI/FS was produced by the LWG and cost over ~~$110~~$110 million during a 17-year period. 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, 83 parties, including the State of Oregon and the federal government, entered into a non-judicial mediation process to try to allocate costs associated with remediation of the Portland Harbor Site. Approximately 110 additional parties signed tolling agreements related to such allocations. On April 23, 2009, the Company and the other AOC signatories filed suit against 69 other parties due to a possible limitations period for some such claims; Arkema Inc. et al v. A & C Foundry Products, Inc. et al, U.S. District Court, District of Oregon, Case #3:09-cv-453-PK. All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has been stayed by the court until January 14, 2022.

The EPA's January 6, 2017 ROD identifies a clean-up remedy that the EPA estimates will take 13 years of active remediation, followed by 30 years of monitoring with an estimated undiscounted cost of ~~$1.7~~$1.7 billion. The EPA typically expects its cost estimates to be accurate within a range of ~~-30%~~-30% to ~~+50%~~+50%, but this ROD states that changes in costs are likely to occur as a result of new data collected over a 2-year period prior to final remedy design. The ~~ROD identifies 13~~EPA has identified 15 Sediment Decision ~~Units.~~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 ~~upstream and~~ downstream of the facility. It also includes a portion of the Company’s riverbank. The ROD does not break down total remediation costs by Sediment Decision Unit. The EPA's ROD concluded that more data was needed to better define clean-up scope and cost. ~~On December 8, 2017, the EPA announced that Portland Harbor is one of 21 Superfund sites targeted for greater attention.~~ On December 19, 2017, the EPA announced that it had entered a new AOC with a group of four potentially responsible parties to conduct additional sampling during 2018 and 2019 to provide more certainty about clean-up costs and aid the mediation process to allocate those costs. The parties to the mediation, including the Company, agreed to help fund the additional sampling, which is now complete. 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 Company’s manufacturing facility. The Company has

not signed an AOC in connection with remedial design, but will potentially be directly or indirectly responsible for conducting or funding a portion of such RM9W remedial design. The allocation process is continuing in parallel with the process to define the remedial design.

The ROD does not address responsibility for the costs of clean-up, nor does it allocate such costs among the potentially responsible parties. 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 ~~contamination~~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 its 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. In addition, the Company may be required to perform periodic maintenance dredging in order to continue to launch vessels from its launch ways in Portland, Oregon, on the Willamette River, and the river's classification as a Superfund site could result in some limitations on future dredging and launch activities. Any of these matters could adversely affect the Company’s business and Consolidated Financial Statements, or the value of the Portland Property.

On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including the Company as well as the U.S. and the State of Oregon for costs it incurred in assessing alleged natural resource damages to the Columbia River from contaminants deposited in Portland Harbor. Confederated Tribes and Bands of the Yakama Nation v. Air Liquide America Corp., et al., U.S. Court for the District of Oregon Case No. 3i17-CV-00164-SB. The complaint does not specify the amount of damages the plaintiff will seek. The case has been stayed until January 14, 2022.

Oregon Department of Environmental Quality (DEQ) Regulation of Portland Manufacturing Operations

The Company entered into a Voluntary Cleanup Agreement with the Oregon Department of Environmental Quality (DEQ) in which the Company agreed to conduct an investigation of whether, and to what extent, past or present operations at the Portland Property may have released hazardous substances into the environment. 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. Interim precautionary measures are also required in the order and the Company is discussing with the DEQ potential remedial actions which may be required. 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.

In connection with the acquisition of the manufacturing business of American Railcar Industries, Inc. (ARI), the Company agreed to assume potential legacy liabilities (known and unknown) related to railcars manufactured by ARI. Among these potential liabilities are certain retrofit and repair obligations arising from regulatory actions by the Federal Railroad Administration and the Association of American Railroads. In some cases, the seller shares with the Company the costs of these retrofit and repair obligations. The Company currently is not able to determine if any of these liabilities will have a material adverse impact on the Company’s Consolidated Financial Statements.

From time to time, Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcomes of which cannot be predicted with certainty. While the ultimate outcome of such legal proceedings cannot be determined at this time, the Company believes that the resolution of pending litigation will not have a material adverse effect on the Company's Consolidated Financial Statements.

As of ~~February 28,~~November 30, 2021, the Company had outstanding letters of credit aggregating to ~~$27.9~~$6.7 million associated with performance guarantees, facility leases and workers compensation insurance.

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 that prioritizes the inputs used in measuring fair value as follows:

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

Level 2 - inputs, other than the quoted market prices in active markets for similar instruments, which are observable, either directly or indirectly; and

Level 3 - unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value on a recurring basis as of ~~February 28,~~November 30, 2021 were:

(In thousands)

Total

Level 1

Level 2 ⁽¹⁾

Level 3

Assets:

Derivative financial instruments

$
6

$
—

$
6

$
—

Nonqualified savings plan investments

44,150

44,150

—

—

Cash equivalents

203,760

203,760

—

—

$
247,916

$
247,910

$
6

$
—

Liabilities:

Derivative financial instruments

$
12,903

$
—

$
12,903

$
—


(in millions)	Total		Level 1		Level 2 (1)		Level 3
Assets:
Derivative financial instruments	$	—	$	—	$	—	$	—
Nonqualified savings plan investments		47.7		47.7		—		—
Cash equivalents		169.0		169.0		—		—
	$	216.7	$	216.7	$	—	$	—
Liabilities:
Derivative financial instruments	$	12.9	$	—	$	12.9	$	—

~~(1)~~

~~Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 11 - Derivative Instruments for further discussion.~~

Assets and liabilities measured at fair value on a recurring basis as of August 31, ~~2020~~2021 were:


(in millions)	Total		Level 1		Level 2 (1)		Level 3
Assets:
Derivative financial instruments	$	0.1	$	—	$	0.1	$	—
Nonqualified savings plan investments		47.7		47.7		—		—
Cash equivalents		228.9		228.9		—		—
	$	276.7	$	276.6	$	0.1	$	—
Liabilities:
Derivative financial instruments	$	10.5	$	—	$	10.5	$	—

(In thousands)

Total

Level 1

Level 2 ⁽¹⁾

Level 3

Assets:

Derivative financial instruments

$
582

$
—

$
582

$
—

Nonqualified savings plan investments

35,744

35,744

—

—

Cash equivalents

203,509

203,509

—

—

$
239,835

$
239,253

$
582

$
—

Liabilities:

Derivative financial instruments

$
15,907

$
—

$
15,907

$
—

(1)

Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 11 - Derivative Instruments for further discussion.

Note 16 – Related Party Transactions

The Company has a ~~41.9%~~41.9% interest in Axis, LLC (Axis), a joint venture. The Company purchased ~~$2.2~~$2.8 million and ~~$6.0~~$3.8 million ~~for the three and six months ended February 28, 2021, respectively and $3.2 million and $7.2 million for the three and six months ended February 29, 2020, respectively~~ of railcar components from ~~Axis.~~

The Company has a 40% interest in the common equity of an entity that buys and sells railcar assets that are leased to third parties. As of February 28, 2021, the carrying amount of the investment was $3.6 million which is classified in Investment in unconsolidated affiliates in the Consolidated Balance Sheet. There were 0 sales to or from this entity during the six months ended February 28, 2021 and February 29, 2020. The Company also provides administrative and remarketing services to this entity and earns management fees for these services which were immaterialAxis for the three ~~and six~~ months ended ~~February 28,~~November 30, 2021 and ~~February 29, 2020.~~2020, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We operate in three reportable segments: Manufacturing; ~~Wheels, Repair & Parts;~~Maintenance Services; and Leasing & Management Services. Our segments are operationally integrated. The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland, Romania and Turkey, produces double-stack intermodal railcars, tank cars, conventional railcars, automotive railcar products and marine vessels. The ~~Wheels, Repair & Parts~~Maintenance Services segment performs wheel and axle ~~servicing;~~servicing, railcar ~~repair, refurbishment~~maintenance and ~~maintenance; as well as production of~~produces a variety of parts for the rail industry in North America. The Leasing & Management Services segment, which includes GBX Leasing, owns approximately ~~8,700~~12,900 railcars ~~and provides~~as of November 30, 2021. We also provide management services for approximately ~~445,000~~443,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America as of ~~February 28,~~November 30, 2021. Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil.

In the first quarter of 2022, we renamed two of our reportable segments to more prominently display the nature of the customer solutions it provides and markets in which it operates. The new names of our reportable segments are Manufacturing (unchanged), Maintenance Services (previously Wheels, Repair & Parts), and Leasing & Management Services (previously Leasing & Services). The name changes have no impact on our organization’s reporting structure nor on financial information previously reported. However, effective September 1, 2021, we also changed our measurement basis for allocating syndication revenue between the Manufacturing and Leasing & Management Services reportable segments. This change in measurement reflects the information currently used by management to assess our operating performance in accordance with our refined leasing strategy and has no impact to our total consolidated revenue. Segment results for the ~~six months ended February 28, 2021 are representative of the challenges of~~prior periods have been recast to conform to the current ~~market conditions. The decrease in operating profits compared to the same~~ period presentation.

We identify two general trends impacting our business at present, both of which we believe are reflected in the ~~prior year~~results for the quarter just ended. First, we believe the North American freight rail equipment market is ~~primarily attributable~~beginning to emerge from the cyclical decrease in economic activity ~~in the freight rail equipment market~~ which began prior to the emergence of ~~COVID-19 (Cyclical Downturn). The Cyclical Downturn has intensified due~~COVID-19. Second, we believe global economic activity continues to recover from the historic sharp dramatic decrease resulting from the COVID-19 ~~Events (as defined below).~~pandemic. While we believe the current market and broader economic environment most likely will present many positive opportunities for our business, as we navigate the recovery, we face a number of challenges which include:

As described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, the items described above may have a material negative impact on our business, liquidity, results of operations and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude these items will impact our business.

~~We also continue to take measures to strengthen our financial position through strategic spending reductions which included reducing our selling and administrative expense by $21.8 million~~24

Despite the challenging operating environment, we achieved the following accomplishments during the ~~six months ended February 28, 2021~~first quarter of 2022 as we navigate the recovery phase:

Our backlog remains strong with railcar deliveries into 2024 and marine deliveries into ~~2022.~~2023. Our railcar backlog ~~increased by 1,000 units since November 30, 2020 resulting in total manufacturing backlog of approximately 24,900~~was 28,000 units with an estimated value of ~~$2.51~~$2.98 billion as of ~~February 28,~~November 30, 2021. ~~Approximately 9% of backlog units and 6% of estimated backlog value as of February 28, 2021 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~~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 7% of backlog units and 5% of estimated backlog value as of November 30, 2021 was associated with our Brazilian manufacturing operations which is accounted for under the equity method. Marine backlog as of ~~February 28,~~November 30, 2021 was ~~$53~~$61 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. 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 continue to actively monitor and manage the impacts on our business of the COVID-19 coronavirus pandemic, the significant decline in global economic activity and governmental reactions to these historic events (COVID-19 Events).

~~Our manufacturing and service facilities continue regular operations. We function as an essential infrastructure business under guidance issued by the~~ ~~U.S.~~ ~~Department of Homeland Security. Similar guidelines and authorities exist in other nations where we operate. Since the emergence of COVID-19, our facilities in the~~ ~~U.S.~~ have been permitted to continue to operate subject to enhanced safety protocols, both voluntary and government mandated, that aim to protect the health of our workforce and the residents of the communities in which our facilities are located. The situation is similar in our facilities in Mexico, Europe, Brazil and Turkey which also have been permitted by applicable governmental authorities to operate subject to enhanced health and safety protocols.

As described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, COVID-19 Events may have a material negative impact on our business, liquidity, results of operations, and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude COVID-19 Events, in combination with the Cyclical Downturn, will negatively impact our business.

In February 2021 we announced a refined leasing strategy to grow our owned portfolio of leased railcars built by Greenbrier by approximately $200 million per year. This will create an incremental annuity stream of tax-advantaged cash flows while reducing our exposure to the new railcar order and delivery cycle. We will execute this strategy through GBX Leasing, a newly formed joint venture in which we will own over 90%.

GBX Leasing commenced operations in March 2021 upon the closing of a $300 million non-recourse warehouse facility, and the conclusion of the initial sale and contribution of railcars and associated leases by Greenbrier valued at approximately $130 million.

GBX Leasing will be financed with non-recourse debt and is expected to be levered approximately 3:1 debt to equity. We intend that GBX Leasing will aggregate leased railcars to obtain permanent debt financing issued in connection with asset-backed securities. We will consolidate GBX Leasing for financial reporting purposes within the Leasing & Services segment. Greenbrier Management Services will provide management services to the GBX Leasing fleet.

Three Months Ended ~~February 28,~~November 30, 2021 Compared to the Three Months Ended ~~February 29,~~November 30, 2020

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

	Three Months Ended
(In thousands)	February 28, 2021			February 29, 2020
							Three Months Ended November 30,
(in millions, except per share amounts)							2021			2020
Revenue:
Manufacturing	$	202,094		$	489,943		$	452.5		$	304.5
Wheels, Repair & Parts		71,623			91,225
Leasing & Services		21,905			42,680
Maintenance Services								72.4			65.6
Leasing & Management Services								25.8			32.9
		295,622			623,848			550.7			403.0
Cost of revenue:
Manufacturing		201,771			422,309			421.6			280.9
Wheels, Repair & Parts		66,667			84,373
Leasing & Services		9,513			30,830
Maintenance Services								71.2			63.0
Leasing & Management Services								10.3			18.4
		277,951			537,512			503.1			362.3
Margin:
Manufacturing		323			67,634			30.9			23.6
Wheels, Repair & Parts		4,956			6,852
Leasing & Services		12,392			11,850
Maintenance Services								1.2			2.6
Leasing & Management Services								15.5			14.5
		17,671			86,336			47.6			40.7
Selling and administrative		43,425			54,597			44.3			43.7
Net gain on disposition of equipment		(27	)		(6,697	)		(8.5	)		(0.9	)
Earnings (loss) from operations		(25,727	)		38,436			11.8			(2.1	)
Interest and foreign exchange		9,568			12,609			12.6			11.1
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates		(35,295	)		25,827
Income tax benefit (expense)		21,752			(7,463	)
Loss before income taxes and earnings (loss) from unconsolidated affiliates								(0.8	)		(13.2	)
Income tax benefit								1.4			7.3
Earnings (loss) before earnings (loss) from unconsolidated affiliates		(13,543	)		18,364			0.6			(5.9	)
Earnings (loss) from unconsolidated affiliates		(378	)		1,651			5.0			(0.8	)
Net earnings (loss)		(13,921	)		20,015			5.6			(6.7	)
Net (earnings) loss attributable to noncontrolling interest		4,856			(6,386	)		5.2			(3.3	)
Net earnings (loss) attributable to Greenbrier	$	(9,065	)	$	13,629		$	10.8		$	(10.0	)
Diluted earnings (loss) per common share	$	(0.28	)	$	0.41		$	0.32		$	(0.30	)

Performance for our segments is evaluated based on operating profit or loss. 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 benefit ~~(expense)~~ for either external or internal reporting purposes.

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 ~~52.6% decrease~~36.7% increase in revenue for the three months ended ~~February 28,~~November 30, 2021 as compared to the three months ended ~~February 29,~~November 30, 2020 was primarily due to a ~~58.8% decrease~~48.6% increase in Manufacturing revenue. The ~~decrease~~increase in Manufacturing revenue was primarily attributed to a ~~54.1% decrease~~37.0% increase in railcar deliveries.

The ~~48.3% decrease~~38.9% increase in cost of revenue for the three months ended ~~February 28,~~November 30, 2021 as compared to the three months ended ~~February 29,~~November 30, 2020 was primarily due to a ~~52.2% decrease~~50.1% increase in Manufacturing cost of revenue. The ~~decrease~~increase in Manufacturing cost of revenue was primarily attributed to a ~~54.1% decrease~~37.0% increase in railcar ~~deliveries. The decrease in cost of revenue was also due to a 69.1% decrease in Leasing & Services cost of revenue primarily due to a decrease in~~deliveries and higher steel and other input costs during the ~~volume of railcars sold that we purchased from third parties.~~three months ended November 30, 2021.

Margin as a percentage of revenue was ~~6.0%~~8.6% and ~~13.8%~~10.1% for the three months ended ~~February 28,~~November 30, 2021 and ~~February 29,~~ 2020, respectively. The overall margin as a percentage of revenue was negatively impacted by a decrease in Manufacturing margin from 7.8% to ~~0.2% from 13.8% primarily attributed to operating at lower volumes and increased costs associated with operating our manufacturing facilities~~6.8%. The decrease in ~~the COVID-19 pandemic during~~Manufacturing margin percentage for the three months ended ~~February 28, 2021.~~November 30, 2021 was primarily attributed to higher steel and other input costs and a change in product mix. In addition, many of our customer contracts include price escalation provisions. When certain of our manufacturing costs increase, we are able to increase the sales price to our customers. While this has no impact to our margin dollars, the increase in revenue and cost of sales has a negative impact to our margin as a percentage of revenue. The decrease in Manufacturing margin percentage was partially offset by an increase in Leasing & Management Service margin from 44.1% to 60.1%. Leasing & Management Service margin as a percentage of revenue for the three months ended November 30, 2020 was negatively impacted by higher sales of railcars that we purchased from third parties which have lower margin percentages.

Net earnings ~~(loss)~~ attributable to Greenbrier is impacted by our operating activities and noncontrolling interest primarily associated with our 50% joint ventures at certain of our Mexican railcar manufacturing facilities and our 75% interest in Greenbrier-Astra Rail, ~~both~~each of which we consolidate for financial reporting purposes. The ~~$22.7~~$20.8 million ~~decrease~~increase in net earnings attributable to Greenbrier for the three months ended ~~February 28,~~November 30, 2021 as compared to the three months ended ~~February 29,~~November 30, 2020 was primarily ~~attributable to a decrease in the after-tax margin~~ due to ~~a reduction in railcar deliveries. This was partially offset by a decrease in Selling and administrative expense, a large tax benefit as a result of~~ the ~~net loss and relief allowable under the~~ following:

~~Manufacturing revenue decreased $287.8 million or 58.8%~~An increase in earnings from unconsolidated affiliates for the three months ended ~~February 28,~~November 30, 2021 primarily related to higher earnings in our Brazil operations.

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of freight railcars and from the conversion of existing or in-service railcars through our facilities in North America and Europe. We also manufacture a broad range of ocean-going and river barges for transporting merchandise between ports within the United States.

Manufacturing revenue increased $148.0 million or 48.6% for the three months ended November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase in revenue was primarily attributed to a ~~54.1% decrease~~37.0% increase in railcar deliveries. ~~In addition,~~The increase was also due to the ~~prior year included a $12.9 million customer order contract modification fee received~~additional revenue associated with an increase in steel and other input costs during the three months ended ~~February 29, 2020.~~November 30, 2021, as many of our customer contracts include price escalation provisions when certain of our manufacturing costs increase.

Manufacturing cost of revenue ~~decreased $220.5~~increased $140.7 million or ~~52.2%~~50.1% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase in cost of revenue was primarily attributed to a ~~54.1% decrease~~37.0% increase in the volume of railcar ~~deliveries.~~deliveries and higher steel and other input costs during the three months ended November 30, 2021.

Manufacturing margin as a percentage of revenue decreased ~~13.6%~~1.0% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The decrease in margin percentage was primarily attributed to operating at lower volumes and increased costs associated with operating our manufacturing facilities in the COVID-19 pandemic during the three months ended February 28, 2021.

~~Manufacturing operating profit decreased $63.3 million or 137.3%~~ for the three months ended ~~February 28,~~November 30, 2021 was primarily attributed to higher steel and other input costs and a change in product mix. In addition, many of our customer contracts include price escalation provisions. When certain of our manufacturing costs increase, we are able to increase the sales price to our customers. While this has no impact to our margin dollars, the increase in revenue and cost of sales has a negative impact to our margin as a percentage of revenue.

Manufacturing operating profit increased $6.9 million or 127.8% for the three months ended November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase in operating profit was primarily attributed to ~~a decrease~~an increase in railcar ~~deliveries~~deliveries.

Our Maintenance Services segment primarily generates revenue from railcar component manufacturing and servicing and from providing railcar maintenance services.

Maintenance Services revenue increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the three months ended February 28, 2021. These were partially offset by a decrease in selling and administrative expense as part of our strategic cost control initiatives during the three months ended February 28, 2021.

~~Wheels, Repair & Parts revenue decreased $19.6~~$6.8 million or ~~21.5%~~10.4% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase was primarily ~~due~~attributed to ~~lower wheelset and component~~higher volumes due to ~~lower~~increased demand. ~~This~~The increase was ~~partially offset by~~also due to higher revenues associated with an increase in scrap metal pricing as we scrap wheels and other ~~components and an increase in parts volumes.~~components.

~~Wheels, Repair & Parts~~Maintenance Services cost of revenue ~~decreased $17.7~~increased $8.2 million or ~~21.0%~~13.0% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase was primarily due to ~~lower~~higher costs associated with ~~a reduction~~an increase in ~~wheelset~~volumes and ~~component volumes.~~an increase in material and labor costs.

~~Wheels, Repair & Parts~~Maintenance Services margin as a percentage of revenue decreased ~~0.6%~~2.3% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The decrease in margin ~~percentage~~ was primarily attributed to ~~operating at lower volumes~~higher material and ~~increased~~labor costs ~~associated with operating our facilities during the COVID-19 pandemic~~ during the three months ended ~~February 28,~~November 30, 2021. This was partially offset by an increase in scrap metal pricing.

~~Wheels, Repair & Parts~~Maintenance Services operating ~~profit decreased~~loss increased $0.9 million ~~or 26.7%~~ for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase in operating ~~profit~~loss was primarily attributed to ~~a reduction in volumes~~higher material and ~~increased~~labor costs ~~associated with operating our facilities during the COVID-19 pandemic. These were partially offset by a decrease in selling and administrative expense as part of our strategic cost control initiatives~~ during the three months ended ~~February 28,~~November 30, 2021. This was partially offset by an increase in volumes and scrap metal pricing.

Our Leasing & Management Services segment generates revenue from leasing railcars from ~~its~~our lease fleet which includes GBX Leasing, 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. The gross proceeds from the sale of these railcars are recorded in revenue and the costs of purchasing these railcars are recorded in cost of revenue.

Leasing & Management Services revenue decreased ~~$20.8~~$7.1 million or ~~48.7%~~21.6% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The decrease was primarily attributed to a decrease in the sale of railcars which we had purchased from third parties with the intent to ~~resell.~~resell and a decline in management services volume. This was partially offset by an increase in leasing revenue primarily from the addition of GBX Leasing's fleet.

Leasing & Management Services cost of revenue decreased ~~$21.3~~$8.1 million or ~~69.1%~~44.0% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The decrease was primarily due to a decrease in the volume of railcars sold that we purchased from third parties and ~~lower transportation costs.~~a decrease in costs from a decline in management services volume. This was partially offset by an increase in costs from the addition of GBX Leasing's fleet.

Leasing & Management Services margin as a percentage of revenue increased ~~28.8%~~16.0% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. Margin as a percentage of revenue for the three months ended ~~February 29,~~November 30, 2020 was negatively impacted by higher sales of railcars that we purchased from third parties which have lower margin percentages.

Leasing & Management Services operating profit ~~decreased $6.4~~increased $7.1 million or ~~49.8%~~70.3% for the three months ended ~~February 28,~~November 30, 2021 compared to the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase was primarily attributed to a ~~$6.3 million reduction in~~higher net gain on disposition of equipment.

Selling and administrative expense was ~~$43.4~~$44.3 million or ~~14.7%~~8.0% of revenue for the three months ended ~~February 28,~~November 30, 2021 compared to ~~$54.6~~$43.7 million or ~~8.8%~~10.8% of revenue for the prior comparable period. The ~~$11.2~~$0.6 million ~~decrease~~increase was primarily attributed to ~~a decline in employee related~~ costs ~~resulting from headcount reductions~~associated with strategic business and ~~a decrease in other controllable spending categories as part of our strategic cost control and liquidity~~IT initiatives.

Net gain on disposition of equipment was ~~$27 thousand~~$8.5 million and $0.9 million for the three months ended ~~February 28,~~November 30, 2021 ~~compared to $6.7 million for the prior comparable period.~~

and 2020, respectively. Net gain on disposition of equipment primarily includes the sale of assets from our lease fleet (Equipment on operating leases, net) ~~that~~and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to accommodate customer demand and to manage risk and ~~liquidity; and disposition of property, plant and equipment.~~liquidity.

The ~~$3.0~~$1.5 million ~~decrease~~increase in interest and foreign exchange expense ~~from~~for the ~~prior comparable period~~three months ended November 30, 2021 compared to the three months ended November 30, 2020 was primarily attributed to the change in the ~~Mexican Peso’s~~Brazilian Real’s foreign exchange rate relative to the U.S. Dollar and an increase in ~~the prior year.~~interest expense from increased borrowings.

For the three months ended ~~February 28,~~November 30, 2021, we had an income tax benefit of ~~$21.8~~$1.4 million on a pre-tax loss of ~~$35.3~~$0.8 million. The tax benefit for the three months ended ~~February 28,~~November 30, 2021 related primarily ~~related~~ to ~~accelerated depreciation and~~net favorable adjustments from amending prior year tax returns.

For the ~~impact~~three months ended November 30, 2020, we had an income tax benefit of ~~the CARES Act which allows us to carryback to years when tax rates were higher, resulting in~~$7.3 million on a ~~larger tax benefit.~~pre-tax loss of $13.2 million. The tax benefit ~~is derived from the tax rate differential between the 2016 rate of 35% and our current US Federal tax rate of 21%. The effective tax rate~~ for the three months ended ~~February 29,~~November 30, 2020 ~~was 28.9%.~~included net favorable discrete tax benefits related to changes in foreign currency exchange rates for our U.S. Dollar denominated foreign operations.

The effective tax rate can fluctuate year-to-year due to 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 (loss)~~Loss before income taxes and earnings (loss) from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax ~~benefit (expense).~~
benefit.

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.

~~Loss~~Earnings from unconsolidated affiliates was ~~$0.4~~$5.0 million for the three months ended ~~February 28,~~November 30, 2021 compared to ~~earnings~~Loss from unconsolidated affiliates of ~~$1.7~~$0.8 million for the three months ended ~~February 29,~~November 30, 2020. The ~~decrease~~increase in earnings from unconsolidated affiliates was primarily related to ~~a loss at~~higher earnings in our Brazil ~~operations and a decrease in earnings from our investment in Axis, a joint venture that manufactures and sells axles to its joint venture partners.~~operations.

Net loss attributable to noncontrolling interest was ~~$4.9~~$5.2 million for the three months ended ~~February 28,~~November 30, 2021 compared to Net earnings attributable to noncontrolling interest ~~$6.4~~of $3.3 million infor the ~~prior comparable period, which~~three months ended November 30, 2020. Net (earnings) loss 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.

~~Six Months Ended February 28, 2021 Compared to the Six Months Ended February 29, 2020~~

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

Six Months Ended

(In thousands)

February 28,
2021

February 29,
2020

Revenue:

Manufacturing

$
510,816

$
1,147,310

Wheels, Repair & Parts

137,179

177,833

Leasing & Services

50,616

68,064

698,611

1,393,207

Cost of revenue:

Manufacturing

482,661

1,004,221

Wheels, Repair & Parts

129,651

166,265

Leasing & Services

27,957

44,196

640,269

1,214,682

Margin:

Manufacturing

28,155

143,089

Wheels, Repair & Parts

7,528

11,568

Leasing & Services

22,659

23,868

58,342

178,525

Selling and administrative

87,132

108,961

Net gain on disposition of equipment

(949
)

(10,656
)
Earnings (loss) from operations

(27,841
)

80,220

Interest and foreign exchange

20,671

25,461

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

(48,512
)

54,759

Income tax benefit (expense)

29,084

(13,457
)
Earnings (loss) before earnings (loss)
   from unconsolidated affiliates

(19,428
)

41,302

Earnings (loss) from unconsolidated affiliates

(1,122
)

2,724

Net earnings (loss)

(20,550
)

44,026

Net (earnings) loss attributable to noncontrolling
   interest

1,513

(22,728
)
Net earnings (loss) attributable to Greenbrier

$
(19,037
)

$
21,298

Diluted earnings (loss) per common share

$
(0.58
)

$
0.64

Performance for our segments is evaluated based on operating profit or loss. 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 benefit (expense) for either external or internal reporting purposes.

The 49.9% decrease in revenue for the six months ended February 28, 2021 as compared to the six months ended February 29, 2020 was primarily due to a 55.5% decrease in Manufacturing revenue. The decrease in Manufacturing revenue was primarily attributed to a 54.2% decrease in railcar deliveries. The decrease in revenue was also due to a 22.9% decrease in Wheels, Repair & Parts revenue primarily due to lower wheelset, component and parts volumes due to lower demand.

The 47.3% decrease in cost of revenue for the six months ended February 28, 2021 as compared to the six months ended February 29, 2020 was primarily due to a 51.9% decrease in Manufacturing cost of revenue. The decrease in Manufacturing cost of revenue was primarily attributed to a 54.2% decrease in railcar deliveries. The decrease in cost of revenue was also due to a 22.0% decrease in Wheels, Repair & Parts cost of revenue primarily due to lower costs associated with a reduction in wheelset, component and parts volumes.

Margin as a percentage of revenue was 8.4% and 12.8% for the six months ended February 28, 2021 and February 29, 2020, respectively. The overall margin as a percentage of revenue was negatively impacted by a decrease in Manufacturing margin to 5.5% from 12.5% primarily attributed to operating at lower volumes and increased costs associated with operating our manufacturing facilities in the COVID-19 pandemic during the six months ended February 28, 2021.

Net earnings (loss) attributable to Greenbrier is impacted by our operating activities and noncontrolling interest associated with our 50% joint ventures at certain of our Mexican railcar manufacturing facilities and our 75% interest in Greenbrier-Astra Rail, both of which we consolidate for financial reporting purposes. The $40.3 million decrease in net earnings attributable to Greenbrier for the six months ended February 28, 2021 as compared to the six months ended February 29, 2020 was primarily attributable to a decrease in the after-tax margin due to a reduction in railcar deliveries. This was partially offset by a decrease in Selling and administrative expense, a large tax benefit as a result of the net loss and relief allowable under the CARES act, and a net loss attributable to noncontrolling interest in the current year, which is added to Net earnings (loss). Net earnings (loss) attributable to noncontrolling interest 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.

Manufacturing revenue decreased $636.5 million or 55.5% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in revenue was primarily attributed to a 54.2% decrease in railcar deliveries.

Manufacturing cost of revenue decreased $521.6 million or 51.9% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in cost of revenue was primarily attributed to a 54.2% decrease in the volume of railcar deliveries.

Manufacturing margin as a percentage of revenue decreased 7.0% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in margin percentage was primarily attributed to operating at lower volumes and increased costs associated with operating our manufacturing facilities in the COVID-19 pandemic during the six months ended February 28, 2021.

Manufacturing operating profit decreased $106.8 million or 107.6% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in operating profit was primarily attributed to a decrease in railcar deliveries and increased costs associated with operating our manufacturing facilities during the COVID-19 pandemic during the six months ended February 28, 2021. These were partially offset by a decrease in selling and administrative expense as part of our strategic cost control initiatives during the six months ended February 28, 2021.

Wheels, Repair & Parts revenue decreased $40.7 million or 22.9% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease was primarily due to lower wheelset, component and parts volumes due to lower demand. This was partially offset by higher revenues associated with an increase in scrap metal pricing as we scrap wheels and other components.

Wheels, Repair & Parts cost of revenue decreased $36.6 million or 22.0% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease was primarily due to lower costs associated with a reduction in wheelset, component and parts volumes.

Wheels, Repair & Parts margin as a percentage of revenue decreased 1.0% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in margin percentage was primarily attributed to operating at lower volumes and increased costs associated with operating our facilities during the COVID-19 pandemic during the six months ended February 28, 2021. This was partially offset by an increase in scrap metal pricing.

Wheels, Repair & Parts operating profit decreased $2.2 million or 49.6% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease in operating profit was primarily attributed to a reduction in volumes and increased costs associated with operating our facilities during the COVID-19 pandemic. These were partially offset by a decrease in selling and administrative expense as part of our strategic cost control initiatives during the six months ended February 28, 2021.

The Leasing & Services segment generates revenue from leasing railcars from its lease fleet, providing various management services, interim rent on leased railcars for syndication, and the sale of railcars purchased from third parties with the intent to resell. The gross proceeds from the sale of these railcars are recorded in revenue and the costs of purchasing these railcars are recorded in cost of revenue.

Leasing & Services revenue decreased $17.4 million or 25.6% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease was primarily attributed to a decrease in the sale of railcars which we had purchased from third parties with the intent to resell and lower interim rent on leased railcars for syndication during the six months ended February 28, 2021.

Leasing & Services cost of revenue decreased $16.2 million or 36.7% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease was primarily due to a decrease in the volume of railcars sold that we purchased from third parties and lower transportation costs.

Leasing & Services margin as a percentage of revenue increased 9.7% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. Margin as a percentage of revenue for the six months ended February 28, 2020 was negatively impacted by higher sales of railcars that we purchased from third parties which have lower margin percentages. Margin as a percentage of revenue was negatively impacted during the three months ended February 28, 2021 by lower interim rent on leased railcars for syndication.

Leasing & Services operating profit decreased $10.3 million or 45.5% for the six months ended February 28, 2021 compared to the six months ended February 29, 2020. The decrease was primarily attributed to a $9.3 million reduction in net gain on disposition of equipment.

Selling and administrative expense was $87.1 million or 12.5% of revenue for the six months ended February 28, 2021 compared to $109.0 million or 7.8% of revenue for the prior comparable period. The $21.8 million decrease was primarily attributed to a decline in employee related costs resulting from headcount reductions and a decrease in other controllable spending categories as part of our strategic cost control and liquidity initiatives.

~~Net gain on disposition of equipment was $0.9 million for the six months ended February 28, 2021 compared to $10.7 million for the prior comparable period.~~

Net gain on disposition of equipment primarily includes the sale of assets from our lease fleet (Equipment on operating leases, net) that are periodically sold in the normal course of business in order to accommodate customer demand and to manage risk and liquidity; and disposition of property, plant and equipment.

The $4.8 million decrease in interest and foreign exchange expense from the prior comparable period was primarily attributed to the change in the Mexican Peso’s foreign exchange rate relative to the U.S. Dollar in the prior year.

For the six months ended February 28, 2021, we had an income tax benefit of $29.1 million on a pre-tax loss of $48.5 million. The tax benefit for the six months ended February 28, 2021 primarily related to accelerated depreciation and the impact of the CARES Act which allows us to carryback to years when tax rates were higher, resulting in a larger tax benefit. The tax benefit is derived from the tax rate differential between the 2016 rate of 35% and our current US Federal tax rate of 21%. The effective tax rate for the six months ended February 29, 2020 was 24.6%.

The effective tax rate can fluctuate year-to-year due to 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 (loss) before income taxes and earnings (loss) from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax benefit (expense).

Loss from unconsolidated affiliates was $1.1 million for the six months ended February 28, 2021 compared to earnings from unconsolidated affiliates of $2.7 million for the six months ended February 29, 2020. The decrease in earnings from unconsolidated affiliates was primarily related to a loss at our Brazil operations and a decrease in earnings from our investment in Axis, a joint venture that manufactures and sells axles to its joint venture partners.

Net loss attributable to noncontrolling interest was $1.5 million for the six months ended February 28, 2021 compared to Net earnings attributable to noncontrolling interest of $22.7 million in the prior comparable period, 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.

We have been financed through cash generated from operations and borrowings. At ~~February 28,~~November 30, 2021 cash and cash equivalents and restricted cash were ~~$602.1~~$437.9 million, a decrease of ~~$240.0~~$233.5 million from ~~$842.1~~$671.4 million at the August 31, ~~2020.~~2021.

The change in cash ~~used in~~provided by (used in) operating activities for the ~~six~~three months ended ~~February 28,~~November 30, 2021 compared to the ~~six~~three months ended ~~February 29,~~November 30, 2020 was primarily due to a ~~favorable~~ net change in working capital associated with increased production rates and ~~leased railcars for syndication partially offset by a net loss during the six months ended February 28, 2021 due to lower volumes of operating activities.~~from higher steel and other input costs.

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 change in cash ~~provided by (used in)~~used in investing activities for the ~~six~~three months ended ~~February 28,~~November 30, 2021 compared to the ~~six~~three months ended ~~February 29,~~November 30, 2020 was primarily attributable to ~~a reduction~~an increase in capital expenditures partially offset by an increase in proceeds from the sale of ~~assets and an~~assets. The increase in capital ~~expenditures.~~

~~Capital~~ expenditures ~~totaled $50.4 million and $40.8 million for~~during the ~~six~~three months ended ~~February 28,~~November 30, 2021 ~~and February 29, 2020, respectively.~~ primarily related to additions to our lease fleet as part of our leasing strategy.

Capital expenditures ~~for 2021~~ primarily relate to additions to our lease fleet and on-going investments into the safety and productivity of our facilities. Leasing & Services and corporate capital expenditures were approximately $35.8 million and $4.9 million for the six months ended February 28, 2021 and February 29, 2020, respectively. Manufacturing capital expenditures were approximately $10.1 million and $31.6 million for the six months ended February 28, 2021 and February 29, 2020, respectively. Wheels, Repair & Parts capital expenditures were approximately $4.5 million and $4.3 million for the six months ended February 28, 2021 and February 29, 2020, respectively.

Proceeds from the sale of assets ~~which~~ primarily ~~related~~relate to sales of railcars from our lease fleet within Leasing & ~~Services, were approximately $11.3 million and $41.8 million for the six months ended February 28, 2021 and February 29, 2020, respectively.~~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. Proceeds from sales of assets are expected to be approximately $145 million for 2022.

Capital expenditures for 2022 are expected to be approximately $275 million for Leasing & Management Services, approximately $55 million for Manufacturing and approximately $10 million for Maintenance Services. Capital expenditures for 2022 primarily relate to additions to our lease fleet reflecting our enhanced leasing strategy and continued investments into the safety and productivity of our facilities.

The change in cash ~~used in~~provided by (used in) financing activities for the ~~six~~three months ended ~~February 28,~~November 30, 2021 compared to the ~~six~~three months ended ~~February 29,~~November 30, 2020 was primarily attributed to ~~repayments~~proceeds from debt, net of ~~debt.~~repayments.

A quarterly dividend of $0.27 per share was declared on ~~April~~January 6, ~~2021.~~2022.

The Board of Directors has authorized our company to repurchase shares of our common stock. The share repurchase program has an expiration date of January 31, 2023. The amount remaining for repurchase was ~~$100~~$100.0 million as of ~~February 28,~~November 30, 2021. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time to time. The timing and amount of purchases will be 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. There were no shares repurchased under the share repurchase program during the ~~six~~three months ended ~~February 28,~~November 30, 2021 and ~~February 29,~~ 2020.

As of November 30, 2021, we had $410.8 million in Cash and cash equivalents and $199.0 million in available borrowings. Our significant cash balance is part of our strategy to maintain strong liquidity as we navigate the uncertainties around the COVID-19 pandemic and emerging economic recovery.

Senior secured credit facilities, consisting of ~~three~~four components, aggregated to ~~$738.8 million~~$1.1 billion as of ~~February 28,~~November 30, 2021. We had an aggregate of ~~$115.4~~$199.0 million available to draw down under committed credit facilities as of ~~February 28,~~November 30, 2021. This amount consists of ~~$42.5~~$68.5 million available on the North American credit facility, ~~$33.9~~$25.5 million on the European credit facilities and ~~$39.0~~$105.0 million on the Mexican credit facilities.

As of ~~February 28,~~November 30, 2021, a $600.0 million revolving line of credit, maturing ~~June 2024,~~August 2026, secured by substantially all of our U.S. assets ~~in the~~ ~~U.S.~~ not otherwise pledged as security for term loans ~~was available~~or the warehouse credit facility, existed to provide working capital and interim financing of equipment, principally for ~~the Company’s~~ our U.S. and Mexican operations. Advances under this North American credit facility bear interest at LIBOR plus 1.50% 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.

As of ~~February 28,~~November 30, 2021, a $300.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing, a joint venture in which we own approximately 95%. Advances under this facility bear interest at LIBOR plus 2.0%. The warehouse credit facility converts to a term loan in April 2023 and matures in April 2025.

As of November 30, 2021, lines of credit totaling ~~$68.8~~$73.8 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 1.5% and Euro Interbank Offered Rate (EURIBOR) plus 1.1%, were available for working capital needs of our European manufacturing operations. The European lines of credit include ~~$35.0~~$37.4 million ~~of facilities~~ which are guaranteed by us. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from June ~~2021~~2022 through ~~September 2022.~~October 2023.

As of ~~February 28,~~November 30, 2021, our Mexican railcar manufacturing operations had ~~three~~four lines of credit totaling ~~$70.0 million.~~$120.0 million for working capital needs. The first line of credit provides up to $30.0 million, of which we and ~~matures in June 2024.~~our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024. The second line of credit provides up to $35.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus ~~3.75%~~3.70%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June ~~2021.~~2023. The third line of credit provides up to $50.0 million and matures in October 2024. Advances under this facility bear interest at LIBOR plus 4.25%. The fourth line of credit provides up to $5.0 million and matures in September 2022. Advances under this facility bear interest at LIBOR plus 2.95% ~~and are to be used for working capital needs.~~.

As of ~~February 28,~~November 30, 2021, outstanding commitments under the senior secured credit facilities consisted of ~~$27.9~~$160.0 million in borrowings and $6.7 million in letters of credit ~~and $210.0 million in borrowings~~ under the North American credit facility, ~~$34.8~~$293.0 million outstanding under the GBX Leasing credit facility, $48.3 million outstanding under the European credit facilities and ~~$31.0~~$15.0 million outstanding under the Mexican credit facilities.

The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us and our various subsidiaries, the most restrictive of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into financing leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of ~~February 28,~~November 30, 2021, we were in compliance with all such restrictive covenants.

From time to time, we may seek to repurchase or otherwise retire or exchange securities, including outstanding convertible notes, borrowings and equity securities, and take other steps to reduce our debt, extend the maturities of our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated transactions or other retirements, repurchases or exchanges. Such retirements, repurchases or exchanges of one note or security for another note or security (now or hereafter existing), if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity requirements and contractual restrictions, if applicable. The amounts involved in any such transactions may, individually or in the aggregate, be material and may involve all or a portion of a particular series of notes or other indebtedness which may reduce the float and impact the trading market of notes or other indebtedness which remain outstanding.

We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.

We do not currently have off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our Consolidated Financial Statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. 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, revenue 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.

Income taxes -The asset and liability method is used to account for income taxes. We are required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for each tax jurisdiction to determine the amount of deferred tax assets and liabilities. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. We recognize liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit.

It is inherently difficult and subjective to estimate ~~such amounts, as this requires us to estimate the probability of various possible outcomes. We reevaluate these~~whether a valuation allowance or uncertain tax ~~positions on~~position is necessary. In making this assessment, management may analyze future taxable income, reversing temporary differences and/or ongoing tax planning strategies. Should a ~~quarterly basis.~~change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, the Company would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. Changes in tax law or court interpretations may result in the recognition of a tax benefit or an additional charge to the tax provision.

Warranty accruals - Warranty costs to cover a defined warranty period are estimated and charged to operations. The estimated warranty cost is based on historical warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historical information for similar product types.

These estimates are inherently uncertain as they are based on historical data for existing products and judgment for new products. If warranty claims are made in the current period for issues that have not historically been the subject of warranty claims and were not taken into consideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense may exceed the accrual for that particular product. Conversely, there is the possibility that claims may be lower than estimates. The warranty accrual is periodically reviewed and updated based on warranty trends. However, as we cannot predict future claims, the potential exists for the difference in any one reporting period to be material.

Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information. If further developments in or resolution of an environmental matter result in facts and circumstances that are significantly different than the assumptions used to develop these reserves, the accrual for environmental remediation could be materially understated or overstated. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which reserves are established are made.

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.

~~Revenue recognition~~ - We measure revenue at the amounts that reflect the consideration to which we expect to be entitled in exchange for transferring control of goods and services to customers. We recognize revenue either at the point in time or over the period of time that performance obligations to customers are satisfied. Payment terms vary by segment and product type and are generally due within normal commercial terms. Our contracts with customers may include multiple performance obligations (e.g. railcars, maintenance, management services, etc.). For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price. We have disaggregated revenue from contracts with customers into categories which describe the principal activities from which we generate our revenues.

Goodwill - In accordance with ~~contracts with customers. We recognize revenue upon our customers’ acceptance of~~Accounting Standards Codification (ASC) Topic 350, Intangibles–Goodwill and Other (ASC 350), the ~~completed railcars at a specified delivery point. From time to time, we enter into multi-year supply agreements. Each railcar delivery is considered a distinct performance obligation, such~~Company evaluates goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the ~~amounts~~carrying amount of such assets may not be recoverable. The Company uses a two-step process to assess the realizability of goodwill. The first step is a qualitative assessment that ~~are recognized as revenue following railcar delivery are generally not subject to change.~~

~~We typically recognize marine vessel manufacturing revenue over time using~~analyzes current economic indicators associated with a particular reporting unit. If 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. This method best depicts our performance in completing the construction of the marine vessel for the customer andqualitative assessment indicates a stable or improved fair value, no further testing is ~~consistent with the percentage of completion method used prior to the adoption of Topic 606:~~ ~~Contracts with Customers~~ ~~(Topic 606).~~

~~We operate~~required. If a ~~network of wheel, repair and parts shops in North America that provide complete wheelset reconditioning and railcar repair services.~~

Wheels revenue is recognized when wheelsets are shipped to the customer or when consumed by customers in the case of consignment arrangements. Parts revenue is recognized upon shipment of the parts to the customers.

Repair 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. This method best depicts our performance in repairing the railcars for the customer. Repair services are typically completed in less than 90 days.

~~We own a fleet of new and used railcars which are leased to third-party customers. Lease revenue is recognized over the lease-term in the period in which~~qualitative assessment indicates it is ~~earned.~~

Syndication transactions represent new and used railcars which have been placed on lease to a customer and which we intend to sell to an investor with the lease attached. At the time of such sale, revenue and cost of revenue associated with railcarsmore likely than not that we have manufactured are recognized in the Manufacturing segment; while revenue and cost of revenue associated with railcars which were obtained from a third-party with the intent to resell and subsequently sold, are recognized in the Leasing & Services segment.

We enter into multi-year contracts to provide management and maintenance services to customers for which revenue is generally recognized on a straight-line basis over the contract term as a stand-ready obligation. Costs to fulfill these contracts are recognized as incurred.

~~Goodwill and acquired intangible assets~~ - We periodically acquire businesses in purchase transactions in which the allocation of the purchase price may result in the recognition of goodwill and other intangible assets. The determination of the value of such intangible assets requires management to make estimates and assumptions. These estimates affect the amount of future period amortization and possible impairment charges.

~~Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third quarter. The provisions of ASC 350~~ ~~Intangibles – Goodwill and Other~~, require that we perform this test by comparing the fair value of each reporting unit with its carrying value. We determine the fair value 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~~is less than its carrying amount, the present value of estimated future cash flows which incorporates forecasted revenues, long-term growth rate, gross margin percentages, operating expenses, short-term net working capital changes, other cash flows andCompany will proceed to the ~~use of discount rates. Under the market approach, we estimate~~quantitative second step where the fair value of a reporting unit is calculated based on ~~observed market multiples for comparable businesses. An~~weighted income and market-based approaches.

If the fair value of a reporting unit is lower than its carrying value, an impairment ~~loss~~to goodwill is recorded, not to ~~the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value. An impairment loss cannot~~ exceed the total amount of goodwill allocated to the reporting unit. Goodwill and indefinite-lived intangible assets are also tested more frequently if changes in circumstances or the occurrence of events indicates that a potential impairment exists. When changes in circumstances,

such as a decline in the market price of our common stock, changes in demand or in the numerous variables associated with the judgments, assumptions and estimates made in assessing the appropriate valuation of goodwill indicate the carrying amount of ~~certain indefinite lived assets may not be recoverable,~~goodwill in the ~~assets are evaluated for impairment.~~

reporting unit. We performed our annual goodwill impairment test during the third quarter of ~~2020~~2021 and we concluded that goodwill for all reporting units was not impaired. The estimated fair value of goodwill in both the Europe Manufacturing and Wheels & Parts reporting units exceeded its carrying value by approximately 5% and 9%, respectively. Since the estimated fair values were not substantially in excess of their carrying values, we may be at risk for an impairment loss in the future if expected profitability trends assumed in the fair value calculation are not realized.

As of ~~February 28,~~November 30, 2021, our goodwill balance was ~~$132.7~~$130.3 million of which ~~$89.4~~$87.4 million related to our Manufacturing segment and ~~$43.3~~$42.9 million related to our ~~Wheels, Repair & Parts~~Maintenance Services segment. Our Manufacturing segment includes the North America Manufacturing reporting unit with a goodwill balance of $56.6 million; and the Europe Manufacturing reporting unit with a goodwill balance of ~~$32.8~~$30.8 million.

Pursuant to the authoritative guidance, we make certain judgments and assumptions to determine our reporting units, which determines the carrying values for each reporting unit. Judgments related to qualitative factors include changes in economic considerations, market and industry trends, business strategy, cost factors, and financial performance, among others, to determine if there are indicators of a significant decline in the fair value of a particular reporting unit.

We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protect revenue or margin on a portion of forecasted foreign currency sales and expenses. At ~~February 28,~~November 30, 2021 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to ~~$199.9~~$120.9 million. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible to predict the impact of a movement in a single foreign currency exchange rate would have on future operating results.

In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At ~~February 28,~~November 30, 2021, net assets of foreign subsidiaries aggregated ~~$374.4~~$373.1 million and a 10% strengthening of the U.S. Dollar relative to the foreign currencies would result in a decrease in equity of ~~$37.4~~$37.3 million, or ~~3.0%~~2.7% of Total equity - Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.

We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting ~~$244.3~~$234.4 million of variable rate debt to fixed rate debt. ~~As a result,~~Notwithstanding these interest rate swap agreements, we are still exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates. At ~~February 28,~~November 30, 2021, ~~54%~~46% of our outstanding debt had fixed rates and ~~46%~~54% had variable rates. At ~~February 28,~~November 30, 2021, a uniform 10% increase in variable interest rates would result in approximately $0.8 million of additional annual interest expense.

Our management has evaluated, under the supervision and with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the quarter ended ~~February 28,~~November 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There is hereby incorporated by reference the information disclosed in Note 14 to Consolidated Financial Statements, Part I of this Quarterly Report on Form 10-Q.

This Form 10-Q should be read in conjunction with Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, ~~2020 and our subsequent Quarterly Report on Form 10-Q.~~2021. Except as set forth below, there have been no material changes in the Risk Factors described in our most recent Annual Report on Form ~~10-K for the year ended August 31, 2020 and subsequent Quarterly Report on Form 10-Q.~~10-K.

The COVID-19 coronavirus pandemic, and the related volatility in global economic activity, as well as governmental reaction to the pandemic ~~and related economic disruptions~~ could continue to negatively impact on our business, liquidity and financial position, results of operations, stock price, and ability to convert backlog to revenue.

The COVID-19 coronavirus outbreak continues to present risks to our business. While the approval in certain jurisdictions of one or more COVID-19 vaccinations has occurred, in many geographies, human mortality and morbidity continues and economic activity remains muted. The pandemic has not yet been contained and the number of its victims and the extent of negative impact on the global economy cannot be foreseen. Several of the countries in which we operate continue to be significantly negatively impacted by COVID-19.

~~We are unable to predict when, how, or with what magnitude COVID-19 and related events will negatively impact our business.~~ We currently identify the following factors as the most significant risks to our business due to COVID-19, governmental actions, and economic conditions.

The longer the pandemic continues, the more likely that more of the foregoing risks will be realized and that other negative impacts on our business will occur, some of which we cannot now foresee.

~~Failure to realize the anticipated benefits of our new leasing joint venture may adversely affect our business, results of operations and financial position.~~

On February 4, 2021, we announced a refined leasing strategy to grow our owned portfolio of leased railcars built by Greenbrier by approximately $200 million per year. The long-term success of our new leasing strategy depends on our ability to lease and re-lease railcars at satisfactory lease rates, our ability to sell railcars into the secondary market at satisfactory prices, our ability to access credit at favorable interest rates and manage increased leverage, our ability to utilize tax benefits, obtain favorable tax treatment under the CARES Act, and our ability to execute successfully our commercial strategies and relationships. If we do not manage these and other factors successfully, the benefits of our new leasing strategy may not be realized as anticipated.

The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock. The share repurchase program has an expiration date of January 31, 2023. The amount remaining for repurchase was ~~$100~~$100.0 million as of ~~February 28,~~November 30, 2021. There were no ~~shares repurchased under the~~ share ~~repurchase program~~repurchases during the three months ended ~~February 28, 2021.~~November 30, 2021 under this program.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Oregon	93-0816972
(State of Incorporation)	(I.R.S. Employer Identification No.)
One Centerpointe Drive, Suite 200, Lake Oswego, OR	97035
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock without par value	GBX	New York Stock Exchange


		Page
	Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION	4
Item 1.	Condensed Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Equity	7
	Condensed Consolidated Statements of Cash Flows	98
	Notes to Condensed Consolidated Financial Statements	109
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4637
Item 4.	Controls and Procedures	4738
PART II.	OTHER INFORMATION	4839
Item 1.	Legal Proceedings	4839
Item 1A.	Risk Factors	4839
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4940
Item 6.	Exhibits	5040
	Signatures	5141


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Attributable to Greenbrier
	Common Stock Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity - Greenbrier			Noncontrolling Interest			Total Equity			Contingently Redeemable Noncontrolling Interest
Balance August 31, 2020		32,701	$	460,400		$	885,460		$	(52,817	)	$	1,293,043		$	180,012		$	1,473,055		$	31,117
Cumulative effect adjustment due to adoption of ASU 2016-13 (see Note 1)		—		—			(509	)		—			(509	)		—			(509	)		—
Net loss		—		—			(19,037	)		—			(19,037	)		(433	)		(19,470	)		(1,080	)
Other comprehensive income, net		—		—			—			6,133			6,133			4			6,137			—
Noncontrolling interest adjustments		—		—			—			—			—			(1,285	)		(1,285	)		—
Joint venture partner distribution declared		—		—			—			—			—			(2,441	)		(2,441	)		—
Restricted stock awards (net of cancellations)		124		15,497			—			—			15,497			—			15,497			—
Unamortized restricted stock		—		(17,854	)		—			—			(17,854	)		—			(17,854	)		—
Restricted stock amortization		—		8,951			—			—			8,951			—			8,951			—
Cash dividends ($0.54 per share)		—		—			(17,722	)		—			(17,722	)		—			(17,722	)		—
Balance February 28, 2021		32,825	$	466,994		$	848,192		$	(46,684	)	$	1,268,502		$	175,857		$	1,444,359		$	30,037

	For The Three Months Ended
	February 28, 2021					February 29, 2020
	Total		Amount of gain (loss) on cash flow hedge activity			Total		Amount of gain (loss) on cash flow hedge activity
Revenue	$	295,622	$	(377	)	$	623,848	$	67
Cost of revenue		277,951		(8	)		537,512		73
Interest and foreign exchange		9,568		(1,263	)		12,609		(369	)


	For The Three Months Ended November 30,
	2021					2020
	Total		Amount of gain (loss) on cash flow hedge activity			Total		Amount of gain (loss) on cash flow hedge activity
Revenue	$	550.7	$	(0.2	)	$	403.0	$	(0.3	)
Cost of revenue	$	503.1	$	—		$	362.3	$	—
Interest and foreign exchange	$	12.6	$	(1.3	)	$	11.1	$	(1.3	)

	For the Six Months Ended
	February 28, 2021					February 29, 2020
	Total		Amount of gain (loss) on cash flow hedge activity			Total		Amount of gain (loss) on cash flow hedge activity
Revenue	$	698,611	$	(623	)	$	1,393,207	$	(99	)
Cost of revenue		640,269		(49	)		1,214,682		(2	)
Interest and foreign exchange		20,671		(2,594	)		25,461		(536	)

(in thousands)
Remaining six months of 2021	$	17,049
2022		30,183
2023		25,421
2024		22,777
2025		12,638
Thereafter		27,870
	$	135,938

(in thousands)
Remaining six months of 2021	$	6,492
2022		12,414
2023		11,983
2024		10,848
2025		6,324
Thereafter		17,409
Total lease payments	$	65,470
Less: Imputed interest		(7,308	)
Total lease obligations	$	58,162


Weighted average remaining lease term:
Operating leases	~~11.5~~12.3 Years

Weighted average discount rate:
Operating leases		~~3.2~~2.9	%

(in thousands)	Six months ended February 28, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7,327
ROU assets obtained in exchange for new operating lease liabilities	$	30

	Three Months Ended
(In thousands, except railcar deliveries)	February 28, 2021			February 29, 2020			Increase (Decrease)			% Change
Revenue	$	202,094		$	489,943		$	(287,849	)		(58.8	%)
Cost of revenue	$	201,771		$	422,309		$	(220,538	)		(52.2	%)
Margin (%)		0.2	%		13.8	%		(13.6	%)	*
Operating profit (loss) ($)	$	(17,216	)	$	46,105		$	(63,321	)		(137.3	%)
Operating profit (loss) (%)		(8.5	%)		9.4	%		(17.9	%)	*
Deliveries		1,700			3,700			(2,000	)		(54.1	%)


	Three Months Ended November 30,						Increase			%
(In millions, except railcar deliveries)	2021			2020			(Decrease)			Change
Revenue	$	452.5		$	304.5		$	148.0			48.6	%
Cost of revenue	$	421.6		$	280.9		$	140.7			50.1	%
Margin (%)		6.8	%		7.8	%		(1.0	%)	*
Operating profit ($)	$	12.3		$	5.4		$	6.9			127.8	%
Operating profit (%)		2.7	%		1.8	%		0.9	%	*
Deliveries		3,700			2,700			1,000			37.0	%

~~10.1~~		~~The Greenbrier Companies, Inc. 2021 Stock Incentive Plan is incorporated herein by reference to Exhibit 99.1 to Registrant’s Form S-8 filed January 6, 2021.~~

~~10.2~~		~~Stock Incentive Grant Program for Non-Employee Directors under the 2021 Stock Incentive Plan.~~

~~10.3~~		~~Third Amendment dated as of January 27, 2021 to Amended and Restated Employment Agreement between Registrant and Mark Rittenbaum.~~

~~31.1~~		Certification pursuant to Rule 13a – 14 (a).

31.2		Certification pursuant to Rule 13a – 14 (a).

32.1		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (Formatted as inline XBRL and contained in Exhibit 101).


		THE GREENBRIER COMPANIES, INC.

Date:	~~April 6, 2021~~January 7, 2022	By:	/s/ Adrian J. Downes
			Adrian J. Downes
			Senior Vice President,
			Chief Financial Officer and Chief Accounting Officer
			(Principal Financial Officer and Principal Accounting Officer)

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