Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
May 31, 2019 | Jun. 26, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | GREENBRIER COMPANIES INC | |
Trading Symbol | GBX | |
Security Exchange Name | NYSE | |
Entity Central Index Key | 0000923120 | |
Current Fiscal Year End Date | --08-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Title of 12(b) Security | Common Stock | |
Entity Common Stock, Shares Outstanding | 32,483,540 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 359,625 | $ 530,655 |
Restricted cash | 21,471 | 8,819 |
Accounts receivable, net | 330,385 | 348,406 |
Inventories | 592,099 | 432,314 |
Leased railcars for syndication | 130,489 | 130,926 |
Equipment on operating leases, net | 376,241 | 322,855 |
Property, plant and equipment, net | 478,502 | 457,196 |
Investment in unconsolidated affiliates | 53,036 | 61,414 |
Intangibles and other assets, net | 97,022 | 94,668 |
Goodwill | 74,318 | 78,211 |
Total assets | 2,513,188 | 2,465,464 |
Liabilities and Equity | ||
Revolving notes | 25,952 | 27,725 |
Accounts payable and accrued liabilities | 473,106 | 449,857 |
Deferred income taxes | 12,089 | 31,740 |
Deferred revenue | 76,170 | 105,954 |
Notes payable, net | 483,918 | 436,205 |
Commitments and contingencies (Note 17) | ||
Contingently redeemable noncontrolling interest | 24,722 | 29,768 |
Greenbrier | ||
Preferred stock—without par value; 25,000 shares authorized; none outstanding | ||
Common stock—without par value; 50,000 shares authorized; 32,484 and 32,191 shares outstanding at May 31, 2019 and August 31, 2018 | ||
Additional paid-in capital | 449,002 | 442,569 |
Retained earnings | 847,433 | 830,898 |
Accumulated other comprehensive loss | (34,120) | (23,366) |
Total equity – Greenbrier | 1,262,315 | 1,250,101 |
Noncontrolling interest | 154,916 | 134,114 |
Total equity | 1,417,231 | 1,384,215 |
Liabilities and Equity | $ 2,513,188 | $ 2,465,464 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | May 31, 2019 | Aug. 31, 2018 |
Preferred stock, without par value | ||
Preferred stock, shares authorized | 25,000 | 25,000 |
Preferred stock, outstanding | ||
Common stock, without par value | ||
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares outstanding | 32,484 | 32,191 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | ||||
Revenue | |||||||
Revenue | $ 856,152 | $ 641,387 | $ 2,119,346 | $ 1,830,258 | |||
Cost of revenue | |||||||
Cost of revenue | 749,580 | 532,880 | 1,886,397 | 1,527,090 | |||
Margin | 106,572 | 108,507 | 232,949 | 303,168 | |||
Selling and administrative expense | 54,377 | 51,793 | 152,701 | 149,130 | |||
Net gain on disposition of equipment | (11,019) | (14,825) | (37,474) | (39,813) | |||
Goodwill impairment | 10,025 | 0 | 10,025 | 0 | |||
Earnings from operations | 53,189 | 71,539 | 107,697 | 193,851 | |||
Other costs | |||||||
Interest and foreign exchange | 9,770 | 6,533 | 23,411 | 20,582 | |||
Earnings before income taxes and loss from unconsolidated affiliates | 43,419 | 65,006 | 84,286 | 173,269 | |||
Income tax expense | (13,008) | (15,944) | (24,391) | (22,778) | |||
Earnings before loss from unconsolidated affiliates | 30,411 | 49,062 | 59,895 | 150,491 | |||
Loss from unconsolidated affiliates | (4,564) | (12,823) | (4,883) | (15,586) | |||
Net earnings | 25,847 | 36,239 | 55,012 | 134,905 | |||
Net earnings attributable to noncontrolling interest | (10,599) | (3,288) | (19,043) | (14,059) | |||
Net earnings attributable to Greenbrier | $ 15,248 | $ 32,951 | $ 35,969 | $ 120,846 | |||
Basic earnings per common share | $ 0.47 | $ 1.03 | $ 1.10 | $ 3.99 | |||
Diluted earnings per common share | $ 0.46 | $ 1.01 | $ 1.08 | $ 3.75 | |||
Weighted average common shares: | |||||||
Basic | [1] | 32,603 | 32,034 | 32,623 | 30,250 | ||
Diluted | 33,183 | 32,914 | 33,161 | 32,774 | |||
Dividends declared per common share | $ 0.25 | $ 0.25 | $ 0.75 | $ 0.71 | |||
Manufacturing | |||||||
Revenue | |||||||
Revenue | $ 681,588 | $ 510,099 | $ 1,629,396 | $ 1,473,411 | |||
Cost of revenue | |||||||
Cost of revenue | 590,788 | 427,875 | 1,451,589 | 1,237,890 | |||
Earnings from operations | 72,110 | 62,435 | 122,955 | 178,589 | |||
Wheels, Repair & Parts | |||||||
Revenue | |||||||
Revenue | 124,980 | [2] | 94,515 | 358,801 | [3] | 261,236 | |
Cost of revenue | |||||||
Cost of revenue | 119,821 | 85,850 | 339,254 | 239,064 | |||
Earnings from operations | (8,820) | [2] | 5,546 | (2,750) | [3] | 13,083 | |
Leasing & Services | |||||||
Revenue | |||||||
Revenue | 49,584 | 36,773 | 131,149 | 95,611 | |||
Cost of revenue | |||||||
Cost of revenue | 38,971 | 19,155 | 95,554 | 50,136 | |||
Earnings from operations | $ 15,337 | $ 26,704 | $ 53,880 | $ 71,008 | |||
[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] | A non-cash impairment charge of $10.0 million was recorded during the three months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. | ||||||
[3] | A non-cash impairment charge of $10.0 million was recorded during the nine months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | ||
Net earnings | $ 25,847 | $ 36,239 | $ 55,012 | $ 134,905 | |
Other comprehensive income | |||||
Translation adjustment | (5,083) | (15,136) | (7,269) | (14,163) | |
Reclassification of derivative financial instruments recognized in net earnings | [1] | 306 | 59 | 1,476 | (606) |
Unrealized loss on derivative financial instruments | [2] | (1,729) | (2,103) | (5,066) | (274) |
Other (net of tax effect) | (1) | 29 | 75 | 54 | |
Other comprehensive income | (6,507) | (17,151) | (10,784) | (14,989) | |
Comprehensive income | 19,340 | 19,088 | 44,228 | 119,916 | |
Comprehensive income attributable to noncontrolling interest | (10,590) | (3,266) | (19,013) | (14,041) | |
Comprehensive income attributable to Greenbrier | $ 8,750 | $ 15,822 | $ 25,215 | $ 105,875 | |
[1] | Net of tax effect of $0.1 million and $0.01 million for the three months ended May 31, 2019 and 2018 and $0.5 million and $0.1 million for the nine months ended May 31, 2019 and 2018. | ||||
[2] | Net of tax effect of $0.5 million and $0.6 million for the three months ended May 31, 2019 and 2018 and $1.6 million and $0.1 million for the nine months ended May 31, 2019 and 2018. |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Reclassification of derivative financial instruments recognized in net earnings (loss), tax | $ 100 | $ 10 | $ 500 | $ 100 |
Unrealized loss on derivative financial instruments, tax | $ 500 | $ 600 | $ 1,600 | $ 100 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Equity - Greenbrier | Noncontrolling Interest | Equity Excluding Contingently Redeemable Noncontrolling Interest | Contingently Redeemable Noncontrolling Interest |
Beginning balance at Aug. 31, 2017 | $ 36,148 | ||||||||
Net earnings | (5,013) | ||||||||
Ending Balance at May. 31, 2018 | 31,135 | ||||||||
Beginning balance (in shares) at Aug. 31, 2017 | 28,503 | ||||||||
Beginning balance at Aug. 31, 2017 | $ 315,306 | $ 709,103 | $ (6,279) | $ 1,018,130 | $ 160,763 | $ 1,178,893 | |||
Net earnings | $ 134,905 | 120,846 | 120,846 | 19,072 | 139,918 | ||||
Other comprehensive income (loss), net | (14,989) | (14,971) | (14,971) | (18) | (14,989) | ||||
Noncontrolling interest adjustments | 1,067 | 1,067 | |||||||
Joint venture partner distribution declared | (59,014) | (59,014) | |||||||
Noncontrolling interest acquired | (7) | (7) | |||||||
Investment by joint venture partner | 6,500 | 6,500 | |||||||
Restricted stock awards (net of cancellations) (in shares) | 336 | ||||||||
Restricted stock awards (net of cancellations) | 7,335 | 7,335 | 7,335 | ||||||
Unamortized restricted stock | (15,052) | (15,052) | (15,052) | ||||||
Restricted stock amortization | 12,084 | 12,084 | 12,084 | ||||||
Cash dividends | (21,747) | (21,747) | (21,747) | ||||||
Conversion of 2018 Convertible Senior Notes (in shares) | 3,352 | ||||||||
Conversion of 2018 Convertible Senior Notes | 118,887 | 118,887 | 118,887 | ||||||
Ending Balance (in shares) at May. 31, 2018 | 32,191 | ||||||||
Ending Balance at May. 31, 2018 | 438,560 | 808,202 | (21,250) | 1,225,512 | 128,363 | 1,353,875 | |||
Beginning balance at Feb. 28, 2018 | 33,046 | ||||||||
Net earnings | (1,911) | ||||||||
Ending Balance at May. 31, 2018 | 31,135 | ||||||||
Beginning balance (in shares) at Feb. 28, 2018 | 28,732 | ||||||||
Beginning balance at Feb. 28, 2018 | 316,073 | 783,495 | (4,121) | 1,095,447 | 147,586 | 1,243,033 | |||
Net earnings | 36,239 | 32,951 | 32,951 | 5,199 | 38,150 | ||||
Other comprehensive income (loss), net | $ (17,151) | (17,129) | (17,129) | (22) | (17,151) | ||||
Noncontrolling interest adjustments | 3,628 | 3,628 | |||||||
Joint venture partner distribution declared | (28,021) | (28,021) | |||||||
Noncontrolling interest acquired | (7) | (7) | |||||||
Restricted stock awards (net of cancellations) (in shares) | 107 | ||||||||
Restricted stock awards (net of cancellations) | 11,585 | 11,585 | 11,585 | ||||||
Unamortized restricted stock | (14,102) | (14,102) | (14,102) | ||||||
Restricted stock amortization | 6,117 | 6,117 | 6,117 | ||||||
Cash dividends | (8,244) | (8,244) | (8,244) | ||||||
Conversion of 2018 Convertible Senior Notes (in shares) | 3,352 | ||||||||
Conversion of 2018 Convertible Senior Notes | 118,887 | 118,887 | 118,887 | ||||||
Ending Balance (in shares) at May. 31, 2018 | 32,191 | ||||||||
Ending Balance at May. 31, 2018 | 438,560 | 808,202 | (21,250) | 1,225,512 | 128,363 | 1,353,875 | |||
Beginning balance at Aug. 31, 2018 | 29,768 | ||||||||
Net earnings | (5,046) | ||||||||
Ending Balance at May. 31, 2019 | 24,722 | ||||||||
Beginning balance (in shares) at Aug. 31, 2018 | 32,191 | 32,191 | |||||||
Beginning balance at Aug. 31, 2018 | $ 1,384,215 | 442,569 | 830,898 | (23,366) | 1,250,101 | 134,114 | 1,384,215 | ||
Net earnings | 55,012 | 35,969 | 35,969 | 24,089 | 60,058 | ||||
Other comprehensive income (loss), net | $ (10,784) | (10,754) | (10,754) | (30) | (10,784) | ||||
Noncontrolling interest adjustments | 7,322 | 7,322 | |||||||
Joint venture partner distribution declared | (12,494) | (12,494) | |||||||
Noncontrolling interest acquired | 1,915 | 1,915 | |||||||
Cumulative effect adjustment due to adoption of ASU 2014-09 (See Note 1) at Aug. 31, 2018 | 5,461 | 5,461 | 5,461 | ||||||
Restricted stock awards (net of cancellations) (in shares) | 293 | ||||||||
Restricted stock awards (net of cancellations) | 12,721 | 12,721 | 12,721 | ||||||
Unamortized restricted stock | (17,445) | (17,445) | (17,445) | ||||||
Restricted stock amortization | 11,157 | 11,157 | 11,157 | ||||||
Cash dividends | (24,895) | (24,895) | (24,895) | ||||||
Ending Balance (in shares) at May. 31, 2019 | 32,484 | 32,484 | |||||||
Ending Balance at May. 31, 2019 | $ 1,417,231 | 449,002 | 847,433 | (34,120) | 1,262,315 | 154,916 | 1,417,231 | ||
Beginning balance at Feb. 28, 2019 | 25,637 | ||||||||
Net earnings | (915) | ||||||||
Ending Balance at May. 31, 2019 | $ 24,722 | ||||||||
Beginning balance (in shares) at Feb. 28, 2019 | 32,379 | ||||||||
Beginning balance at Feb. 28, 2019 | 444,962 | 840,478 | (27,622) | 1,257,818 | 145,459 | 1,403,277 | |||
Net earnings | 25,847 | 15,248 | 15,248 | 11,514 | 26,762 | ||||
Other comprehensive income (loss), net | $ (6,507) | (6,498) | (6,498) | (9) | (6,507) | ||||
Noncontrolling interest adjustments | 2,016 | 2,016 | |||||||
Joint venture partner distribution declared | (4,064) | (4,064) | |||||||
Restricted stock awards (net of cancellations) (in shares) | 105 | ||||||||
Restricted stock awards (net of cancellations) | 38 | 38 | 38 | ||||||
Unamortized restricted stock | 0 | 0 | 0 | ||||||
Restricted stock amortization | 4,002 | 4,002 | 4,002 | ||||||
Cash dividends | (8,293) | (8,293) | (8,293) | ||||||
Ending Balance (in shares) at May. 31, 2019 | 32,484 | 32,484 | |||||||
Ending Balance at May. 31, 2019 | $ 1,417,231 | $ 449,002 | $ 847,433 | $ (34,120) | $ 1,262,315 | $ 154,916 | $ 1,417,231 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Cash dividend per share | $ 0.25 | $ 0.25 | $ 0.75 | $ 0.71 |
Equity Excluding Contingently Redeemable Noncontrolling Interest [Member] | ||||
Cash dividend per share | $ 0.25 | $ 0.25 | $ 0.75 | $ 0.71 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2019 | May 31, 2018 | |
Cash flows from operating activities | ||
Net earnings | $ 55,012 | $ 134,905 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | ||
Deferred income taxes | (20,478) | (38,825) |
Depreciation and amortization | 60,833 | 55,161 |
Net gain on disposition of equipment | (37,474) | (39,813) |
Accretion of debt discount | 3,268 | 3,109 |
Stock based compensation expense | 10,792 | 20,311 |
Goodwill impairment | 10,025 | 0 |
Noncontrolling interest adjustments | 7,322 | 1,067 |
Other | 1,916 | 1,345 |
Decrease (increase) in assets: | ||
Accounts receivable, net | 27,926 | (24,980) |
Inventories | (169,813) | (4,270) |
Leased railcars for syndication | (43,796) | (69,994) |
Other | (2,525) | 30,549 |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued liabilities | 30,581 | 34,898 |
Deferred revenue | (27,712) | (23,837) |
Net cash provided by (used in) operating activities | (94,123) | 79,626 |
Cash flows from investing activities | ||
Proceeds from sales of assets | 100,730 | 129,828 |
Capital expenditures | (149,945) | (118,656) |
Investment in and advances to unconsolidated affiliates | (11,393) | (21,455) |
Cash distribution from unconsolidated affiliates | 1,986 | 3,941 |
Net cash used in investing activities | (58,622) | (6,342) |
Cash flows from financing activities | ||
Net change in revolving notes with maturities of 90 days or less | (1,882) | 16,013 |
Proceeds from issuance of notes payable | 225,000 | 13,749 |
Repayments of notes payable | (179,803) | (19,274) |
Debt issuance costs | (2,974) | |
Investment by joint venture partner | 6,500 | |
Dividends | (25,072) | (21,866) |
Cash distribution to joint venture partner | (11,715) | (69,413) |
Tax payments for net share settlement of restricted stock | (6,321) | (7,716) |
Net cash used in financing activities | (2,767) | (82,007) |
Effect of exchange rate changes | (2,866) | (12,462) |
Decrease in cash and cash equivalents and restricted cash | (158,378) | (21,185) |
Cash and cash equivalents and restricted cash | ||
Beginning of period | 539,474 | 620,358 |
End of period | 381,096 | 599,173 |
Balance Sheet Reconciliation: | ||
Cash and cash equivalents | 359,625 | 589,969 |
Restricted cash | 21,471 | 9,204 |
Total cash and cash equivalents and restricted cash as presented above | 381,096 | 599,173 |
Cash paid during the period for | ||
Interest | 11,350 | 13,080 |
Income taxes, net | 45,904 | 62,219 |
Non-cash activity | ||
Transfer from Leased railcars for syndication to Equipment on operating leases, net | 42,802 | 5,541 |
Capital expenditures accrued in Accounts payable and accrued liabilities | 14,455 | 1,868 |
Change in Accounts payable and accrued liabilities associated with dividends declared | 177 | 119 |
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner | $ (779) | 29 |
Conversion of 2018 Senior Convertible Notes | $ 118,887 |
Interim Financial Statements
Interim Financial Statements | 9 Months Ended |
May 31, 2019 | |
Interim Financial Statements | Note 1 – Interim Financial Statements The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and its subsidiaries (Greenbrier or the Company) as of May 31, 2019 and for the three and nine months ended May 31, 2018 and 2019 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 nine months ended May 31, 2019 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2019. 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 2018 Annual Report on Form 10-K. Management Estimates – 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. Initial Adoption of Accounting Policies – In the first quarter of 2019, the Company adopted Accounting Standard Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09). This standard was issued to provide a common revenue recognition model for entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. The new standard also requires additional disclosures to sufficiently describe the nature, amount, timing, and uncertainty of revenue and cash flow arising from contracts with customers. As a result of adopting the new standard, the timing of the Company’s revenue recognition has principally remained unchanged. Certain minor changes have occurred related to maintenance and repair services. Costs incurred while fulfilling maintenance contracts will now be recognized as incurred while the related revenue will continue to be recognized over time. Additionally, repair service revenue, while previously recognized upon completion of the services, will now be recognized over time. This standard was adopted using a modified retrospective approach through a cumulative effect adjustment, which increased retained earnings by $5.5 million at September 1, 2018. The adoption of the new revenue standard did not have a material effect on the Company’s Unaudited Condensed Consolidated Balance Sheets and Statements of Income. In the first quarter of 2019, the Company adopted Accounting Standard Update 2016-18, Restricted Cash (ASU 2016-18). This update requires additional disclosure and that the Statement of Cash Flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash are included with cash & cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The guidance requires retrospective adjustment to each period presented. The adoption of ASU 2016-18 did not have an impact on the Condensed Consolidated Balance Sheet or the Statement of Income, but did result in revisions to the Condensed Consolidated Statement of Cash Flows as well as other revised disclosures. Prospective Accounting Changes – In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). This update improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. The guidance expands the ability to qualify for hedge accounting for non-financial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. The new guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance beginning September 1, 2019. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. Share Repurchase Program – The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock. In January 2019, the expiration date of this share repurchase program was extended from March 31, 2019 to March 31, 2021 and the amount remaining for repurchase was increased from $88 million to $100 million. 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 the Company to acquire any specific number of shares in any period. The Company did not repurchase any shares during the three and nine months ended May 31, 2019. As of May 31, 2019, the Company had cumulatively repurchased 3,206,226 shares for approximately $137.0 million since October 2013 and had $100.0 million available under the share repurchase program. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
May 31, 2019 | |
Revenue Recognition | Note 2 – Revenue Recognition The Company measures revenue at the amounts that reflect the consideration to which it expects to be entitled in exchange for transferring control of goods and services to customers. The Company recognizes 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. The Company’s contracts with customers may include multiple performance obligations (e.g. railcars, maintenance, management services, etc.). For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. The Company has disaggregated revenue from contracts with customers into categories which describe the principal activities from which the Company generates its revenues. See Note 15—Segment Information for further disaggregated revenue information. Manufacturing Railcars are manufactured in accordance with contracts with customers. The Company recognizes revenue upon its customers’ acceptance of the completed railcars at a specified delivery point. From time to time, the Company enters into multi-year supply agreements. Each railcar delivery is considered a distinct performance obligation, such that the amounts that are recognized as revenue following railcar delivery are generally not subject to change. The Company typically recognizes marine vessel manufacturing revenue 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 the Company’s performance in completing the construction of the marine vessel for the customer and is consistent with the percentage of completion method used prior to the adoption of the new revenue standard. Wheels, Repair & Parts The Company operates a network of wheel, repair and parts shops in North America that provide complete wheelset reconditioning, railcar repair services and parts. 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 the Company’s performance in repairing the railcars for the customer. Repair services are typically completed in less than 90 days. Leasing & Services The Company owns a fleet of new and used cars which are leased to third-party customers. Lease revenue is recognized over the lease-term in the period in which it is earned in accordance with ASC 840: Leases . Syndication transactions represent new and used railcars which have been placed on lease to a customer and which the Company intends to sell to an investor with the lease attached. At the time of such sale, revenue and cost of revenue associated with railcars that the Company has 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 them and subsequently sold, are recognized in the Leasing & Services segment in accordance with ASC 840: Leases . The Company enters into multi-year contracts to provide management and maintenance services to customers for which revenue is generally recognized ratably over the contract term as a stand-ready obligation. Costs to fulfill these contracts are recognized as incurred. Contract balances Contract assets primarily consist of unbilled receivables related to marine vessel construction and repair services, for which the respective contracts do not yet permit billing at the reporting date. 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 opening and closing balances of the Company’s contract balances are as follows: (in thousands) Balance sheet classification September 1, 2018 May 31, 2019 $ change Contract assets Inventories $ 7,228 $ 9,715 $ 2,487 Contract liabilities 1 Deferred revenue $ 41,250 $ 36,237 $ (5,013 ) 1 Contract liabilities balance includes deferred revenue within the scope of the new revenue standard. For the three and nine month periods ended May 31, 2019, the Company recognized $2.0 million and $10.6 million of revenue that was included in Contract liabilities as of September 1, 2018. Performance obligations As of May 31, 2019, 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) May 31, 2019 Revenue type 1 Manufacturing – Railcar sales $ 2,047.3 Manufacturing – Railcars intended for syndication 2 $ 669.5 Manufacturing – Marine $ 82.5 Services $ 130.4 1 Unsatisfied performance obligation related to Wheels, Repair & Parts revenue is not material 2 Not within the scope of the new revenue standard Based on current production and delivery schedules and existing contracts, approximately $1.8 billion of the Railcar Sales amount is expected to be recognized through fiscal 2020 while the remaining amount is expected in future periods. The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operation, 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 from 2019-2021 as vessel construction is completed. Services includes management and maintenance services of which approximately 54% are expected to be performed from 2019-2024 and the remaining amount ratably through 2037. |
Acquisitions
Acquisitions | 9 Months Ended |
May 31, 2019 | |
Acquisitions | Note 3 – Acquisitions On August 20, 2018, the Company entered into a dissolution agreement with Watco Companies, LLC, its previous joint venture partner, to discontinue their GBW Railcar Services railcar repair joint venture. Pursuant to the dissolution agreement, previously operated Greenbrier repair shops and associated employees returned to the Company. Additionally, the dissolution agreement provides that certain agreements entered into in connection with the original creation of GBW in 2014 were terminated as of the transaction date, including the leases of real and personal property, service agreements, and certain employment-related agreements. GBW will complete its cessation of activities in an orderly manner in fiscal 2019. As the assets received and liabilities assumed from GBW meet the definition of a business, the Company has accounted for this transaction as a business combination. The total net assets acquired were approximately $57.6 million. Additionally, the Company removed the book value of its remaining equity method investment in, and note receivable due from, the joint venture. The accumulated deficit reflected in GBW’s balance sheet as of August 31, 2018 continues to be funded by the joint venture partners. The Company has included this assumed liability within the purchase price allocation in the table below. For the nine months ended May 31, 2019, the Repair operations contributed by this acquisition generated consolidated revenues of $71.1 million and a loss from operations of $20.3 million, which are reported in the Company’s condensed consolidated financial statements as part of the Wheels, Repair & Parts segment. 10.0 The impact of the acquisition was not material to the Company’s results of operations, therefore pro forma financial information has not been included. Minor adjustments were made to the purchase price allocation during the three months ended May 31, 2019. The preliminary allocation of the purchase price, based on the fair value of the net assets acquired was: (in thousands) Cash and cash equivalents $ 5,000 Accounts receivable, net 12,230 Inventories 18,106 Property, plant and equipment, net 16,748 Intangibles and other assets, net 9,200 Goodwill 10,025 Total assets acquired 71,309 Accounts payable and accrued liabilities 13,679 Total liabilities assumed 13,679 Net assets acquired $ 57,630 Certain liabilities in the table above are estimates and the Company will adjust the purchase price allocation as they are settled. Pending acquisition of ARI’s manufacturing business On April 17, 2019, the Company entered into an agreement to acquire the manufacturing business of American Railcar Industries in a transaction valued at $400 million, after adjustments for net tax benefits valued at $30 million. The gross purchase price totals $ 430 30 50 |
Inventories
Inventories | 9 Months Ended |
May 31, 2019 | |
Inventories | Note 4 – Inventories Inventories are valued at the lower of cost (first-in, first-out) or market. Work-in-process includes material, labor and overhead. The following table summarizes the Company’s inventory balance: (In thousands) May 31, 2019 August 31, 2018 Manufacturing supplies and raw materials $ 367,744 $ 278,726 Work-in-process 130,573 105,021 Finished goods 99,646 54,181 Excess and obsolete adjustment (5,864 ) (5,614 ) $ 592,099 $ 432,314 |
Intangibles and Other Assets, n
Intangibles and Other Assets, net | 9 Months Ended |
May 31, 2019 | |
Intangibles and Other Assets, net | Note 5 – 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 thousands) May 31, 2019 August 31, 2018 Intangible assets subject to amortization: Customer relationships $ 72,625 $ 72,521 Accumulated amortization (46,580 ) (43,576 ) Other intangibles 15,713 16,300 Accumulated amortization (7,635 ) (6,400 ) 34,123 38,845 Intangible assets not subject to amortization 4,703 5,115 Prepaid and other assets 23,941 18,935 Nonqualified savings plan investments 27,141 26,299 Revolving notes issuance costs, net 3,464 1,824 Assets held for sale 3,650 3,650 Total Intangible and other assets, net $ 97,022 $ 94,668 Amortization expense for the three and nine months ended May 31, 2019 was $1.3 million and $4.6 million and for the three and nine months ended May 31, 2018 was $1.4 million and $4.2 million. Amortization expense for the years ending August 31, 2019, 2020, 2021, 2022 and 2023 is expected to be $5.8 million, $5.1 million, $5.1 million, $3.7 million and $3.5 million, respectively. |
Goodwill
Goodwill | 9 Months Ended |
May 31, 2019 | |
Goodwill | Note 6 – Goodwill Changes in the carrying value of goodwill are as follows: (In thousands) Manufacturing Wheels, Leasing Total Balance August 31, 2018 $ 27,083 $ 51,128 $ — $ 78,211 Additions (1) 5,122 2,162 — 7,284 Translation (1,152 ) — — (1,152 ) Goodwill impairment — (10,025 ) — (10,025 ) Balance May 31, 2019 $ 31,053 $ 43,265 $ — $ 74,318 (1) Additions to goodwill relate to the GBW repair shop transaction (Wheels, Repair & Parts) and Rayvag acquisition (Manufacturing). The inception to date of the Company’s gross goodwill balance, accumulated impairment losses and accumulated other reductions were as follows: (In thousands) Goodwill Gross goodwill balance before accumulated goodwill impairment losses and other reductions $ 236,868 Accumulated goodwill impairment losses (138,234 ) Accumulated other reductions (24,316 ) Balance May 31, 2019 $ 74,318 The Company performs a goodwill impairment test annually during the third quarter. Goodwill is also tested more frequently if changes in circumstances or the occurrence of events indicates that a potential impairment exists. The provisions of ASC 350, Intangibles—Goodwill and Other Based on the results of the Company’s annual impairment test, the fair values of its reporting units exceeded their carrying values except for the repair reporting unit. The Company initially recorded the repair goodwill following the GBW repair shop transaction in 2018. As a result of a greater number of shop closures than initially expected, near-term operational challenges and updated estimated future cash flows, a non-cash impairment charge of $ 10.0 |
Revolving Notes
Revolving Notes | 9 Months Ended |
May 31, 2019 | |
Revolving Notes | Note 7 – Revolving Notes Senior secured credit facilities, consisting of three components, aggregated to $692.7 million as of May 31, 2019. As of May 31, 2019, a $600.0 million revolving line of credit, maturing September 2023, secured by substantially all the Company’s assets in the U.S. not otherwise pledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this 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 inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios. As of May 31, 2019, lines of credit totaling $42.7 million secured by certain of the Company’s European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.1% to WIBOR plus 1.3% and Euro Interbank Offered Rate (EURIBOR) plus 1.1%, were available for working capital needs of the European manufacturing operations. The European lines of credit include a $12.5 million facility which is guaranteed by the Company. European credit facilities are continually being renewed. Currently, these European credit facilities have maturities that range from July February 2021 The Company’s Mexican railcar manufacturing joint venture has two lines of credit totaling $50.0 million. The first line of credit provides up to $30.0 million. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw against this facility through March 2024. The second line of credit provides up to $20.0 million, of which the Company and its joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2021. As of May 31, 2019, outstanding commitments under the senior secured credit facilities consisted of $23.9 million in letters of credit under the North American credit facility and $26.0 million outstanding under the European credit facilities. As of August 31, 2018, outstanding commitments under the senior secured credit facilities consisted of $72.2 million in letters of credit under the North American credit facility and $27.7 million outstanding under the European credit facilities. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
May 31, 2019 | |
Accounts Payable and Accrued Liabilities | Note 8 – Accounts Payable and Accrued Liabilities (In thousands) May 31, 2019 August 31, 2018 Trade payables $ 256,452 $ 226,405 Other accrued liabilities 93,905 73,273 Accrued payroll and related liabilities 88,653 105,111 Accrued warranty 23,965 27,395 Income taxes payable 7,645 4,771 Other 2,486 12,902 $ 473,106 $ 449,857 |
Warranty Accruals
Warranty Accruals | 9 Months Ended |
May 31, 2019 | |
Warranty Accruals | Note 9 – 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 May 31, Nine Months Ended May 31, (In thousands) 2019 2018 2019 2018 Balance at beginning of period $ 24,994 $ 26,977 $ 27,395 $ 20,737 Charged to cost of revenue, net 1,235 3,183 4,088 10,782 Payments (2,004 ) (1,855 ) (6,801 ) (3,695 ) Currency translation effect (260 ) (1,059 ) (717 ) (578 ) Balance at end of period $ 23,965 $ 27,246 $ 23,965 $ 27,246 |
Notes Payable
Notes Payable | 9 Months Ended |
May 31, 2019 | |
Notes Payable | Note 10 – Notes Payable In September 2018, the Company refinanced approximately $170 million of existing senior term debt, due in March 2020, secured by a pool of leased railcars with new 5-year $225 million senior term debt also secured by a pool of leased railcars. The new debt bears a floating interest rate of LIBOR plus 1.50% or Prime plus 0.50%. The term loan is to be repaid in equal quarterly installments of $1.97 million with the remaining outstanding amounts, plus accrued interest, to be paid on the maturity date in September 2023. An interest rate swap agreement was entered into on 50% of the initial balance to swap the floating interest rate to a fixed rate of 2.99%. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
May 31, 2019 | |
Accumulated Other Comprehensive Loss | Note 11 – Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following: (In thousands) Unrealized Gain (loss) on Derivative Financial Instruments Foreign Currency Translation Adjustment Other Accumulated Other Comprehensive Loss Balance, August 31, 2018 $ (431 ) $ (21,506 ) $ (1,429 ) $ (23,366 ) Other comprehensive gain (loss) before reclassifications (5,066 ) (7,239 ) 75 (12,230 ) Amounts reclassified from Accumulated other comprehensive loss 1,476 — — 1,476 Balance, May 31, 2019 $ (4,021 ) $ (28,745 ) $ (1,354 ) $ (34,120 ) The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with presentation location, were as follows: Three Months Ended May 31, (In thousands) 2019 2018 Financial Statement Location (Gain) loss on derivative financial instruments: Foreign exchange contracts $ 249 $ 71 Revenue and cost of revenue Interest rate swap contracts 142 39 Interest and foreign exchange 391 110 Total before tax (85 ) (51 ) Income tax expense $ 306 $ 59 Net of tax Nine Months Ended May 31, (In thousands) 2019 2018 Financial Statement Location (Gain) loss on derivative financial instruments: Foreign exchange contracts $ 1,506 $ (986 ) Revenue and cost of revenue Interest rate swap contracts 438 312 Interest and foreign exchange 1,944 (674 ) Total before tax (468 ) 68 Income tax expense $ 1,476 $ (606 ) Net of tax |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
May 31, 2019 | |
Earnings Per Share | Note 12 – Earnings Per Share The shares used in the computation of basic and diluted earnings per common share are reconciled as follows: Three Months Ended May 31, Nine Months Ended May 31, (In thousands ) 2019 2018 2019 2018 Weighted average basic common shares outstanding (1) 32,603 32,034 32,623 30,250 Dilutive effect of 2018 Convertible notes (2) n/a 655 n/a 2,435 Dilutive effect of 2024 Convertible notes (3) — — — — Dilutive effect of restricted stock units (4) 580 225 538 89 Weighted average diluted common shares outstanding 33,183 32,914 33,161 32,774 (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 the 2018 Convertible notes was included for the three and nine months ended May 31, 2018 as they were considered dilutive under the “if converted” method as further discussed below. The 2018 Convertible notes matured on April 1, 2018. (3) The dilutive effect of the 2024 Convertible notes was excluded for the three and nine months ended May 31, 2019 and 2018 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive. (4) 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 more dilutive of two approaches. The first approach includes the dilutive effect, using the treasury stock method, associated with shares underlying the 2024 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 approach supplements the first by including the “if converted” effect of the 2018 Convertible notes during the periods in which they were outstanding. Under the “if converted” method, debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes. The 2024 Convertible notes are included in the calculation of both approaches using the treasury stock method when the average stock price is greater than the applicable conversion price. Three Months Ended May 31, Nine Months Ended May 31, 2019 2018 2019 2018 Net earnings attributable to Greenbrier $ 15,248 $ 32,951 $ 35,969 $ 120,846 Add back: Interest and debt issuance costs on the 2018 Convertible notes, net of tax n/a 297 n/a 2,031 Earnings before interest and debt issuance costs on 2018 Convertible Notes n/a $ 33,248 n/a $ 122,877 Weighted average diluted common shares outstanding 33,183 32,914 33,161 32,774 Diluted earnings per share $ 0.46 $ 1.01 (1) $ 1.08 $ 3.75 (1) (1) Diluted earnings per share was calculated as follows: Earnings before interest and debt issuance costs (net of tax) on convertible notes Weighted average diluted common shares outstanding |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
May 31, 2019 | |
Stock Based Compensation | Note 13 – Stock Based Compensation 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 units, restricted stock and phantom stock units awards. Stock based compensation expense was $3.5 million and $10.8 million for the three and nine months ended May 31, 2019, respectively and $7.7 million and $20.3 million for the three and nine months ended May 31, 2018, respectively. Compensation expense is recorded in Selling and administrative expense and Cost of revenue on the Consolidated Statements of Income. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
May 31, 2019 | |
Derivative Instruments | Note 14 – 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 May 31, 2019 exchange rates, forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros and Pound Sterling; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $81.0 million. The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when there is a loss, or as Accounts receivable, net when there is a gain. As the contracts mature at various dates through March 2021, 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 May 31, 2019 exchange rates, approximately $0.1 million would be reclassified to revenue or cost of revenue in the next year. At May 31, 2019, an interest rate swap agreement maturing in September 2023 had a notional amount of $110.5 million. The fair value of the contract is included on the Consolidated Balance Sheets in Accounts payable and accrued liabilities when there is a loss, or in Accounts receivable, net when there is a gain. 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 May 31, 2019 interest rates, approximately $0.6 million would be reclassified to interest expense in the next year. Fair Values of Derivative Instruments Asset Derivatives Liability Derivatives May 31, August 31, May 31, August 31, (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 $ 1,083 $ 700 Accounts payable and accrued liabilities $ — $ 1,211 Interest rate swap contracts Accounts receivable, net — 781 Accounts payable and accrued liabilities 5,174 1 $ 1,083 $ 1,481 $ 5,174 $ 1,212 Derivatives not designated as hedging instruments Foreign forward exchange contracts Accounts receivable, net $ 106 $ 76 Accounts payable and accrued liabilities $ — $ 354 Interest rate swap contracts Accounts receivable, net — — Accounts payable and accrued liabilities 185 — $ 106 $ 76 $ 185 $ 354 The Effect of Derivative Instruments on the Statements of Income Three Months Ended May 31, 2019 Derivatives in cash flow hedging relationships Location of gain (loss) recognized in income on derivatives Gain (loss) recognized in income on 2019 2018 Foreign forward exchange contract Interest and foreign exchange $ — $ (852 ) Interest rate swap contracts Interest and foreign exchange — — $ — $ (852 ) Derivatives in cash flow hedging relationships Gain (loss) recognized Location of gain Gain (loss) reclassified Location of gain Gain (loss) recognized 2019 2018 2019 2018 2019 2018 Foreign forward exchange contracts $ 330 $ (2,285 ) Revenue $ (68 ) $ (168 ) Revenue $ 264 $ 190 Foreign forward exchange contracts 102 (343 ) Cost of revenue (181 ) 97 Cost of revenue 179 157 Interest rate swap contracts (2,704 ) 12 Interest and (143 ) (39 ) Interest and (163 ) — $ (2,272 ) $ (2,616 ) $ (392 ) $ (110 ) $ 280 $ 347 Nine Months Ended May 31, 2019 Derivatives in cash flow hedging relationships Location of gain (loss) recognized in income on derivatives Gain (loss) recognized in income on 2019 2018 Foreign forward exchange contract Interest and foreign exchange $ 495 $ 1,081 Interest rate swap contracts Interest and foreign exchange — (1 ) $ 495 $ 1,080 Derivatives in cash flow hedging relationships Gain (loss) recognized Location of gain Gain (loss) reclassified Location of gain Gain (loss) recognized 2019 2018 2019 2018 2019 2018 Foreign forward exchange contracts $ (16 ) $ (1,063 ) Revenue $ (735 ) $ 1,262 Revenue $ 1,164 $ 472 Foreign forward exchange contracts (293 ) (566 ) Cost of revenue (771 ) (276 ) Cost of revenue 857 353 Interest rate swap contracts (6,393 ) 1,485 Interest and (438 ) (312 ) Interest and (185 ) — $ (6,702 ) $ (144 ) $ (1,944 ) $ 674 $ 1,836 $ 825 |
Segment Information
Segment Information | 9 Months Ended |
May 31, 2019 | |
Segment Information | Note 15 – Segment Information The Company operates in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. Prior to August 20, 2018, the Company operated in four reportable segments: Manufacturing; Wheels, Repair & Parts; Leasing & Services; and GBW Joint Venture. On August 20, 2018 the Company entered into an agreement with its joint venture partner to discontinue the GBW railcar repair joint venture, which resulted in 12 repair shops returned to the Company. Beginning on August 20, 2018, the GBW Joint Venture is no longer considered a reportable segment. 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 2018 Annual Report on Form 10-K except for the revenue recognition accounting policy which has subsequently been updated (see Note 2 – Revenue Recognition). Performance is evaluated based on Earnings 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 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. The results of operations for the GBW Joint Venture are not reflected in the tables below as the investment was accounted for under the equity method of accounting. For the three months ended May 31, 2019: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 681,588 $ 29,201 $ 710,789 $ 72,110 $ 2,000 $ 74,110 Wheels, Repair & Parts 1 124,980 11,601 136,581 (8,820 ) 808 (8,012 ) Leasing & Services 49,584 5,848 55,432 15,337 4,913 20,250 Eliminations — (46,650 ) (46,650 ) — (7,721 ) (7,721 ) Corporate — — — (25,438 ) — (25,438 ) $ 856,152 $ — $ 856,152 $ 53,189 $ — $ 53,189 1 A non-cash impairment charge of $ 10.0 For the nine months ended May 31, 2019: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 1,629,396 $ 82,257 $ 1,711,653 $ 122,955 $ 4,791 $ 127,746 Wheels, Repair & Parts 1 358,801 36,440 395,241 (2,750 ) 262 (2,488 ) Leasing & Services 131,149 14,758 145,907 53,880 12,466 66,346 Eliminations — (133,455 ) (133,455 ) — (17,519 ) (17,519 ) Corporate — — — (66,388 ) — (66,388 ) $ 2,119,346 $ — $ 2,119,346 $ 107,697 $ — $ 107,697 1 A non-cash impairment charge of $ 10.0 For the three months ended May 31, 2018: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 510,099 $ 53,501 $ 563,600 $ 62,435 $ 6,215 $ 68,650 Wheels, Repair & Parts 94,515 10,879 105,394 5,546 686 6,232 Leasing & Services 36,773 3,886 40,659 26,704 3,380 30,084 Eliminations — (68,266 ) (68,266 ) — (10,281 ) (10,281 ) Corporate — — — (23,146 ) — (23,146 ) $ 641,387 $ — $ 641,387 $ 71,539 $ — $ 71,539 For the nine months ended May 31, 2018: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 1,473,411 $ 84,253 $ 1,557,664 $ 178,589 $ 13,816 $ 192,405 Wheels, Repair & Parts 261,236 27,563 288,799 13,083 2,214 15,297 Leasing & Services 95,611 9,855 105,466 71,008 8,546 79,554 Eliminations — (121,671 ) (121,671 ) — (24,576 ) (24,576 ) Corporate — — — (68,829 ) — (68,829 ) $ 1,830,258 $ — $ 1,830,258 $ 193,851 $ — $ 193,851 Total assets (In thousands) May 31, 2019 August 31, 2018 Manufacturing $ 1,143,718 $ 1,020,757 Wheels, Repair & Parts 307,630 306,756 Leasing & Services 650,483 578,818 Unallocated 411,357 559,133 $ 2,513,188 $ 2,465,464 Reconciliation of Earnings from operations to Earnings before income tax and loss from unconsolidated affiliates: Three Months Ended May 31, Nine Months Ended May 31, (In thousands) 2019 2018 2019 2018 Earnings from operations $ 53,189 $ 71,539 $ 107,697 $ 193,851 Interest and foreign exchange 9,770 6,533 23,411 20,582 Earnings before income tax and loss from unconsolidated affiliates $ 43,419 $ 65,006 $ 84,286 $ 173,269 |
Income Taxes
Income Taxes | 9 Months Ended |
May 31, 2019 | |
Income Taxes | Note 16 – Income Taxes The Company recognized the income tax effects of the Tax Cuts and Jobs Act (Tax Act) in accordance with Staff Accounting Bulletin No. 118 (SAB 118), which required the financial results to reflect effects for which the accounting is complete and those which are provisional. Provisional effects were adjusted during the measurement period determined under SAB 118 based on ongoing analysis of data, tax positions and regulatory guidance. The accounting was considered complete as of November 30, 2018. There were no material adjustments made to the provisional effects during 2019. The Tax Act also made other significant changes to U.S. federal income tax laws, including a global intangible low-taxed income tax (GILTI) and a base erosion anti-abuse tax (BEAT) which became effective for the Company beginning on September 1, 2018. Though the impact of GILTI and BEAT during the nine months ended May 31, 2019 was not material, those taxes were included in the projected effective tax rate for the current year. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
May 31, 2019 | |
Commitments and Contingencies | Note 17 – Commitments and Contingencies Portland Harbor Superfund Site The Company’s Portland, Oregon manufacturing facility 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 have not signed such consent, but nevertheless contributed money to the effort. The EPA-mandated RI/FS was produced by the LWG and cost over $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 16, 2020. The allocation process is continuing in parallel with the process to define the remediation steps. 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 billion. The EPA typically expects its cost estimates to be accurate within a range of -30% to +50%, but this ROD states that changes in costs are likely to occur as a result of new data it wants to collect over a 2-year period prior to final remedy design. The ROD identifies 13 Sediment Decision Units. One of the units, RM9W, includes the nearshore area of the river sediments offshore of the Company’s Portland, Oregon manufacturing facility 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, have agreed to help fund the additional sampling. The EPA has also requested that potentially responsible parties enter AOCs 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 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 its ownership of the Portland, Oregon manufacturing facility. Because these environmental investigations are still underway, including the collection of new pre-remedial design sampling data by EPA, 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 its Portland property. On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including the Company as well as the United States 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., The case has been stayed until January 16, 2020. Oregon Department of Environmental Quality (DEQ) Regulation of Portland Manufacturing Operations The Company has 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 the Company could incur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties. Other Litigation, Commitments and Contingencies 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 May 31, 2019, the Company had outstanding letters of credit aggregating to $23.9 million associated with performance guarantees, facility leases and workers compensation insurance. As of May 31, 2019, the Company had a $10.0 million note receivable from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a $19.2 million note receivable balance from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. These note receivables are included on the Consolidated Balance Sheet in Accounts receivable, net. In the future, the Company may make loans to or provide guarantees for Amsted-Maxion Cruzeiro or Greenbrier-Maxion. |
Fair Value Measures
Fair Value Measures | 9 Months Ended |
May 31, 2019 | |
Fair Value Measures | Note 18 – Fair Value Measures 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 May 31, 2019 were: (In thousands) Total Level 1 Level 2 (1) Level 3 Assets: Derivative financial instruments $ 1,189 $ — $ 1,189 $ — Nonqualified savings plan investments 27,141 27,141 — — Cash equivalents 82,756 82,756 — — $ 111,086 $ 109,897 $ 1,189 $ — Liabilities: Derivative financial instruments $ 5,359 $ — $ 5,359 $ — (1) Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 14—Derivative Instruments for further discussion. Assets and liabilities measured at fair value on a recurring basis as of August 31, 2018 were: (In thousands) Total Level 1 Level 2 Level 3 Assets: Derivative financial instruments $ 1,557 $ — $ 1,557 $ — Nonqualified savings plan investments 26,299 26,299 — — Cash equivalents 126,430 126,430 — — $ 154,286 $ 152,729 $ 1,557 $ — Liabilities: Derivative financial instruments $ 1,566 $ — $ 1,566 $ — |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
May 31, 2019 | |
Related Party Transactions | Note 19 – Related Party Transactions In June 2017, the Company purchased a 40% interest in the common equity of an entity that buys and sells railcar assets that are leased to third parties. The railcars sold to this leasing warehouse are principally built by Greenbrier. The Company accounts for this leasing warehouse investment under the equity method of accounting. As of May 31, 2019, the carrying amount of the investment was $5.8 million which is classified in Investment in unconsolidated affiliates in the Consolidated Balance Sheet. Upon sale of railcars to this entity from Greenbrier, 60% of the related revenue and margin is recognized and 40% is deferred until the railcars are ultimately sold by the entity. During the nine months ended May 31, 2019, the Company recognized $18 million in revenue associated with railcars sold into the leasing warehouse and an additional $6 million associated with railcars sold out of the leasing warehouse. The Company also provides administrative and remarketing services to this entity and earns management fees for these services which were immaterial for the nine months ended May 31, 2019. As of May 31, 2019, the Company had a $10.0 million note receivable from Amsted-Maxion Cruzeiro, its unconsolidated Brazilian castings and components manufacturer and a $19.2 million note receivable balance from Greenbrier-Maxion, its unconsolidated Brazilian railcar manufacturer. These note receivables are included on the Consolidated Balance Sheet in Accounts receivable, net. |
Subsequent Event
Subsequent Event | 9 Months Ended |
May 31, 2019 | |
Subsequent Event | Note 20 – Subsequent Event On June 3, 2019, the Company amended its $ 600.0 300.0 1.25 600.0 2.875 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
May 31, 2019 | |
Summary of Contract Balances | The opening and closing balances of the Company’s contract balances are as follows: (in thousands) Balance sheet classification September 1, 2018 May 31, 2019 $ change Contract assets Inventories $ 7,228 $ 9,715 $ 2,487 Contract liabilities 1 Deferred revenue $ 41,250 $ 36,237 $ (5,013 ) 1 Contract liabilities balance includes deferred revenue within the scope of the new revenue standard. |
Summary of Estimated Revenue Related to Performance Obligations Wholly or Partially Unsatisfied | 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) May 31, 2019 Revenue type 1 Manufacturing – Railcar sales $ 2,047.3 Manufacturing – Railcars intended for syndication 2 $ 669.5 Manufacturing – Marine $ 82.5 Services $ 130.4 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
May 31, 2019 | |
GBW Railcar Services LLC | |
Preliminary Allocation of Purchase Price Based on Fair Value of Net Assets Acquired | The preliminary allocation of the purchase price, based on the fair value of the net assets acquired was: (in thousands) Cash and cash equivalents $ 5,000 Accounts receivable, net 12,230 Inventories 18,106 Property, plant and equipment, net 16,748 Intangibles and other assets, net 9,200 Goodwill 10,025 Total assets acquired 71,309 Accounts payable and accrued liabilities 13,679 Total liabilities assumed 13,679 Net assets acquired $ 57,630 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
May 31, 2019 | |
Components of Inventories | Inventories are valued at the lower of cost (first-in, first-out) or market. Work-in-process includes material, labor and overhead. The following table summarizes the Company’s inventory balance: (In thousands) May 31, 2019 August 31, 2018 Manufacturing supplies and raw materials $ 367,744 $ 278,726 Work-in-process 130,573 105,021 Finished goods 99,646 54,181 Excess and obsolete adjustment (5,864 ) (5,614 ) $ 592,099 $ 432,314 |
Intangibles and Other Assets,_2
Intangibles and Other Assets, net (Tables) | 9 Months Ended |
May 31, 2019 | |
Identifiable Intangible and Other Assets | The following table summarizes the Company’s identifiable intangible and other assets balance: (In thousands) May 31, 2019 August 31, 2018 Intangible assets subject to amortization: Customer relationships $ 72,625 $ 72,521 Accumulated amortization (46,580 ) (43,576 ) Other intangibles 15,713 16,300 Accumulated amortization (7,635 ) (6,400 ) 34,123 38,845 Intangible assets not subject to amortization 4,703 5,115 Prepaid and other assets 23,941 18,935 Nonqualified savings plan investments 27,141 26,299 Revolving notes issuance costs, net 3,464 1,824 Assets held for sale 3,650 3,650 Total Intangible and other assets, net $ 97,022 $ 94,668 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
May 31, 2019 | |
Schedule of Changes in Carrying Value of Goodwill | Changes in the carrying value of goodwill are as follows: (In thousands) Manufacturing Wheels, Leasing Total Balance August 31, 2018 $ 27,083 $ 51,128 $ — $ 78,211 Additions (1) 5,122 2,162 — 7,284 Translation (1,152 ) — — (1,152 ) Goodwill impairment — (10,025 ) — (10,025 ) Balance May 31, 2019 $ 31,053 $ 43,265 $ — $ 74,318 (1) Additions to goodwill relate to the GBW repair shop transaction (Wheels, Repair & Parts) and Rayvag acquisition (Manufacturing). The inception to date of the Company’s gross goodwill balance, accumulated impairment losses and accumulated other reductions were as follows: (In thousands) Goodwill Gross goodwill balance before accumulated goodwill impairment losses and other reductions $ 236,868 Accumulated goodwill impairment losses (138,234 ) Accumulated other reductions (24,316 ) Balance May 31, 2019 $ 74,318 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
May 31, 2019 | |
Accounts Payable and Accrued Liabilities | (In thousands) May 31, 2019 August 31, 2018 Trade payables $ 256,452 $ 226,405 Other accrued liabilities 93,905 73,273 Accrued payroll and related liabilities 88,653 105,111 Accrued warranty 23,965 27,395 Income taxes payable 7,645 4,771 Other 2,486 12,902 $ 473,106 $ 449,857 |
Warranty Accruals (Tables)
Warranty Accruals (Tables) | 9 Months Ended |
May 31, 2019 | |
Warranty Accrual Activity | Warranty accrual activity: Three Months Ended May 31, Nine Months Ended May 31, (In thousands) 2019 2018 2019 2018 Balance at beginning of period $ 24,994 $ 26,977 $ 27,395 $ 20,737 Charged to cost of revenue, net 1,235 3,183 4,088 10,782 Payments (2,004 ) (1,855 ) (6,801 ) (3,695 ) Currency translation effect (260 ) (1,059 ) (717 ) (578 ) Balance at end of period $ 23,965 $ 27,246 $ 23,965 $ 27,246 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
May 31, 2019 | |
Components of Accumulated Other Comprehensive Loss, Net of Tax | Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following: (In thousands) Unrealized Gain (loss) on Derivative Financial Instruments Foreign Currency Translation Adjustment Other Accumulated Other Comprehensive Loss Balance, August 31, 2018 $ (431 ) $ (21,506 ) $ (1,429 ) $ (23,366 ) Other comprehensive gain (loss) before reclassifications (5,066 ) (7,239 ) 75 (12,230 ) Amounts reclassified from Accumulated other comprehensive loss 1,476 — — 1,476 Balance, May 31, 2019 $ (4,021 ) $ (28,745 ) $ (1,354 ) $ (34,120 ) |
Amounts Reclassified out of Accumulated Other Comprehensive Loss | The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with presentation location, were as follows: Three Months Ended May 31, (In thousands) 2019 2018 Financial Statement Location (Gain) loss on derivative financial instruments: Foreign exchange contracts $ 249 $ 71 Revenue and cost of revenue Interest rate swap contracts 142 39 Interest and foreign exchange 391 110 Total before tax (85 ) (51 ) Income tax expense $ 306 $ 59 Net of tax Nine Months Ended May 31, (In thousands) 2019 2018 Financial Statement Location (Gain) loss on derivative financial instruments: Foreign exchange contracts $ 1,506 $ (986 ) Revenue and cost of revenue Interest rate swap contracts 438 312 Interest and foreign exchange 1,944 (674 ) Total before tax (468 ) 68 Income tax expense $ 1,476 $ (606 ) Net of tax |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
May 31, 2019 | |
Reconciliation of Shares Used in Computation of Basic and Diluted Earnings Per Common Share | The shares used in the computation of basic and diluted earnings per common share are reconciled as follows: Three Months Ended May 31, Nine Months Ended May 31, (In thousands ) 2019 2018 2019 2018 Weighted average basic common shares outstanding (1) 32,603 32,034 32,623 30,250 Dilutive effect of 2018 Convertible notes (2) n/a 655 n/a 2,435 Dilutive effect of 2024 Convertible notes (3) — — — — Dilutive effect of restricted stock units (4) 580 225 538 89 Weighted average diluted common shares outstanding 33,183 32,914 33,161 32,774 (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 the 2018 Convertible notes was included for the three and nine months ended May 31, 2018 as they were considered dilutive under the “if converted” method as further discussed below. The 2018 Convertible notes matured on April 1, 2018. (3) The dilutive effect of the 2024 Convertible notes was excluded for the three and nine months ended May 31, 2019 and 2018 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive. (4) 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. |
Approach to Calculate Diluted Earning per Share | Three Months Ended May 31, Nine Months Ended May 31, 2019 2018 2019 2018 Net earnings attributable to Greenbrier $ 15,248 $ 32,951 $ 35,969 $ 120,846 Add back: Interest and debt issuance costs on the 2018 Convertible notes, net of tax n/a 297 n/a 2,031 Earnings before interest and debt issuance costs on 2018 Convertible Notes n/a $ 33,248 n/a $ 122,877 Weighted average diluted common shares outstanding 33,183 32,914 33,161 32,774 Diluted earnings per share $ 0.46 $ 1.01 (1) $ 1.08 $ 3.75 (1) (1) Diluted earnings per share was calculated as follows: Earnings before interest and debt issuance costs (net of tax) on convertible notes Weighted average diluted common shares outstanding |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
May 31, 2019 | |
Fair Values of Derivative Instruments | Fair Values of Derivative Instruments Asset Derivatives Liability Derivatives May 31, August 31, May 31, August 31, (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 $ 1,083 $ 700 Accounts payable and accrued liabilities $ — $ 1,211 Interest rate swap contracts Accounts receivable, net — 781 Accounts payable and accrued liabilities 5,174 1 $ 1,083 $ 1,481 $ 5,174 $ 1,212 Derivatives not designated as hedging instruments Foreign forward exchange contracts Accounts receivable, net $ 106 $ 76 Accounts payable and accrued liabilities $ — $ 354 Interest rate swap contracts Accounts receivable, net — — Accounts payable and accrued liabilities 185 — $ 106 $ 76 $ 185 $ 354 |
Effect of Derivative Instruments on the Statements of Income | The Effect of Derivative Instruments on the Statements of Income Three Months Ended May 31, 2019 Derivatives in cash flow hedging relationships Location of gain (loss) recognized in income on derivatives Gain (loss) recognized in income on 2019 2018 Foreign forward exchange contract Interest and foreign exchange $ — $ (852 ) Interest rate swap contracts Interest and foreign exchange — — $ — $ (852 ) Derivatives in cash flow hedging relationships Gain (loss) recognized Location of gain Gain (loss) reclassified Location of gain Gain (loss) recognized 2019 2018 2019 2018 2019 2018 Foreign forward exchange contracts $ 330 $ (2,285 ) Revenue $ (68 ) $ (168 ) Revenue $ 264 $ 190 Foreign forward exchange contracts 102 (343 ) Cost of revenue (181 ) 97 Cost of revenue 179 157 Interest rate swap contracts (2,704 ) 12 Interest and (143 ) (39 ) Interest and (163 ) — $ (2,272 ) $ (2,616 ) $ (392 ) $ (110 ) $ 280 $ 347 Nine Months Ended May 31, 2019 Derivatives in cash flow hedging relationships Location of gain (loss) recognized in income on derivatives Gain (loss) recognized in income on 2019 2018 Foreign forward exchange contract Interest and foreign exchange $ 495 $ 1,081 Interest rate swap contracts Interest and foreign exchange — (1 ) $ 495 $ 1,080 Derivatives in cash flow hedging relationships Gain (loss) recognized Location of gain Gain (loss) reclassified Location of gain Gain (loss) recognized 2019 2018 2019 2018 2019 2018 Foreign forward exchange contracts $ (16 ) $ (1,063 ) Revenue $ (735 ) $ 1,262 Revenue $ 1,164 $ 472 Foreign forward exchange contracts (293 ) (566 ) Cost of revenue (771 ) (276 ) Cost of revenue 857 353 Interest rate swap contracts (6,393 ) 1,485 Interest and (438 ) (312 ) Interest and (185 ) — $ (6,702 ) $ (144 ) $ (1,944 ) $ 674 $ 1,836 $ 825 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
May 31, 2019 | |
Results of Operations | For the three months ended May 31, 2019: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 681,588 $ 29,201 $ 710,789 $ 72,110 $ 2,000 $ 74,110 Wheels, Repair & Parts 1 124,980 11,601 136,581 (8,820 ) 808 (8,012 ) Leasing & Services 49,584 5,848 55,432 15,337 4,913 20,250 Eliminations — (46,650 ) (46,650 ) — (7,721 ) (7,721 ) Corporate — — — (25,438 ) — (25,438 ) $ 856,152 $ — $ 856,152 $ 53,189 $ — $ 53,189 1 A non-cash impairment charge of $ 10.0 For the nine months ended May 31, 2019: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 1,629,396 $ 82,257 $ 1,711,653 $ 122,955 $ 4,791 $ 127,746 Wheels, Repair & Parts 1 358,801 36,440 395,241 (2,750 ) 262 (2,488 ) Leasing & Services 131,149 14,758 145,907 53,880 12,466 66,346 Eliminations — (133,455 ) (133,455 ) — (17,519 ) (17,519 ) Corporate — — — (66,388 ) — (66,388 ) $ 2,119,346 $ — $ 2,119,346 $ 107,697 $ — $ 107,697 1 A non-cash impairment charge of $ 10.0 For the three months ended May 31, 2018: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 510,099 $ 53,501 $ 563,600 $ 62,435 $ 6,215 $ 68,650 Wheels, Repair & Parts 94,515 10,879 105,394 5,546 686 6,232 Leasing & Services 36,773 3,886 40,659 26,704 3,380 30,084 Eliminations — (68,266 ) (68,266 ) — (10,281 ) (10,281 ) Corporate — — — (23,146 ) — (23,146 ) $ 641,387 $ — $ 641,387 $ 71,539 $ — $ 71,539 For the nine months ended May 31, 2018: Revenue Earnings (loss) from operations (In thousands) External Intersegment Total External Intersegment Total Manufacturing $ 1,473,411 $ 84,253 $ 1,557,664 $ 178,589 $ 13,816 $ 192,405 Wheels, Repair & Parts 261,236 27,563 288,799 13,083 2,214 15,297 Leasing & Services 95,611 9,855 105,466 71,008 8,546 79,554 Eliminations — (121,671 ) (121,671 ) — (24,576 ) (24,576 ) Corporate — — — (68,829 ) — (68,829 ) $ 1,830,258 $ — $ 1,830,258 $ 193,851 $ — $ 193,851 Total assets (In thousands) May 31, 2019 August 31, 2018 Manufacturing $ 1,143,718 $ 1,020,757 Wheels, Repair & Parts 307,630 306,756 Leasing & Services 650,483 578,818 Unallocated 411,357 559,133 $ 2,513,188 $ 2,465,464 |
Reconciliation of Earnings from Operations to Earnings Before Income Tax and Loss from Unconsolidated Affiliates | Reconciliation of Earnings from operations to Earnings before income tax and loss from unconsolidated affiliates: Three Months Ended May 31, Nine Months Ended May 31, (In thousands) 2019 2018 2019 2018 Earnings from operations $ 53,189 $ 71,539 $ 107,697 $ 193,851 Interest and foreign exchange 9,770 6,533 23,411 20,582 Earnings before income tax and loss from unconsolidated affiliates $ 43,419 $ 65,006 $ 84,286 $ 173,269 |
Fair Value Measures (Tables)
Fair Value Measures (Tables) | 9 Months Ended |
May 31, 2019 | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of May 31, 2019 were: (In thousands) Total Level 1 Level 2 (1) Level 3 Assets: Derivative financial instruments $ 1,189 $ — $ 1,189 $ — Nonqualified savings plan investments 27,141 27,141 — — Cash equivalents 82,756 82,756 — — $ 111,086 $ 109,897 $ 1,189 $ — Liabilities: Derivative financial instruments $ 5,359 $ — $ 5,359 $ — (1) Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 14—Derivative Instruments for further discussion. Assets and liabilities measured at fair value on a recurring basis as of August 31, 2018 were: (In thousands) Total Level 1 Level 2 Level 3 Assets: Derivative financial instruments $ 1,557 $ — $ 1,557 $ — Nonqualified savings plan investments 26,299 26,299 — — Cash equivalents 126,430 126,430 — — $ 154,286 $ 152,729 $ 1,557 $ — Liabilities: Derivative financial instruments $ 1,566 $ — $ 1,566 $ — |
Interim Financial Statements -
Interim Financial Statements - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 68 Months Ended | ||
Sep. 02, 2018 | May 31, 2019 | May 31, 2019 | May 31, 2019 | Jan. 31, 2019 | Jan. 30, 2019 | |
Accounting Standards Update 2014-09 | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Increase to retained earnings | $ 5.5 | |||||
Share Repurchase Program - 2013 | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Remaining authorized repurchase amount | $ 100 | $ 100 | $ 100 | $ 100 | $ 88 | |
Stock repurchased during period, shares | 0 | 0 | ||||
Stock repurchase program total cost of repurchased shares | $ 137 | |||||
Repurchase of common stock, shares | 3,206,226 |
Revenue Recognition - Additiona
Revenue Recognition - Additional information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019USD ($) | May 31, 2019USD ($) | |||
Revenue From Contract With Customers [Line Items] | ||||
Revenue recognized from contract with customers liability | $ 2 | $ 10.6 | ||
Railcar sales | ||||
Revenue From Contract With Customers [Line Items] | ||||
Expected revenue recognized in the reminder of fiscal year | 1,800 | 1,800 | ||
Services | ||||
Revenue From Contract With Customers [Line Items] | ||||
Expected revenue recognized in the reminder of fiscal year | $ 130.4 | [1] | $ 130.4 | [1] |
Expected performance percentage | 54.00% | 54.00% | ||
Maximum | ||||
Revenue From Contract With Customers [Line Items] | ||||
Repair service period | 90 days | |||
[1] | Unsatisfied performance obligation related to Wheels, Repair & Parts revenue is not material |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Contract Balances (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2019 | Sep. 01, 2018 | |
Contract with Customer Asset and Liability [Line Items] | ||
Change in contract assets | $ 2,487 | |
Change in contract liabilities | (5,013) | |
Contract assets | 9,715 | $ 7,228 |
Contract liabilities | $ 36,237 | $ 41,250 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Estimated Revenue Related to Performance Obligations (Detail) $ in Millions | May 31, 2019USD ($) | |
Railcar sales | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue type 1 | $ 1,800 | |
Services | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue type 1 | 130.4 | [1] |
Manufacturing | Railcar sales | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue type 1 | 2,047.3 | [1] |
Manufacturing | Railcars for Syndication | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue type 1 | 669.5 | [1],[2] |
Manufacturing | Marine | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue type 1 | $ 82.5 | [1] |
[1] | Unsatisfied performance obligation related to Wheels, Repair & Parts revenue is not material | |
[2] | Not within the scope of the new revenue standard |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Apr. 17, 2019 | May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 20, 2018 | |||
Business Acquisition [Line Items] | ||||||||
Net assets acquired | $ 57,600 | |||||||
Revenue | $ 856,152 | $ 641,387 | $ 2,119,346 | $ 1,830,258 | ||||
Earnings (loss) from operations | 53,189 | 71,539 | 107,697 | 193,851 | ||||
Goodwill impairment | 10,000 | 10,025 | ||||||
Wheels, Repair & Parts | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue | 124,980 | [1] | 94,515 | 358,801 | [2] | 261,236 | ||
Earnings (loss) from operations | $ (8,820) | [1] | $ 5,546 | (2,750) | [2] | $ 13,083 | ||
Goodwill impairment | 10,025 | |||||||
Repair Operations | Wheels, Repair & Parts | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue | 71,100 | |||||||
Earnings (loss) from operations | $ 20,300 | |||||||
American Railcar Industries | ||||||||
Business Acquisition [Line Items] | ||||||||
Business combination estimated gross purchase price | $ 430,000 | |||||||
Business combination consideration transferred for capital expenditures | 30,000 | |||||||
Business combination consideration transferred Liabilities Incurred | 50,000 | |||||||
Related party transaction amounts of transaction | 400,000 | |||||||
Income tax credits and adjustments | $ 30,000 | |||||||
[1] | A non-cash impairment charge of $10.0 million was recorded during the three months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. | |||||||
[2] | A non-cash impairment charge of $10.0 million was recorded during the nine months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. |
Acquisitions - Preliminary Allo
Acquisitions - Preliminary Allocation of Purchase Price Based on Fair Value of Net Assets Acquired (Detail) - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 | Aug. 20, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 74,318 | $ 78,211 | |
Net assets acquired | $ 57,600 | ||
GBW Railcar Services LLC | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 5,000 | ||
Accounts receivable, net | 12,230 | ||
Inventories | 18,106 | ||
Property, plant and equipment, net | 16,748 | ||
Intangibles and other assets, net | 9,200 | ||
Goodwill | 10,025 | ||
Total assets acquired | 71,309 | ||
Accounts payable and accrued liabilities | 13,679 | ||
Total liabilities assumed | 13,679 | ||
Net assets acquired | $ 57,630 |
Inventories - Components of Inv
Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 |
Inventory [Line Items] | ||
Manufacturing supplies and raw materials | $ 367,744 | $ 278,726 |
Work-in-process | 130,573 | 105,021 |
Finished goods | 99,646 | 54,181 |
Excess and obsolete adjustment | (5,864) | (5,614) |
Inventories | $ 592,099 | $ 432,314 |
Intangibles and Other Assets,_3
Intangibles and Other Assets, Net - Identifiable Intangible and Other Assets (Detail) - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 |
Intangibles and Other Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Net, Total | $ 34,123 | $ 38,845 |
Intangible assets not subject to amortization | 4,703 | 5,115 |
Prepaid and other assets | 23,941 | 18,935 |
Nonqualified savings plan investments | 27,141 | 26,299 |
Revolving notes issuance costs, net | 3,464 | 1,824 |
Assets held for sale | 3,650 | 3,650 |
Total Intangible and other assets, net | 97,022 | 94,668 |
Customer Relationships | ||
Intangibles and Other Assets by Major Class [Line Items] | ||
Finite lived intangible assets gross | 72,625 | 72,521 |
Accumulated amortization | (46,580) | (43,576) |
Other Intangible Assets | ||
Intangibles and Other Assets by Major Class [Line Items] | ||
Finite lived intangible assets gross | 15,713 | 16,300 |
Accumulated amortization | $ (7,635) | $ (6,400) |
Intangibles and Other Assets,_4
Intangibles and Other Assets, Net - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Schedule of Intangible Assets Disclosure [Line Items] | ||||
Amortization expense | $ 1.3 | $ 1.4 | $ 4.6 | $ 4.2 |
Future amortization expense, 2019 | 5.8 | 5.8 | ||
Future amortization expense, 2020 | 5.1 | 5.1 | ||
Future amortization expense, 2021 | 5.1 | 5.1 | ||
Future amortization expense, 2022 | 3.7 | 3.7 | ||
Future amortization expense, 2023 | $ 3.5 | $ 3.5 |
Goodwill - Schedule of Changes
Goodwill - Schedule of Changes in Carrying Value of Goodwill (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |
May 31, 2019USD ($) | May 31, 2019USD ($) | ||
Goodwill [Line Items] | |||
Beginning balance | $ 78,211 | ||
Addition | 7,284 | [1] | |
Translation | (1,152) | ||
Goodwill impairment | $ (10,000) | (10,025) | |
Ending balance | 74,318 | 74,318 | |
Gross goodwill balance before accumulated goodwill impairment losses and other reductions | 236,868 | 236,868 | |
Accumulated goodwill impairment losses | (138,234) | (138,234) | |
Accumulated other reductions | (24,316) | (24,316) | |
Manufacturing | |||
Goodwill [Line Items] | |||
Beginning balance | 27,083 | ||
Addition | 5,122 | [1] | |
Translation | (1,152) | ||
Ending balance | 31,053 | 31,053 | |
Wheels, Repair & Parts | |||
Goodwill [Line Items] | |||
Beginning balance | 51,128 | ||
Addition | 2,162 | [1] | |
Goodwill impairment | (10,025) | ||
Ending balance | $ 43,265 | $ 43,265 | |
[1] | Additions to goodwill relate to the GBW repair shop transaction (Wheels, Repair & Parts) and Rayvag acquisition (Manufacturing). |
Goodwill - Additional Informati
Goodwill - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
May 31, 2019 | May 31, 2019 | |
Goodwill impairment | $ 10,000 | $ 10,025 |
Revolving Notes - Additional In
Revolving Notes - Additional Information (Detail) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | May 31, 2019USD ($)FacilityCreditFacility | Aug. 31, 2018USD ($) | |
Line of Credit Facility [Line Items] | |||
Number of lines of credits | CreditFacility | 2 | ||
Long-term Line of Credit | $ 25,952 | $ 27,725 | |
LIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 1.50% | ||
Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 0.50% | ||
Senior Secured Credit Facilities, Consisting of 3 Components | |||
Line of Credit Facility [Line Items] | |||
Number of senior secured credit facilities | Facility | 3 | ||
Line of credit facility maximum capacity | $ 692,700 | ||
Letter of credit facility outstanding amount | 23,900 | 72,200 | |
Revolving Line of Credit, 1st Component of Senior Secured Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility maximum capacity | $ 600,000 | ||
Line of credit maturity date | 2023-09 | ||
Revolving Line of Credit, 1st Component of Senior Secured Credit Facilities | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 1.50% | ||
Revolving Line of Credit, 1st Component of Senior Secured Credit Facilities | Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 0.50% | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility maximum capacity | $ 42,700 | ||
Letter of credit facility outstanding amount | 26,000 | $ 27,700 | |
Long-term Line of Credit | $ 12,500 | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | Minimum | |||
Line of Credit Facility [Line Items] | |||
Line of credit maturity date | 2019-07 | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | Maximum | |||
Line of Credit Facility [Line Items] | |||
Line of credit maturity date | 2021-02 | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | WIBOR | Minimum | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 1.10% | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | WIBOR | Maximum | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 1.30% | ||
European Line of Credit, 2nd Component of Senior Secured Credit Facilities | EURIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 1.10% | ||
Mexican Railcar Manufacturing Joint Venture Line of Credit, 3rd Component of Senior Secured Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility maximum capacity | $ 50,000 | ||
Mexican Railcar Manufacturing Joint Venture Line of Credit 1, 3rd Component of Senior Secured Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility maximum capacity | $ 30,000 | ||
Line of credit facility borrowings outstanding due period | 2024-03 | ||
Mexican Railcar Manufacturing Joint Venture Line of Credit 1, 3rd Component of Senior Secured Credit Facilities | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 2.00% | ||
Mexican Railcar Manufacturing Joint Venture Line of Credit 2, 3rd Component of Senior Secured Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility maximum capacity | $ 20,000 | ||
Line of credit facility borrowings outstanding due period | 2021-06 | ||
Joint venture partner each guaranteed percentage | 50.00% | ||
Mexican Railcar Manufacturing Joint Venture Line of Credit 2, 3rd Component of Senior Secured Credit Facilities | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, percentage points added to the reference rate | 2.00% |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities - Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands | May 31, 2019 | Feb. 28, 2019 | Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Aug. 31, 2017 |
Accounts Payable and Accrued Liabilities [Line Items] | ||||||
Trade payables | $ 256,452 | $ 226,405 | ||||
Other accrued liabilities | 93,905 | 73,273 | ||||
Accrued payroll and related liabilities | 88,653 | 105,111 | ||||
Accrued warranty | 23,965 | $ 24,994 | 27,395 | $ 27,246 | $ 26,977 | $ 20,737 |
Income taxes payable | 7,645 | 4,771 | ||||
Other | 2,486 | 12,902 | ||||
Accounts payable and accrued liabilities | $ 473,106 | $ 449,857 |
Warranty Accruals - Warranty Ac
Warranty Accruals - Warranty Accruals Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Product Liability Contingency [Line Items] | ||||
Balance at beginning of period | $ 24,994 | $ 26,977 | $ 27,395 | $ 20,737 |
Charged to cost of revenue, net | 1,235 | 3,183 | 4,088 | 10,782 |
Payments | (2,004) | (1,855) | (6,801) | (3,695) |
Currency translation effect | (260) | (1,059) | (717) | (578) |
Balance at end of period | $ 23,965 | $ 27,246 | $ 23,965 | $ 27,246 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Detail) $ in Thousands | 1 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Instrument [Line Items] | |
Periodic payment | $ 1,970 |
Swap agreement interest rate | 50.00% |
Fixed interest rate | 2.99% |
Senior Term Debt | |
Debt Instrument [Line Items] | |
Senior term debt | $ 170,000 |
5 Year Senior Term Debt | |
Debt Instrument [Line Items] | |
Senior term debt | $ 225,000 |
LIBOR | |
Debt Instrument [Line Items] | |
Debt instrument, percentage points added to the reference rate | 1.50% |
Prime Rate | |
Debt Instrument [Line Items] | |
Debt instrument, percentage points added to the reference rate | 0.50% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss, Net of Tax (Detail) $ in Thousands | 9 Months Ended |
May 31, 2019USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | $ 1,250,101 |
Ending balance | 1,262,315 |
Unrealized Gain (Loss) on Derivative Financial Instruments | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (431) |
Other comprehensive gain (loss) before reclassifications | (5,066) |
Amounts reclassified from Accumulated other comprehensive loss | 1,476 |
Ending balance | (4,021) |
Foreign Currency Translation Adjustment | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (21,506) |
Other comprehensive gain (loss) before reclassifications | (7,239) |
Ending balance | (28,745) |
Other | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (1,429) |
Other comprehensive gain (loss) before reclassifications | 75 |
Ending balance | (1,354) |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (23,366) |
Other comprehensive gain (loss) before reclassifications | (12,230) |
Amounts reclassified from Accumulated other comprehensive loss | 1,476 |
Ending balance | $ (34,120) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Amounts Reclassified out of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Interest and foreign exchange | $ 9,770 | $ 6,533 | $ 23,411 | $ 20,582 |
Total before tax | (43,419) | (65,006) | (84,286) | (173,269) |
Income tax expense | 13,008 | 15,944 | 24,391 | 22,778 |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Total before tax | 391 | 110 | 1,944 | (674) |
Income tax expense | (85) | (51) | (468) | 68 |
Net of tax | 306 | 59 | 1,476 | (606) |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | Foreign Exchange Contracts | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Revenue and Cost of revenue | 249 | 71 | 1,506 | (986) |
Unrealized (Gain) Loss on Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive loss | Interest rate swap contracts | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Interest and foreign exchange | $ 142 | $ 39 | $ 438 | $ 312 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Shares Used in Computation of Basic and Diluted Earnings Per Common Share (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | ||
Earnings Per Share Disclosure [Line Items] | |||||
Weighted average basic common shares outstanding | [1] | 32,603 | 32,034 | 32,623 | 30,250 |
Dilutive effect of restricted stock units | [2] | 580 | 225 | 538 | 89 |
Weighted average diluted common shares outstanding | 33,183 | 32,914 | 33,161 | 32,774 | |
2018 Senior Notes | |||||
Earnings Per Share Disclosure [Line Items] | |||||
Dilutive effect of convertible notes | [3] | 655 | 2,435 | ||
2024 Senior Notes | |||||
Earnings Per Share Disclosure [Line Items] | |||||
Dilutive effect of convertible notes | [4] | 0 | 0 | 0 | 0 |
[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] | 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. | ||||
[3] | The dilutive effect of the 2018 Convertible notes was included for the three and nine months ended May 31, 2018 as they were considered dilutive under the “if converted” method as further discussed below. The 2018 Convertible notes matured on April 1, 2018. | ||||
[4] | The dilutive effect of the 2024 Convertible notes was excluded for the three and nine months ended May 31, 2019 and 2018 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive. |
Earnings Per Share - Approach t
Earnings Per Share - Approach to Calculate Diluted Earning Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net earnings attributable to Greenbrier | $ 15,248 | $ 32,951 | $ 35,969 | $ 120,846 |
Weighted average diluted common shares outstanding | 33,183 | 32,914 | 33,161 | 32,774 |
Diluted earnings per share | $ 0.46 | $ 1.01 | $ 1.08 | $ 3.75 |
2018 Senior Notes | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Interest and debt issuance costs on the 2018 Convertible notes, net of tax | $ 297 | $ 2,031 | ||
Earnings before interest and debt issuance costs on 2018 Convertible Notes | $ 33,248 | $ 122,877 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items] | ||||
Stock based compensation expense | $ 3,500 | $ 7,700 | $ 10,792 | $ 20,311 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) | 9 Months Ended |
May 31, 2019USD ($) | |
Foreign Exchange Contracts | |
Derivative [Line Items] | |
Aggregate derivative notional amount | $ 81,000,000 |
Amount reclassified to revenue or cost of revenue in the next year | 100,000 |
Interest rate swap contracts | |
Derivative [Line Items] | |
Aggregate derivative notional amount | $ 110,500,000 |
Maturity date | 2023-09 |
Unrealized pre-tax gain (loss) that would be reclassified to interest expense in the next year | $ 600,000 |
Derivative Instruments - Fair V
Derivative Instruments - Fair Values of Derivative Instruments (Detail) - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 1,189 | $ 1,557 |
Liability Derivatives | 5,359 | 1,566 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 1,083 | 1,481 |
Liability Derivatives | 5,174 | 1,212 |
Designated as Hedging Instrument | Foreign Exchange Contracts | Accounts Receivable | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 1,083 | 700 |
Designated as Hedging Instrument | Foreign Exchange Contracts | Accounts Payable and Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 0 | 1,211 |
Designated as Hedging Instrument | Interest rate swap contracts | Accounts Receivable | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 781 |
Designated as Hedging Instrument | Interest rate swap contracts | Accounts Payable and Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 5,174 | 1 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 106 | 76 |
Liability Derivatives | 185 | 354 |
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Accounts Receivable | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 106 | 76 |
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Accounts Payable and Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 0 | 354 |
Not Designated as Hedging Instrument | Interest rate swap contracts | Accounts Receivable | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 0 |
Not Designated as Hedging Instrument | Interest rate swap contracts | Accounts Payable and Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 185 | $ 0 |
Derivative Instruments - Effect
Derivative Instruments - Effect of Derivative Instruments on Statements of Income (Detail) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income on derivatives | $ 0 | $ (852) | $ 495 | $ 1,080 |
Gain (loss) recognized in OCI on derivatives (effective portion) | (2,272) | (2,616) | (6,702) | (144) |
Gain (loss) reclassified accumulated OCI income (effective portion) | (392) | (110) | (1,944) | 674 |
Gain (loss) recognized on derivative (ineffective portion and amount excluded from effectiveness testing) | 280 | 347 | 1,836 | 825 |
Foreign Exchange Forward | Interest and Foreign Exchange | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income on derivatives | 0 | (852) | 495 | 1,081 |
Foreign Exchange Forward | Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in OCI on derivatives (effective portion) | 330 | (2,285) | (16) | (1,063) |
Gain (loss) reclassified accumulated OCI income (effective portion) | (68) | (168) | (735) | 1,262 |
Gain (loss) recognized on derivative (ineffective portion and amount excluded from effectiveness testing) | 264 | 190 | 1,164 | 472 |
Foreign Exchange Forward | Cost Of Revenue | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in OCI on derivatives (effective portion) | 102 | (343) | (293) | (566) |
Gain (loss) reclassified accumulated OCI income (effective portion) | (181) | 97 | (771) | (276) |
Gain (loss) recognized on derivative (ineffective portion and amount excluded from effectiveness testing) | 179 | 157 | 857 | 353 |
Interest rate swap contracts | Interest and Foreign Exchange | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income on derivatives | 0 | 0 | 0 | (1) |
Gain (loss) recognized in OCI on derivatives (effective portion) | (2,704) | 12 | (6,393) | 1,485 |
Gain (loss) reclassified accumulated OCI income (effective portion) | (143) | (39) | (438) | $ (312) |
Gain (loss) recognized on derivative (ineffective portion and amount excluded from effectiveness testing) | $ (163) | $ 0 | $ (185) |
Segment Information - Additiona
Segment Information - Additional Information (Detail) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Aug. 20, 2018FacilitySegment | Aug. 19, 2018Segment | May 31, 2019USD ($) | May 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | Segment | 3 | 4 | ||
Number of railcars repair shops returned to business | Facility | 12 | |||
Goodwill impairment | $ | $ 10,000 | $ 10,025 |
Segment Information - Segments
Segment Information - Segments Internal Financial Reports (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |||
Segment Reporting Information [Line Items] | |||||||
Revenues | $ 856,152 | $ 641,387 | $ 2,119,346 | $ 1,830,258 | |||
Earnings (loss) from operations | 53,189 | 71,539 | 107,697 | 193,851 | |||
Assets | 2,513,188 | 2,513,188 | $ 2,465,464 | ||||
Manufacturing | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 681,588 | 510,099 | 1,629,396 | 1,473,411 | |||
Earnings (loss) from operations | 72,110 | 62,435 | 122,955 | 178,589 | |||
Wheels, Repair & Parts | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 124,980 | [1] | 94,515 | 358,801 | [2] | 261,236 | |
Earnings (loss) from operations | (8,820) | [1] | 5,546 | (2,750) | [2] | 13,083 | |
Leasing & Services | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 49,584 | 36,773 | 131,149 | 95,611 | |||
Earnings (loss) from operations | 15,337 | 26,704 | 53,880 | 71,008 | |||
Operating Segments | Manufacturing | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 710,789 | 563,600 | 1,711,653 | 1,557,664 | |||
Earnings (loss) from operations | 74,110 | 68,650 | 127,746 | 192,405 | |||
Assets | 1,143,718 | 1,143,718 | 1,020,757 | ||||
Operating Segments | Wheels, Repair & Parts | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 136,581 | [1] | 105,394 | 395,241 | [2] | 288,799 | |
Earnings (loss) from operations | (8,012) | [1] | 6,232 | (2,488) | [2] | 15,297 | |
Assets | 307,630 | 307,630 | 306,756 | ||||
Operating Segments | Leasing & Services | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 55,432 | 40,659 | 145,907 | 105,466 | |||
Earnings (loss) from operations | 20,250 | 30,084 | 66,346 | 79,554 | |||
Assets | 650,483 | 650,483 | 578,818 | ||||
Operating Segments | Unallocated Amount to Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 411,357 | 411,357 | $ 559,133 | ||||
Intersegment Eliminations | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | (46,650) | (68,266) | (133,455) | (121,671) | |||
Earnings (loss) from operations | (7,721) | (10,281) | (17,519) | (24,576) | |||
Intersegment Eliminations | Manufacturing | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 29,201 | 53,501 | 82,257 | 84,253 | |||
Earnings (loss) from operations | 2,000 | 6,215 | 4,791 | 13,816 | |||
Intersegment Eliminations | Wheels, Repair & Parts | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 11,601 | [1] | 10,879 | 36,440 | [2] | 27,563 | |
Earnings (loss) from operations | 808 | [1] | 686 | 262 | [2] | 2,214 | |
Intersegment Eliminations | Leasing & Services | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 5,848 | 3,886 | 14,758 | 9,855 | |||
Earnings (loss) from operations | 4,913 | 3,380 | 12,466 | 8,546 | |||
Corporate, Non-Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 0 | 0 | |||||
Earnings (loss) from operations | $ (25,438) | $ (23,146) | $ (66,388) | $ (68,829) | |||
[1] | A non-cash impairment charge of $10.0 million was recorded during the three months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. | ||||||
[2] | A non-cash impairment charge of $10.0 million was recorded during the nine months ended May 31, 2019 related to the Company’s repair reporting unit. See Note 6 – Goodwill for additional information. |
Segment Information - Reconcili
Segment Information - Reconciliation of Earnings from Operations to Earnings Before Income Tax and Loss from Unconsolidated Affiliates (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Earnings from operations | $ 53,189 | $ 71,539 | $ 107,697 | $ 193,851 |
Interest and foreign exchange | 9,770 | 6,533 | 23,411 | 20,582 |
Earnings before income tax and loss from unconsolidated affiliates | $ 43,419 | $ 65,006 | $ 84,286 | $ 173,269 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Jan. 06, 2017USD ($)Segment | Dec. 31, 2016USD ($) | May 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Line Items] | |||
Remedial investigation and feasibility study | $ 110,000,000 | ||
Performance Guarantee | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Letter of credit facility outstanding amount | $ 23,900,000 | ||
Portland Harbor Site | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Number of sediment decision units | Segment | 13 | ||
Estimated undiscounted cost | $ 1,700,000,000 | ||
Period for remedial action | 13 years | ||
Period for monitoring | 30 years | ||
New data collection period to reflect actual cost prior to final remedy design | 2 years | ||
Portland Harbor Site | Minimum | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Accuracy of cost estimate | 30.00% | ||
Portland Harbor Site | Maximum | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Accuracy of cost estimate | 50.00% | ||
Amsted-Maxion Cruzeiro | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Note receivable | 10,000,000 | ||
Greenbrier-Maxion | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Note receivable | $ 19,200,000 |
Fair Value Measures - Assets an
Fair Value Measures - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | May 31, 2019 | Aug. 31, 2018 | |
Assets: | |||
Derivative financial instruments | $ 1,189 | $ 1,557 | |
Nonqualified savings plan investments | 27,141 | 26,299 | |
Cash equivalents | 82,756 | 126,430 | |
Assets, Fair Value Disclosure, Total | 111,086 | 154,286 | |
Liabilities: | |||
Derivative financial instruments | 5,359 | 1,566 | |
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | |||
Assets: | |||
Nonqualified savings plan investments | 27,141 | 26,299 | |
Cash equivalents | 82,756 | 126,430 | |
Assets, Fair Value Disclosure, Total | 109,897 | 152,729 | |
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | |||
Assets: | |||
Derivative financial instruments | 1,189 | [1] | 1,557 |
Assets, Fair Value Disclosure, Total | 1,189 | [1] | 1,557 |
Liabilities: | |||
Derivative financial instruments | $ 5,359 | [1] | $ 1,566 |
[1] | Level 2 assets and liabilities include derivative financial instruments that are valued based on observable inputs. See Note 14 - Derivative Instruments for further discussion. |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | |
May 31, 2019 | Jun. 30, 2017 | |
Related Party Transaction [Line Items] | ||
Carrying amount of investment in unconsolidated affiliates | $ 5.8 | |
Percentage of recognized revenue and margin from sale | 60.00% | |
Percentage of deferred revenue and margin from sale | 40.00% | |
Revenue recognize from railcars sold | $ 18 | |
Leasing Warehouse | ||
Related Party Transaction [Line Items] | ||
Revenue recognize from railcars sold | 6 | |
Greenbrier | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership in entity | 40.00% | |
Amsted-Maxion Cruzeiro | ||
Related Party Transaction [Line Items] | ||
Note receivable | 10 | |
Greenbrier-Maxion | ||
Related Party Transaction [Line Items] | ||
Note receivable | $ 19.2 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - Amended Line Of Credit Facility [Member] - Subsequent Event [Member] $ in Millions | Jun. 03, 2019USD ($) |
Amended Line Of Credit Facility Maximum Borrowing Capacity | $ 600 |
Line of credit facility expiration date description | The Amended Credit Facility (including the Term Loan) matures on June 3, 2024, unless Greenbrier’s currently outstanding 2.875% convertible senior notes remain outstanding as of November 1, 2023, in which case the Amended Credit Facility matures on November 1, 2023. |
Term Loan [Member] | |
Term loan capacity available to borrow | $ 300 |
Term loan variable rate of interest | 1.25% |