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What changed in GREENBRIER COMPANIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GREENBRIER COMPANIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+335 added−309 removedSource: 10-K (2023-10-25) vs 10-K (2022-10-31)

Top changes in GREENBRIER COMPANIES INC's 2023 10-K

335 paragraphs added · 309 removed · 223 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+19 added−21 removed26 unchanged
Biggest changeWe periodically make advance purchases to avoid possible shortages of material due to capacity limitations of component suppliers, shipping and transportation delays and possible price increases. In 2022, the top ten suppliers for all inventory purchases accounted for approximately 49% of total purchases. The top two suppliers accounted for 16% and 10% of total inventory purchases in 2022.
Biggest changeWe operate a replacement parts business which aids in our vertical integration and we continue to pursue strategic opportunities to protect and enhance our supply chain. We periodically make advance purchases to avoid possible shortages of material due to capacity limitations of component suppliers, shipping and transportation delays and possible price increases.
We provide our customers with a diverse range of equipment and financing alternatives designed to satisfy each customer’s unique needs, whether the customer is buying new equipment, sustainable conversion of existing equipment or seeking to outsource the maintenance or management of equipment. These custom programs may involve a combination of railcar products, leasing, sustainable conversions and remarketing services.
We provide our customers with a diverse range of equipment, services and financing alternatives designed to satisfy each customer’s unique needs, whether the customer is buying new equipment, sustainable conversion of existing equipment or seeking to outsource the maintenance or management of equipment. These custom programs may involve a combination of railcar products, leasing, sustainable conversions and remarketing services.
Based on the investigation to date, we believe that we did not contribute in any material way to contaminants of concern in the river sediments or the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to its property precedes our ownership of the Portland Property.
Based on the investigation to date, we believe that we did not contribute in any material way to contaminants of concern in the river sediments or the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to the Portland Property precedes our ownership of the Portland Property.
The EPA requested that potentially responsible parties enter AOCs during 2019 agreeing to conduct remedial design studies. Some parties have signed AOCs, including one party with respect to RM9W which includes the area offshore of our Portland Property.
The EPA requested that potentially responsible parties enter AOCs during 2019 agreeing to conduct remedial design studies. Some parties have signed AOCs, including one party with respect to RM9W which includes the area offshore of the Portland Property.
In all other countries, we conform to country specific regulations where applicable. 11 Additional Information We are a public reporting company and file annual, quarterly, current and special reports, proxy statements and other information with the SEC.
In all other countries, we conform to country specific regulations where applicable. Additional Information We are a public reporting company and file annual, quarterly, current and special reports, proxy statements and other information with the SEC.
We operate an integrated business model in North America that combines freight car manufacturing, wheel services, railcar maintenance, component parts, leasing and fleet management services. Our model is designed to provide customers with a comprehensive set of freight car solutions by utilizing our substantial engineering, mechanical and technical capabilities as well as our experienced commercial personnel.
We operate an integrated business model in North America that combines freight car manufacturing, wheel services, railcar maintenance, component parts, leasing and fleet management services. Our model is designed to provide customers with a comprehensive set of freight car product and service solutions by utilizing our substantial engineering, mechanical and technical capabilities as well as our experienced commercial personnel.
Our management services business is responsible for a majority of the maintenance and administration of our fleet of railcars. 5 Unconsolidated Affiliates U.S. Axle Manufacturing - We have a 41.9% interest in Axis, LLC (Axis), a joint venture that manufactures and sells axles to its joint venture partners for use and distribution both domestically and internationally.
Our management services business is responsible for the maintenance and administration of our fleet of railcars. Unconsolidated Affiliates U.S. Axle Manufacturing - We have a 41.9% interest in Axis, LLC (Axis), a joint venture that manufactures and sells axles to its joint venture partners for use and distribution both domestically and internationally.
Environmental studies have been conducted on certain of our owned and leased properties that indicate additional investigation and some remediation on certain properties may be necessary. 9 Portland Harbor Superfund Site Our Portland, Oregon manufacturing facility (the Portland Property) is located adjacent to the Willamette River. In December 2000, the U.S.
Environmental studies have been conducted on certain of our owned and leased properties that indicate additional investigation and some remediation on certain properties may be necessary. Portland Harbor Superfund Site Our former Portland, Oregon manufacturing facility (the Portland Property) is located adjacent to the Willamette River. In December 2000, the U.S.
Our integrated model allows us to develop cross-selling opportunities and synergies among our various business segments thereby enhancing our margins. We believe our integrated model is difficult to duplicate and provides greater value for our customers and investors. We operate in three reportable segments: Manufacturing; Maintenance Services; and Leasing & Management Services.
Our integrated model allows us to develop cross-selling opportunities and synergies among our various operating segments thereby enhancing our margins. We believe our integrated model is difficult to duplicate and provides greater value for our customers and investors. We operate in three reportable segments: Manufacturing; Maintenance Services; and Leasing & Management Services.
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. The EPA has identified 15 Sediment Decision Units within the ROD cleanup area.
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. The EPA has identified several Sediment Decision Units within the ROD cleanup area.
We also produce a wide range of boxcars, which are used in the transport of paper products, perishables and general merchandise. Our flat car products include center partition cars for the forest products industry and heavy-duty flat cars. Tank Cars - We produce a variety of tank cars, including general purpose, pressurized, and stainless steel.
We also produce a wide range of boxcars, which are used in the transport of paper products, perishables and general merchandise. Our flat car products include center partition cars for the forest products industry and heavy-duty flat cars. Tank Cars - We produce a variety of tank cars, including general purpose, pressurized, coiled, lined, insulated and stainless steel.
One of the units, RM9W, includes the nearshore area of the river sediments offshore of the Portland Property as well as downstream of the facility. It also includes a portion of our company’s riverbank. The ROD does not break down total remediation costs by Sediment Decision Unit.
One of the units, RM9W, includes the nearshore area of the river sediments offshore of the Portland Property as well as downstream of the facility. It also includes a portion of the Portland Property's riverbank. The ROD does not break down total remediation costs by Sediment Decision Unit.
All such filings are available free of charge. Copies of our Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines and Code of Business Conduct and Ethics are also available on our web site at http://www.gbrx.com .
All such filings are available free of charge. Copies of our Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines and Code of Business Conduct and Ethics are also available on our website at http://www.gbrx.com .
Financial information about our business segments as well as geographic information is located in Note 18 - Segment Information to our Consolidated Financial Statements. The Greenbrier Companies, Inc., is incorporated in Oregon. Our principal executive offices are located at One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035.
Financial information about our reportable segments as well as geographic information is located in Note 19 - Segment Information to our Consolidated Financial Statements. The Greenbrier Companies, Inc., is incorporated in Oregon. Our principal executive offices are located at One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035.
The regulatory environment in Europe consists of a combination of EU regulations and country specific regulations, including a harmonized set of Technical Standards for Interoperability of freight wagons throughout the EU. The regulatory environment in Brazil consists of oversight from the Ministry of Infrastructure, the National Agency of Ground Transportation and the National Association of Railroad Transporters.
The regulatory environment in Europe consists of a combination of EU regulations and country specific regulations, including a harmonized set of Technical Standards for Interoperability of freight wagons throughout the EU. The regulatory environment in Brazil consists of oversight from the Ministry of Transportation and the National Agency of Ground Transportation.
Our relationships with financial institutions and operating lessors combined with our ownership of a lease fleet of approximately 12,200 railcars enables us to offer flexible financing programs to our customers including operating leases of varied intervals and “per diem” leases.
Our relationships with financial institutions and operating lessors combined with our ownership of a lease fleet of approximately 13,400 railcars enables us to offer flexible financing programs to our customers including operating leases of varied intervals and “per diem” leases.
We currently provide management services for a fleet of approximately 408,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America. In addition, our Regulatory Services Group offers regulatory, engineering, process consulting and advocacy support to the tank car and petrochemical rail shipper community, among other services.
We currently provide management services for a fleet of railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America. In addition, our Regulatory Services Group offers regulatory, engineering, process consulting and advocacy support to the tank car owner and shipper community, among other services.
Our customers often specify particular components and suppliers of such components. Although the number of alternative suppliers of certain specialty components has declined in recent years, there are at least two available suppliers for substantially all of our components. Certain materials and components are periodically in short supply which could potentially impact production at our facilities.
Although the number of alternative suppliers of certain specialty components has declined in recent years, there are at least two available suppliers for substantially all of our components. 6 Certain materials and components are periodically in short supply which could potentially impact production at our facilities.
These are designed for the transportation of hazardous and non-hazardous commodities such as petroleum products, ethanol, liquefied petroleum gas, petrochemicals, caustic soda, chlorine, fertilizers, vegetable oils, bio-diesel and various other products. Intermodal Railcars - We manufacture a comprehensive portfolio of intermodal railcars. Our Maxi-Stack I and Maxi-Stack III are the most popular double-stack railcar well cars.
These are designed for the transportation of hazardous and non-hazardous commodities such as petroleum products, ethanol, liquefied petroleum gas, petrochemicals, caustic soda, chlorine, fertilizers, vegetable oils, bio-diesel and various other products. Intermodal Railcars - We manufacture a comprehensive portfolio of intermodal railcars. Our most popular intermodal product is our double-stack railcars called Maxi-Stack I and Maxi-Stack IV.
Brazilian Railcar Manufacturing - We have a 60% ownership interest in Greenbrier Maxion-Equipamentos e Serviços Ferroviários S.A. (Greenbrier-Maxion), the leading railcar manufacturer in South America, located near São Paulo, Brazil. Greenbrier-Maxion also assembles bogies and offers a range of aftermarket services including railcar overhaul and refurbishment.
Brazilian Railcar Manufacturing - We have a 60% ownership interest in Greenbrier Maxion-Equipamentos e Serviços Ferroviários S.A. (Greenbrier-Maxion), a leading railcar manufacturer in South America, based in Hortolandia, Brazil. Greenbrier-Maxion also assembles bogies and offers a range of aftermarket services including railcar overhaul and refurbishment.
Confederated Tribes and Bands of the Yakama Nation v. Air Liquide America Corp., et al., U.S. Court for the District of Oregon Case No. 3i17-CV-00164-SB. The complaint does not specify the amount of damages the plaintiff will seek. The case has been stayed until January 14, 2025.
Air Liquide America Corp., et al., U.S. Court for the District of Oregon Case No. 3i17-CV-00164-SB. The complaint does not specify the amount of damages the plaintiff will seek. The case has been stayed until January 14, 2025.
We have not signed an AOC in connection with remedial design, but will assist in conducting or funding a portion of the RM9W remedial design. The ROD does not address responsibility for the costs of clean-up, nor does it allocate such costs among the potentially responsible parties.
We have not signed an AOC in connection with remedial design, but we are assisting in funding a portion of the RM9W remedial design. 9 The ROD does not address responsibility for the costs of clean-up, nor does it allocate such costs among the potentially responsible parties.
The percentage of owned units on lease was 98.4% at August 31, 2022 with an average remaining lease term of 3.7 years and an average age of 9 years. We also originate leases of railcars, which are either newly built or refurbished by our operations, or bought in the secondary market.
The percentage of owned units on lease was 98.3% at August 31, 2023 with an average remaining lease term of 3.9 years and an average age of 7.5 years. We also originate leases of railcars, which are either newly built or refurbished by our operations.
The primary products we produce for the North American market are: Conventional Railcars - We produce a variety of covered hopper cars for cement, fertilizer, grain, plastic pellets and grain mill products as well as gondolas and open top hoppers for steel, scrap and aggregates.
The primary products we produce for the North American market are: Freight Railcars - We produce a variety of covered hopper cars for food grade products, grain, fertilizer, cement, minerals and plastic pellets as well as gondolas and open top hoppers for steel, metals, scrap and aggregates.
Backlog The following table depicts our reported railcar backlog subject to third party sale or lease in number of railcars and estimated future revenue value attributable to such backlog, at the dates shown: August 31, 2022 2021 2020 New railcar backlog units (1) 29,500 26,600 24,600 Estimated future revenue value (in millions) (2) $ 3,480 $ 2,810 $ 2,420 (1) Each platform of a railcar is treated as a separate unit.
Backlog The following table depicts our reported railcar backlog subject to third party sale or lease in number of railcars and estimated future revenue value attributable to such backlog, at the dates shown: August 31, 2023 2022 2021 New railcar backlog units 1 30,900 29,500 26,600 Estimated future revenue value (in millions) 2 $ 3,810 $ 3,480 $ 2,810 1 Each platform of a railcar is treated as a separate unit. 2 Subject to change based on finalization of product mix.
Our shops perform routine railcar maintenance for third parties and for our leased and managed railcar fleets. Component Parts Manufacturing - Our component parts facilities recondition and manufacture railcar cushioning units, couplers, yokes, side frames, bolsters and various other parts. We also produce roofs, doors and associated parts for boxcars.
Our shops perform routine railcar maintenance for third parties and for our leased and managed railcar fleets. Component Parts Manufacturing - Our component parts facilities recondition and manufacture railcar cushioning units, couplers, yokes, side frames, bolsters and various other parts.
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.
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, 96 parties, including the State of Oregon and the federal government, are participating in a non-judicial, mediated allocation process to try to allocate costs associated with remediation of the Portland Harbor Site.
Brazilian Castings and Component Parts Manufacturing - We have a 29.5% ownership interest in Amsted-Maxion Fundição e Equipamentos Ferroviários S.A. (Amsted-Maxion) based in Cruzeiro, Brazil. Amsted-Maxion is a manufacturer of various castings and components for railcars and other heavy industrial equipment. Amsted-Maxion has a 40% ownership position in Greenbrier-Maxion and is integrated with the operations of our Brazilian railcar manufacturer.
Brazilian Castings and Component Parts Manufacturing - We have a 29.5% ownership interest in Amsted-Maxion Fundição e Equipamentos Ferroviários S.A. (Amsted-Maxion) based in Cruzeiro, Brazil. Amsted-Maxion is a 5 manufacturer of various castings and wheel components for railcars and other heavy industrial equipment.
(2) Subject to change based on finalization of product mix. Approximately 6% of backlog units and estimated value as of August 31, 2022 was associated with our Brazilian manufacturing operation which are accounted for under the equity method. Based on current production schedules, approximately 22,100 units in the August 31, 2022 backlog are scheduled for delivery in 2023.
Approximately 3% of backlog units and 2% of estimated value as of August 31, 2023 was associated with our Brazilian manufacturing operation which are accounted for under the equity method. Based on current production schedules, approximately 21,500 units in the August 31, 2023 backlog are scheduled for delivery in 2024.
We also offer railcar management, regulatory compliance services and leasing services to railcar owners or other users of railcars in North America. We are a leading provider of freight railcar wheel services, parts and maintenance in North America. Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil.
We are a leading provider of freight railcar wheel services, maintenance and parts in North America. Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil.
No other customers accounted for greater than 10% of total revenue. Raw Materials and Components Our products require a supply of materials including steel and specialty components such as brakes, wheels and axles. Specialty components purchased from third parties represent a significant amount of the cost of most freight cars.
Raw Materials and Components Our products require a supply of materials including steel and specialty components such as brakes, wheels and axles. Specialty components purchased from third parties represent a significant amount of the cost of most freight cars. Our customers often specify particular components and suppliers of such components.
Any of these matters could adversely affect our business and Consolidated Financial Statements, or the value of the Portland Property. 10 On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including our company as well as the U.S. and the State of Oregon for costs it incurred in assessing alleged natural resource damages to the Columbia River from contaminants deposited in Portland Harbor.
On January 30, 2017 the Confederated Tribes and Bands of Yakama Nation sued 33 parties including our company as well as the federal government 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.
Research and development costs incurred during the years ended August 31, 2022, 2021 and 2020 were $5.4 million, $6.3 million and $5.8 million, respectively. Human Capital With the oversight of the Board, our CEO and senior leadership are thoughtfully invested in our global workforce. We regularly review our priorities and progress in each of the areas highlighted below.
Research and development costs incurred during the years ended August 31, 2023, 2022 and 2021 were $4.0 million, $5.4 million and $6.3 million, respectively. 7 Human Capital With the oversight of the Board, our Chief Executive Officer and senior leadership are thoughtfully invested in our global workforce.
Approximately 110 additional parties signed tolling agreements related to such allocations. On April 23, 2009, our 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.
We will continue to participate in the allocation process. Approximately 110 additional parties signed tolling agreements related to such allocations. On April 23, 2009, our 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.
All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has been stayed by the court until January 14, 2025.
A & C Foundry Products, Inc. et al , U.S. District Court, District of Oregon, Case #3:09-cv-453-PK. All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has been stayed by the court until January 14, 2025.
Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.
Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time. Customers Customers across our segments include railroads, leasing companies, financial institutions, shippers, carriers and transportation companies.
Item 1. B USINESS Introduction We are one of the leading designers, manufacturers and marketers of railroad freight car equipment in North America, Europe, South America and other geographies as opportunities arise. We also are a manufacturer and marketer of marine barges in North America.
Item 1. B USINESS Introduction We are one of the leading designers, manufacturers and marketers of railroad freight car equipment in North America, Europe, South America and other geographies as opportunities arise. We offer railcar management, regulatory compliance services and leasing services to railcar owners or other users of railcars in North America.
In addition, each of the reports and documents listed above are available free of charge by contacting our Investor Relations Department at The Greenbrier Companies, Inc., One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035. 12
Information contained on our website is not part of or incorporated into this Form 10-K or any other filings with the SEC. In addition, each of the reports and documents listed above are available free of charge by contacting our Investor Relations Department at The Greenbrier Companies, Inc., One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035. 11
We believe that our customers’ preference for high quality products, our technological leadership in developing innovative products, our focus on being highly responsive to our customer’s needs and competitive pricing of our railcars have helped us maintain our long-standing relationships with our customers. 6 In 2022, revenue from three customers accounted for approximately 39% of total revenue which represented 44% of Manufacturing revenue, 17% of Maintenance Services revenue, and 2% of Leasing & Management Services revenue.
We have strong, long-term relationships with many of our customers. We believe that our customers’ preference for high quality products, our technological leadership in developing innovative products, our focus on being highly responsive to our customers' needs and competitive pricing of our railcars have helped us maintain our long-standing relationships with our customers.
European Railcar Manufacturing - Our European manufacturing operations produce a variety of tank, automotive and conventional freight railcar types, including a comprehensive line of pressurized tank cars for liquid petroleum, LPG gas, chlorine and ammonia and non-pressurized tank cars for light oil, chemicals and other products.
In addition, our European manufacturing operations produce a comprehensive line of pressurized tank cars for liquid petroleum, LPG gas, chlorine and ammonia and non-pressurized tank cars for light oil, chemicals and other products. Maintenance Services Segment Wheel Services - We operate a wheel services network in North America.
In an effort to mitigate shortages and reduce supply chain costs, we have entered into strategic alliances and multi-year arrangements for the global sourcing of certain materials and components, we operate a replacement parts business which aids in our vertical integration and we continue to pursue strategic opportunities to protect and enhance our supply chain.
We experienced an increase in the price and shortages of certain materials and components during 2023. In an effort to mitigate shortages and reduce supply chain costs, we have entered into strategic alliances and multi-year arrangements for the global sourcing of certain materials and components.
We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities.
Occupational Safety and Health Administration (OSHA) and the Secretaria del Trabajo y Prevision Social (STPS) in Mexico. We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to 10 materials handled and managed at our facilities.
The balance of the production is scheduled for delivery in 2024. Backlog units for lease may be syndicated to third parties or held in our own fleet depending on a variety of factors. Multi-year supply agreements are a part of rail industry practice. A portion of the orders included in backlog reflects an assumed product mix.
The balance of the production is scheduled for delivery into 2026. Our backlog includes $970 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Multi-year supply agreements are a part of rail industry practice.
There are few competitors that focus on the commercial large barge market. We compete on the basis of price, quality, reliability of delivery, launching capacity and experience with certain product types. Competition in the Maintenance Services businesses is dependent on the type of product or service provided. There are many competitors in these businesses.
Competition in the Maintenance Services businesses is dependent on the type of product or service provided. There are many competitors in these businesses. We compete primarily on the basis of quality, timeliness of delivery, customer service, location of shops, price and engineering expertise.
Many European railroads are state-owned and are subject to European Union (EU) regulations covering the tender of government contracts. Through our research and customer relationships, insights are derived into the potential need for new products and services. Marketing and engineering personnel collaborate to evaluate opportunities and develop new products and services that exceed customers’ expectations.
Many European railroads are state-owned and are subject to European Union (EU) regulations covering the tender of government contracts. In Brazil, the government grants long-term concession contracts to private companies to operate and invest in Brazil’s freight rail network. Through our research and customer relationships, insights are derived into the potential need for new products and services.
We believe that manufacturing expertise, the improvement of existing technology and the development of new products are at least as important as patent protection in establishing and maintaining a competitive advantage in our market.
We have obtained a number of U.S. and non-U.S. patents of varying duration, and pending patent applications, registered trademarks, copyrights and trade names. We believe that manufacturing expertise, the improvement of existing technology and the development of new products are important in addition to patent protection, in establishing and maintaining a competitive advantage in our market.
To remain competitive globally, we regularly evaluate our compensation programs. This includes reviewing base pay levels for equity both internally and externally and assessing the effectiveness of our short and long-term incentive programs.
This includes reviewing base pay levels for equity both internally and externally and assessing the effectiveness of our short and long-term incentive programs. In addition, we strive to provide competitive health and wellness programs to our employees. Benefits and Wellness – We believe benefits programs are a key differentiator in attracting and retaining talent.
Our telephone number is (503) 684-7000 and our Internet website is located at http://www.gbrx.com . Products and Services Manufacturing Segment North American Railcar Manufacturing - We manufacture most freight railcar types currently in use in the North American market (other than coal cars) and we continue to expand our product features and functionality.
Products and Services Manufacturing Segment North American Railcar Manufacturing - We manufacture most freight railcar types currently in use in the North American market (other than coal cars) and we continue to expand our product features and functionality. We have demonstrated an ability to capture high market shares in many of the car types we produce.
Our aggregate expenditure has not been material, however we could incur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties. Regulation We must comply with the rules of the U.S.
We have 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. Our aggregate expenditure has not been material, however we could incur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties.
The AAR promulgates rules and regulations governing the safety and design of equipment, relationships among railroads and other railcar owners with respect to railcars in interchange, and other matters. The AAR also certifies railcar builders and component manufacturers that provide equipment for use on North American railroads.
These regulations govern equipment and safety appliance standards for freight cars and other rail equipment used in interstate and international commerce throughout North America. The AAR promulgates rules and regulations governing the safety and design of equipment, relationships among railroads and other railcar owners with respect to railcars in interchange, and other matters.
Under terms of the orders, the exact mix and pricing will be determined in the future, which may impact backlog. Marine backlog was $31 million and $70 million as of August 31, 2022 and 2021, respectively. Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations.
A portion of the orders included in backlog reflects an assumed product mix. Under terms of the orders, the exact mix and pricing will be determined in the future, which may impact backlog. Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms.
Assets from our owned lease fleet are periodically sold to accommodate customer demand, manage risk and maintain liquidity. In February 2022, GBX Leasing, one of our subsidiaries, completed its inaugural offering of railcar asset-backed securities (“ABS”).
Assets from our owned lease fleet are periodically sold to accommodate customer demand, manage risk and maintain liquidity.
Our Environmental, Social & Governance Report (ESG) provides additional information regarding our ESG goals and initiatives. It can be found on our website. Information contained on or accessible through our website is not incorporated into, and does not constitute a part of, this filing.
Our Environmental, Social & Governance Report (ESG) provides additional information regarding our ESG strategy and goals. It can be found on our website.
More specifically, the transportation of hazardous materials by rail is subject to rigorous oversight by FRA, PHMSA, and DHS. Railroads, acting through the Association of American Railroads (AAR), work in partnership with these and other local, state, and federal entities on hazardous materials-related issues, including train routing, security, tank car design and emergency response.
Railroads, acting through the AAR, work in partnership with these and other local, state, and federal entities on hazardous materials-related issues, including train routing, security, tank car design and emergency response. Railroads also require compliance with certain industry best practices that sometimes exceed federal requirements for trains carrying hazardous materials.
No other suppliers accounted for more than 10% of total inventory purchases. We believe we maintain good relationships with our suppliers. Competition We are currently one of the two largest railcar manufacturers competing in North America. There are also a handful of specialty builders who focus on niche markets.
Competition We are currently one of the two largest railcar manufacturers in North America. There are also a handful of specialty builders who focus on niche markets. We believe that in Europe we are in the top tier of railcar manufacturers. Through our 60% ownership interest in Greenbrier-Maxion, we are a leading railcar manufacturer in South America.
We believe our strong servicing capability and our ability to sell railcars with a lease attached (syndicate railcars), integrated with our manufacturing, maintenance shops, railcar specialization and expertise in particular lease structures provide a strong competitive advantage. 7 Marketing and Product Development In North America, we leverage an integrated marketing and sales effort to coordinate relationships in our various segments.
We compete primarily on the basis of quality, price, timeliness of delivery, reputation, service offerings and deal structuring and syndication ability. We believe our strong servicing capability and our ability to sell railcars with a lease attached (syndicate railcars), integrated with our manufacturing, maintenance shops, railcar specialization and expertise in particular lease structures provides a strong competitive advantage.
In all railcar markets that we serve, we compete on the basis of quality, price, reliability of delivery, innovative product design, reputation and customer service. Competition in the marine industry is dependent on the type of product produced, customer type, including governmental or commercial, proximity to delivery point, and manufacturing capacity.
The railcar manufacturing industry is becoming more global as customers are purchasing railcars from manufacturers outside of their geographic region. In all railcar markets that we serve, we compete on the basis of quality, price, timeliness of delivery, innovative product design, reputation and customer service.
Many of them are also customers that buy new railcars from our manufacturing facilities and used railcars from our lease fleet, as well as utilize our management and maintenance services. We compete primarily on the basis of quality, price, reliability of delivery, reputation, service offerings and deal structuring and syndication ability.
There are at least twenty institutions in North America that provide railcar leasing and/or services similar to ours. Many of them are also customers that buy new railcars from our manufacturing facilities and used railcars from our lease fleet, as well as utilize our management and maintenance services.
In addition, our European manufacturing operations produce flat cars, cars for coil steel and metals, gondolas, intermodal cars, sliding wall cars, hoppers and automobile transport cars. Marine Vessel Fabrication - We manufacture a broad range of Jones Act ocean-going and river barges for transporting merchandise between ports within the United States.
European Railcar Manufacturing - Our European manufacturing operations produce a variety of freight railcar types, including gondolas, hoppers, intermodal cars, automobile transport, coil steel and metals, flat cars, and sliding wall cars.
Other Unconsolidated Affiliates - We have other unconsolidated affiliates which primarily include joint ventures that produce rail and industrial components.
Amsted-Maxion has a 40% ownership position in Greenbrier-Maxion and is integrated with the operations of our Brazilian railcar manufacturer. Other Unconsolidated Affiliates - We have other unconsolidated affiliates which primarily include joint ventures that produce rail and industrial components, all of which are presented in Investment in unconsolidated affiliates on the Consolidated Balance Sheets.
Safety – Employee safety is a top priority and we remain dedicated to continuously improving our safety performance over time. Our safety performance is monitored regularly by our CEO, senior leadership and our Board. We are proud of the sustained improvement in our safety statistics even while we have experienced significant increases in headcount.
Approximately 6,000 employees are represented by unions, primarily in Mexico and Europe. At our Maintenance Services locations, approximately 50 employees are represented by a union. We believe we have good union relations. Safety – Employee safety is a top priority and we remain dedicated to continuously improving our safety performance over time.
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We have demonstrated an ability to capture high market shares in many of the car types we produce.
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Our telephone number is (503) 684-7000 and our Internet website is located at http://www.gbrx.com . Information contained on our website is not part of or incorporated into this Form 10-K or any other filings with the SEC.
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Our primary focus is on the larger ocean-going vessels although we have the capability to compete in other marine-related products. Our Portland, Oregon manufacturing facility, located on a deep-water port on the Willamette River, includes marine vessel fabrication capabilities. Maintenance Services Segment Wheel Services - We operate a wheel services network in North America.
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In 2023, revenue from two customers in aggregate accounted for approximately 30% of total revenue which represented 33% of Manufacturing revenue, 16% of Maintenance Services revenue, and 5% of Leasing & Management Services revenue. No other customers accounted for greater than 10% of total revenue.
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Customers Customers across our segments include railroads, leasing companies, financial institutions, shippers, carriers and transportation companies. We have strong, long-term relationships with many of our customers.
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In 2023, the top ten suppliers for all inventory purchases accounted for approximately 42% of total purchases. The top supplier accounted for 16% of total inventory purchases in 2023. No other suppliers accounted for more than 10% of total inventory purchases. We believe we maintain good relationships with our suppliers.
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We experienced an increase in the price and shortages of certain materials and components during 2022.
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Marketing and Product Development In North America, we leverage an integrated marketing and sales effort to coordinate relationships in our various segments.
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We believe that in Europe we are in the top tier of railcar manufacturers. Through our 60% ownership interest in Greenbrier-Maxion, we are the leading railcar manufacturer in South America. The railcar manufacturing industry is becoming more global as customers are purchasing railcars from manufacturers outside of their geographic region.
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Marketing and engineering personnel collaborate to evaluate opportunities and develop new products and services that exceed customers’ expectations.
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We compete primarily on the basis of quality, timeliness of delivery, customer service, location of shops, price and engineering expertise. There are at least twenty institutions in North America that provide railcar leasing and/or services similar to ours.
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We regularly review our priorities and progress in each of the areas highlighted below. We depend on a highly skilled workforce of 13,800 of which approximately half reside in Mexico. Individuals across multiple locations who have technical skills, including experience in welding, engineering, and machine operating are necessary for us to succeed.
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In 2022, our Total Injury Rate improved more than 10% from the end of 2021. Talent and Diversity - We recognize that a talented and diverse workforce is critical to our success. This year we continued our focus on attracting talent, while simultaneously retaining and developing our people.
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Our safety performance is monitored regularly by our CEO, senior leadership and our Board. We are proud of our commitment to maintaining a safe workplace. Employee Engagement – Building a successful human capital management strategy requires foresight, commitment and a willingness to embrace change.
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During the year, we developed an onboarding framework that is focused on welcoming a diverse workforce by establishing a consistent and inclusive process. To ensure we remain engaged and understand our employees’ priorities, during 2022 we launched an employee engagement survey.
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We are committed to creating a culture of feedback that supports our IDEAL Commitment (Inclusion, Diversity, Equity, Access and Leadership) and reinforces our Core Value of Respect for People. To remain engaged and understand our employees’ priorities, in 2023 we expanded our employee engagement survey to include our Mexico facilities.
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We gained important insights to help our company improve and have developed goals to continue building on our core value of Respect for People. During 2022, we continued to develop upon our IDEAL (Inclusion, Diversity, Equity, Access and Leadership) commitment by creating six Employee Resource Groups (ERGs).
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Feedback from our surveys informed our decision to introduce additional communication and recognition opportunities. Communication and Connections – In 2023, Greenbrier launched GBX RailDepot, a communication platform established to connect people and information, and further enhance our workplace culture. Employees can access company information and employee resources, recognize others for their contributions, and celebrate milestones together.
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The ERGs are created by employees and offer a space for employees to facilitate development, cultural connection, diversity and understanding within the Greenbrier workforce. Our commitment to investing in our people includes enhanced training and development pathways.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+40 added−23 removed116 unchanged
Biggest changeA halt of production at any of our manufacturing facilities could severely affect delivery times to our customers. Any significant delay in deliveries not otherwise contractually mitigated could result in cancellation of all or a portion of our orders, cause us to lose future sales, and negatively affect our reputation and our results of operations.
Biggest changeAny significant delay in deliveries not otherwise contractually mitigated could result in cancellation of all or a portion of our orders, the loss of future sales, and negatively affect our reputation and our results of operations. 14 An inability to successfully manage, maintain, update, and secure our information systems, and utilize these systems to produce, disseminate, and store relevant and reliable data and information pertaining to our business, could adversely affect our business and competitive position in the market.
If we become subject to any such claims and are unable successfully to resolve them or maintain inadequate insurance for such claims, our business, financial condition and results of operations could be materially adversely affected. The products we manufacture are designed to work optimally when properly operated, installed, repaired, maintained and used to transport the intended cargo.
If we become subject to any such claims and are unable to successfully resolve them or maintain inadequate insurance for such claims, our business, financial condition and results of operations could be materially adversely affected. The products we manufacture are designed to work optimally when properly operated, installed, repaired, maintained and used to transport the intended cargo.
If such incentives are discontinued or diminished, the demand for our products could decrease, thereby creating the potential for a material adverse effect on our financial condition or results of operations. Risks Related to our Common Stock Our stock price has been volatile and may continue to experience large fluctuations.
If such incentives are discontinued or diminished, the demand for our products could decrease, thereby creating the potential for a material adverse effect on our financial condition or results of operations. 24 Risks Related to our Common Stock Our stock price has been volatile and may continue to experience large fluctuations.
If we are unable to successfully manage the risks associated with our foreign and cross-border business activities, our results of operations, financial condition, liquidity and cash flows could be negatively impacted. Fluctuations in foreign currency exchange rates could lead to increased costs and lower profitability.
If we are unable to successfully manage the risks associated with our foreign and cross-border business activities, our results of operations, financial condition, liquidity and cash flows could be negatively impacted. 20 Fluctuations in foreign currency exchange rates could lead to increased costs and lower profitability.
All of these factors and others could disrupt our business directly and could disrupt the business of our customers thereby reducing or delaying orders of our goods and services. Prolonged civil unrest, political instability or uncertainty, military activities, or broad-based sanctions could have an adverse effect on our operations and business outlook.
These factors and others could disrupt our business directly and could disrupt the business of our customers thereby reducing or delaying orders of our goods and services. Prolonged civil unrest, political instability or uncertainty, military activities, or broad-based sanctions could have an adverse effect on our operations and business outlook.
A limited availability of financing or higher interest rates could increase the cost of, or potentially deter, new leasing arrangements with our customers, reduce our ability to syndicate railcars under lease to financial institutions, or impact the sales price we may receive on such syndications, any of which could materially adversely affect our business, financial condition and results of operations. 22 Some of our competitors are owned or financially supported by foreign governments and may sell products below cost or otherwise compete unfairly.
A limited availability of financing or higher interest rates could increase the cost of, or potentially deter, new leasing arrangements with our customers, reduce our ability to syndicate railcars under lease to financial institutions, or impact the sales price we may receive on such syndications, any of which could materially adversely affect our business, financial condition and results of operations. 21 Some of our competitors are owned or financially supported by foreign governments and may sell products below cost or otherwise compete unfairly.
Such use of social and other digital media could result in unexpected and unsubstantiated claims concerning our business in general or our products, our leadership or our reputation among customers and the public at large, thereby making it more difficult for us to compete effectively, and potentially having a material adverse effect on our business, operations, or financial condition. 27 Item 1B.
Such use of social and other digital media could result in unexpected and unsubstantiated claims concerning our business in general or our products, our leadership or our reputation among customers and the public at large, thereby making it more difficult for us to compete effectively, and potentially having a material adverse effect on our business, operations, or financial condition. 26 Item 1B.
Our inability to develop and manufacture new product innovations or technologies in a timely and profitable manner, or to obtain timely certification, or to achieve market acceptance, or to avoid quality problems in our new products, could have a material adverse effect on our revenue and results of operations and subject us to losses including penalties, cancellation of orders, rejection of railcars by a customer and/or other losses.
Our inability to develop and manufacture new products or technologies in a timely and profitable manner, or to obtain timely certification, or to achieve market acceptance, or to avoid quality problems in our new products, could have a material adverse effect on our revenue and results of operations and subject us to losses including penalties, cancellation of orders, rejection of railcars by a customer and/or other losses.
We face several risks due to our debt and debt service obligations including our potential inability to satisfy our financial obligations related to our consolidated indebtedness; potential breach of the covenants in our credit agreements; our ability to borrow additional amounts or refinance existing indebtedness in the future to fund operating needs may be limited or costly; our availability of cash flow may be inadequate because a portion of our cash flow is needed to pay principal and interest on our debt; we may be at a disadvantage relative to our competitors that have greater financial resources than us or more flexible capital structures than us; we face additional exposure to the risk of increased interest rates as certain of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of an increase in interest rates; restrictions under debt agreements may adversely interfere with our financial and operating flexibility; and exposure to the possibility that we may suffer a material adverse effect on our business and financial condition if we are unable to service our debt or obtain additional financing, as needed.
We face several risks due to our debt and debt service obligations including our potential inability to satisfy our financial obligations related to our consolidated indebtedness; potential breach of the covenants in our credit agreements (including our revolving credit facility, asset-backed facilities and other facilities); our ability to borrow additional amounts or refinance existing indebtedness in the future to fund operating needs may be limited or costly; our availability of cash flow may be inadequate because a portion of our cash flow is needed to pay principal and interest on our debt; we may be at a disadvantage relative to our competitors that have greater financial resources than us or more flexible capital structures than us; we face additional exposure to the risk of increased interest rates as certain of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of an increase in interest rates; restrictions under debt agreements may adversely interfere with our financial and operating flexibility; and exposure to the possibility that we may suffer a material adverse effect on our business and financial condition if we are unable to service our debt or obtain additional financing, as needed.
In addition, we have a Regulatory Services Group which offers regulatory, engineering, process consulting and advocacy support to the tank car and petrochemical rail shipper community, among other services.
In addition, we have a Regulatory Services Group that offers regulatory, engineering, process consulting and advocacy support to the tank car and petrochemical rail shipper community, among other services.
As a result, comparisons of our manufacturing revenue, deliveries, quarterly net gain on disposition of equipment, income and liquidity between quarterly periods within one year and between comparable periods in different years may not be meaningful and should not be relied upon as indicators of our future performance.
As a result, comparisons of our Manufacturing or Leasing & Management Services revenue, deliveries, quarterly net gain on disposition of equipment, income and liquidity between quarterly periods within one year and between comparable periods in different years may not be meaningful and should not be relied upon as indicators of our future performance.
Our information technology infrastructure also includes products and services provided by third parties, and these providers can experience breaches of their systems and products that affect the security of our systems and our proprietary or confidential information. Our reliance on information technology increases as working remotely increases among our employees.
Our information technology infrastructure also includes products and services provided by third parties, and these providers can experience breaches of their systems and 13 products that affect the security of our systems and our proprietary or confidential information. Our reliance on information technology increases to the extent working remotely increases among our employees.
If warranty claims attributable to actions of third party component manufacturers are not recoverable from such parties due to their poor financial condition or other reasons, we could be liable for warranty claims and other risks for using these materials in our products.
If warranty claims attributable to actions of third party component manufacturers are not recoverable from such parties due to their poor financial condition or other reasons, we could be liable for warranty claims and other risks for using these materials in our products. Insurance coverage could be costly, unavailable or inadequate.
We provide a number of services which include the manufacture and supply of new railcars, wheels, components and parts and the lease and maintenance of railcars for our customers that transport a variety of commodities, including tank railcars that transport hazardous materials such as crude oil, ethanol and other products.
We provide a number of services which include the manufacture and supply of new railcars, wheels, new and refurbished axles, components and parts and the lease and maintenance of railcars for our customers that transport a variety of commodities, including tank railcars that transport hazardous materials such as crude oil, ethanol, chlorine, anhydrous ammonia and other products.
Such attempts are increasing in number and in technical sophistication, and if successful, would expose us and the affected parties to risk of loss or misuse of proprietary or confidential information or disruptions of our business operations.
Such attempts are increasing in number and in technical sophistication, and if successful, would expose us and the affected parties to risk of loss or misuse of proprietary or confidential information, and could significantly disrupt our business operations.
The cost of steel and all other materials used in the production of our railcars represents more than half of our direct manufacturing costs per railcar and in the production of our marine barges represents more than 30% of our direct manufacturing costs per marine barge.
The cost of steel and all other materials used in the production of our railcars represents more than half of our direct manufacturing costs per railcar.
We perform a goodwill impairment test annually at the reporting unit level during the third quarter of each year, or whenever events or circumstances indicate that the carrying value of these assets may exceed their fair value.
We perform a goodwill impairment test at the reporting unit level annually or whenever events or circumstances indicate that the carrying value of these assets may exceed their fair value.
During 2022, we experienced significantly elevated commodity and supply chain costs including the costs of labor, raw materials, energy, fuel, materials and other inputs necessary for the production and distribution of our products, and we expect elevated levels of inflation to continue in 2023.
During 2023, we experienced elevated commodity and supply chain costs including the costs of labor, raw materials, energy, fuel, materials and other inputs necessary for the production and distribution of our products, and elevated levels of inflation may continue in 2024.
Our products may be sold to third parties who may misuse, improperly install or improperly or inadequately maintain or repair such products, which may result in us being subjected to claims or litigation associated with product damage, injuries or property damage that could increase our costs and weaken our financial condition.
Our products may be sold to third parties who may misuse, improperly install or improperly or inadequately maintain or repair such products, which may result in us being subjected to claims or litigation associated with product damage, injuries or property damage that could increase our costs and weaken our financial condition. 22 Risks related to potential misconduct by employees may adversely impact us.
In February 2022, the Russian Federation commenced a military invasion of Ukraine. We cannot predict the full impact of the war in Ukraine, the economic sanctions imposed on Russia, and the related economic and geopolitical instability, including instability in the manufacturing and freight rail markets.
Our business may be negatively impacted as a result of war in Ukraine. In February 2022, the Russian Federation commenced a military invasion of Ukraine. We cannot predict the full impact of the war in Ukraine, the economic sanctions imposed on Russia, and the related economic and geopolitical instability, including instability in the manufacturing and freight rail markets.
We have identified a material weakness in our internal control over financial reporting. If we fail to properly remediate the material weakness or to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
If we fail to properly remediate the material weakness or to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
If we are unable to recruit, train and retain adequate numbers of qualified employees and third party labor providers on a timely basis or at a reasonable cost or on reasonable terms, our business and results of operations could be adversely affected. Our business may be negatively impacted as a result of armed conflict in Ukraine.
If we are unable to recruit, train and retain adequate numbers of qualified employees and third party labor providers on a timely basis or at a reasonable cost or on reasonable terms, our business and results of operations could be adversely affected.
The industry in which we operate is subject to periodic economic cycles, and the purchasing trends of customers in our industry have a significant impact on demand for our products and services.
Cyclical economic downturns in our industry usually result in decreased demand for our products and services and reduced revenue. The industry in which we operate is subject to periodic economic cycles, and the purchasing trends of customers in our industry have a significant impact on demand for our products and services.
Our manufacturing backlog represents future production for our customers in various periods, and estimated potential revenue attributable to such production. Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms which may not occur.
Our manufacturing backlog represents future production for our customers, and estimated potential revenue attributable to such production. Our backlog of railcar units is not necessarily indicative of future results of operations. Some orders are subject to customary documentation, conditions, or completion of terms which may not occur.
Any such disruption in our supply of specialized components and services or increased costs of those components or services could harm our business and adversely affect our results of operations. 16 The timing of our asset sales and related revenue recognition could cause significant differences in our quarterly results and liquidity.
Any resulting disruption in our supply, or increase in the cost of specialized components and services could harm our business and adversely affect our results of operations. The timing of our asset sales and related revenue recognition could cause significant differences in our quarterly results and liquidity.
Shareholder activism could result in substantial costs to the Company, give rise to perceived uncertainties as to our future, adversely affect our relationships with suppliers, customers, and regulators, make it more difficult to attract and retain qualified personnel, and adversely impact our stock price.
Shareholder activism could result in substantial costs to the Company, give rise to perceived uncertainties as to our future, adversely affect our relationships with suppliers, customers, and regulators, make it more difficult to attract and retain qualified personnel, and adversely impact our stock price. Our current shareholders could experience dilution. We require substantial working capital to fund our business.
If we became involved in securities class action litigation in the future, it could result in substantial costs and diversion of our management’s attention and our resources and could harm our stock price, business, prospects, financial condition and results of operations. Our current shareholders could experience dilution. We require substantial working capital to fund our business.
If we became involved in securities class action litigation in the future, it could result in substantial costs and diversion of our management’s attention and our resources and could harm our stock price, business, prospects, financial condition and results of operations.
A loss of any such personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition and results of operations. 15 Our backlog is not necessarily indicative of the level of our future revenues.
A loss of any such personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition and results of operations.
Our share repurchase program may be modified, suspended or discontinued at any time without prior notice. Although the share repurchase program is intended to enhance long-term shareholder value, we cannot provide assurance that this will occur.
The Board of Directors has authorized our company to repurchase our common stock through a share repurchase program. Our share repurchase program may be modified, suspended or discontinued at any time without prior notice. Although the share repurchase program is intended to enhance long-term shareholder value, we cannot provide assurance that this will occur.
We must continue to recruit, retain and motivate senior management and other key employees sufficient to maintain our current business and support our future projects and growth objectives. We are vulnerable to attrition among our current senior management team and other key employees. Some members of our senior management team and other key employees are at or nearing retirement age.
We must continue to recruit, retain and motivate senior management and other key employees sufficient to maintain our current business and support our future projects and growth objectives. We are vulnerable to attrition among our current senior management team and other key 16 employees.
The current economic downturn in our industry has impacted the demand for our products and services, and will continue to result in one or more of the following: lower sales volumes, lower prices, lower lease utilization rates and decreased revenues and profits.
An economic downturn in our industry would impact the demand for our products and services, and would result in one or more of the following: lower sales volumes, lower prices, lower lease utilization rates and decreased revenues and profits.
Demand for specific types of railcars increases and decreases with the demand for goods such as grains, metals, construction aggregates, fertilizer, perishables and general merchandise, plastic pellets, oil and gas, bio-fuels, chemicals, and automobiles, among others, which is beyond our control. Cyclical economic downturns in our industry usually result in decreased demand for our products and services and reduced revenue.
Demand for specific types of railcars increases and decreases with the demand for goods such as grains, 19 metals, construction aggregates, fertilizer, perishables and general merchandise, plastic pellets, oil and gas, bio-fuels, chemicals, and automobiles, among others, which is beyond our control.
Addressing cybersecurity threats and incidents, whether or not successful, could result in our incurring significant costs related to, for example, disruptions in our operations, rebuilding internal systems, implementing additional threat protection measures, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties, as well as reputational harm.
The theft, loss, or misuse of third party data collected, used, stored, or transferred by us to run our business, and our attempts to address cybersecurity threats and incidents, whether or not successful, could result in our incurring significant costs related to, for example, disruptions in our operations, rebuilding internal systems, implementing additional threat protection measures, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties, as well as reputational harm.
Even our inadvertent failure to comply with federal, state, or international privacy-related or data-protection laws and regulations could result in audits, regulatory inquiries, or proceedings against us by governmental entities or other third parties. 17 Updates or changes to our information technology systems may result in problems that could negatively impact our business.
Even our inadvertent failure to comply with federal, state, or international privacy-related or data-protection laws and regulations could result in audits, regulatory inquiries, or proceedings against us by governmental entities or other third parties.
Our financial performance and market value could cause future write-downs of goodwill or intangibles or other long-lived assets in future periods. We are required to perform an annual impairment test of goodwill and other indefinite lived assets which could result in an impairment charge if it is determined that the carrying value of the asset exceeds its fair value.
We are required to perform an annual impairment test of goodwill and other indefinite lived assets which could result in an impairment charge if it is determined that the carrying value of the asset exceeds its fair value.
We occasionally accept orders prior to receiving railcar certification or proving our ability to manufacture a quality product that meets customer standards. We could be unable to successfully design or manufacture new railcar product innovations or technologies.
We continue to introduce new railcar product innovations and technologies as well as develop and offer information-technology-based services. We occasionally accept orders prior to receiving railcar certification or proving our ability to manufacture a quality product that meets customer standards. We could be unable to successfully design or manufacture new railcar product innovations or technologies.
These markets can experience high levels of volatility and access to capital can be constrained for extended periods of time. In addition to conditions in the capital markets, a number of other factors could cause us to incur increased borrowing costs and have greater difficulty accessing public and private markets for both secured and unsecured debt.
In addition to conditions in the capital markets, a number of other factors could cause us to incur increased borrowing costs and have greater difficulty accessing public and private markets for both secured and unsecured debt.
No other suppliers accounted for more than 10% of total inventory purchases. Certain components of our products, particularly specialized components like castings, bolsters, trucks, wheels and axels, and certain services, such as lining capabilities, are currently only available from a limited number of suppliers.
Certain components of our products, particularly specialized components like castings, bolsters, trucks, wheels and axles, and certain services, such as lining capabilities, are currently only available from a limited number of suppliers.
Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, income taxes, warranty accruals, environmental costs, and goodwill, among others. If our accounting policies, methods, judgments, assumptions, estimates and allocations prove to be incorrect, or if circumstances change, our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.
If our accounting policies, methods, judgments, assumptions, estimates and allocations prove to be incorrect, or if circumstances change, our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.
Adverse changes in foreign regulations applicable to us or our customers, such as labor, environment, trade, tax, currency and price regulations, could limit our operations, make the manufacture and distribution of our products difficult, and delay or limit our ability to repatriate income derived from foreign markets. 21 Our business benefits from free trade agreements between the United States and foreign governments, and from various U.S. corporate tax provisions related to international commerce.
Adverse changes in foreign regulations applicable to us or our customers, such as labor, environment, trade, tax, currency and price regulations, could limit our operations, make the manufacture and distribution of our products difficult, and delay or limit our ability to repatriate income derived from foreign markets.
Monetary interventions also risk a sustained decline in aggregate demand, either globally or within one more geographic market. A decline in demand for our products would most likely have a negative impact on our business and results of operations.
Additionally, increased borrowing costs faced by our customers could result in decreased demand for our products. Monetary interventions also risk a sustained decline in aggregate demand, either globally or within one or more geographic markets. A decline in demand for our products would have a negative impact on our business and results of operations.
Certain relevant provisions of our Articles of Incorporation and Bylaws, as well as Oregon law, are described in further detail in “Description of the Registrant’s Securities Under Section 12 of the Securities Exchange Act of 1934” annexed as Exhibit 4.3 to this Annual Report. 26 Payments of cash dividends on our common stock may be made only at the discretion of our Board of Directors and may be restricted by Oregon law.
Certain relevant provisions of our Articles of Incorporation and Bylaws, as well as Oregon law, are described in further detail in “Description of the Registrant’s Securities Under Section 12 of the Securities Exchange Act of 1934” annexed as Exhibit 4.3 to this Annual Report.
The loss of suppliers or their inability to meet our price, quality, quantity and delivery requirements could have an adverse effect on our ability to manufacture and sell our products on a cost-effective basis. 13 Shortages of skilled labor, increased labor costs, or failure to maintain good relations with our workforce could adversely affect our operations.
The loss of suppliers or their inability to meet our price, quality, quantity and delivery requirements could have an adverse effect on our ability to manufacture and sell our products on a cost-effective basis.
Disruptions in the supply of materials and components used in the production of our products could negatively impact our business and results of operations. Supply chains were severely disrupted by the COVID-19 global pandemic. Armed conflict in Ukraine has also severely disrupted supply chains for the materials and components that we use in manufacturing our products.
Supply chains were severely disrupted by the COVID-19 global pandemic. The war in Ukraine has also severely disrupted supply chains for the materials and components that we use in manufacturing our products.
During its evaluation of the effectiveness of disclosure controls and procedures as of August 31, 2022, management determined that our internal control over financial reporting was not effective, because we did not have effective controls over change management of system configurations in one IT environment to ensure all changes were logged and approved.
During its evaluation of the effectiveness of disclosure controls and procedures as of August 31, 2023, management determined that our internal control over financial reporting was not effective, because we did not have effective controls in one IT environment as a result of deficiencies in change management, program development, and user access controls.
We rely on limited suppliers for certain components and services needed in our production. If we are not able to procure specialty components or services on commercially reasonable terms or on a timely basis, our business, financial condition and results of operations would be adversely affected.
If we are not able to procure specialty components or services on commercially reasonable terms or on a timely basis, our business, financial condition and results of operations would be adversely affected. Our manufacturing operations depend in part on our ability to obtain timely deliveries of materials, components and services in acceptable quantities and quality from our suppliers.
Legislation and new rules to regulate emission of GHGs have been introduced in numerous state legislatures, the U.S. Congress, and by the EPA. Some of these proposals would require industries to meet stringent new standards that may require substantial reporting of GHGs and other carbon intensive activities in addition to potentially mandating reductions in our carbon emissions.
Some of these proposals would require industries to meet stringent new standards that may require substantial reporting of GHGs and other carbon intensive activities in addition to potentially mandating reductions in our carbon emissions.
Any of these conditions or events could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business, financial condition and results of operations. 23 Risks Related to Legal, Compliance and Regulatory Matters Risks related to potential misconduct by employees may adversely impact us.
Any of these conditions or events could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business, financial condition and results of operations.
A material disruption in the movement of rail traffic could negatively impact our business and results of operations. Equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities, could lead to production, delivery, or service curtailments or shutdowns, loss of revenue or higher expenses.
Equipment failures, technological failures, costs and inefficiencies associated with changing of production lines, or transfer of production between facilities, could lead to production, delivery, or service curtailments or shutdowns, loss of revenue or higher expenses. We operate a substantial amount of equipment at our production facilities.
Changes in accounting standards can be hard to predict and can materially impact how we record and report our financial condition and results of operations. 25 Some of our customers place orders for our products in reliance on their ability to utilize tax benefits or tax credits any of which benefits or credits could be discontinued thereby reducing incentives for our customers to purchase our rail products.
Some of our customers place orders for our products in reliance on their ability to utilize tax benefits or tax credits any of which benefits or credits could be discontinued thereby reducing incentives for our customers to purchase our rail products.
If we are not able to purchase materials and energy at competitive prices, our ability to produce and sell our products on a cost-effective basis could be adversely impacted which, in turn, could adversely affect our revenue and profitability. Our fixed-price contracts generally anticipate material price increases and surcharges.
If we are not able to purchase materials and energy at competitive prices, our ability to produce and sell our products on a cost-effective basis could be adversely impacted which, in turn, could adversely affect our revenue and profitability. 12 Disruptions in the supply of materials and components used in the production of our products could negatively impact our business and results of operations.
We depend on skilled labor in all areas of our business. Some of our facilities are located in areas where demand for skilled labor often exceeds supply. Shortages of some types of skilled labor such as welders and machine operators could restrict our ability to maintain or increase production rates, lead to production inefficiencies and increase our labor costs.
Shortages of some types of skilled labor such as welders and machine operators could restrict our ability to maintain or increase production rates, lead to production inefficiencies and increase our labor costs.
If we are unsuccessful in our succession planning efforts, the continuity of our business and results of operations could be adversely affected.
Some members of our senior management team and other key employees are at or nearing retirement age. If we are unsuccessful in our succession planning efforts, the continuity of our business and results of operations could be adversely affected.
In some cases, we could be required to apply a new or revised standard retrospectively, resulting in the revision of prior period financial statements.
In some cases, we could be required to apply a new or revised standard retrospectively, resulting in the revision of prior period financial statements. Changes in accounting standards can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
Other adverse consequences of climate change could include an increased frequency of severe weather events and rising sea levels that could affect operations at our manufacturing facilities, the price of insuring company assets, or other unforeseen disruptions of our operations, systems, property or equipment. 24 Train derailments or other accidents or claims could subject us to legal claims that adversely impact our business, financial condition and our results of operations.
Other adverse consequences of climate change could include an increased frequency of severe weather events and rising sea levels that could affect operations at our manufacturing facilities, the price of insuring company assets, or other unforeseen disruptions of our operations, systems, property or equipment. 23 We have identified a material weakness in our internal control over financial reporting.
We have acquired businesses and invested in or entered into joint ventures in past periods. We may in the future acquire other businesses or invest in or enter into joint ventures with other companies.
Our business will suffer if we are unsuccessful in making, integrating, and maintaining acquisitions, joint ventures and other strategic investments. We have acquired businesses and invested in or entered into joint ventures in past periods. We may in the future acquire other businesses or invest in or enter into other joint ventures.
Our share repurchase program is intended to enhance long-term shareholder value although we cannot guarantee this will occur and this program may be suspended or terminated at any time. The Board of Directors has authorized our company to repurchase our common stock through a share repurchase program.
Accordingly, we may not be able to continue to pay dividends in any given amount in the future, or at all. 25 Our share repurchase program is intended to enhance long-term shareholder value although we cannot guarantee this will occur and this program may be suspended or terminated at any time.
As a result, the amount of interest we may pay on our variable rate indebtedness is difficult to predict. 18 Our product and service warranties could expose us to significant claims. We offer our customers limited warranties for many of our products and services.
Our product and service warranties could expose us to significant claims. We offer our customers limited warranties for many of our products and services.
The United States Federal Reserve, the European Central Bank, and several other central banks, have undertaken or signaled increases in benchmark interest rates. Rising interest rates increases our borrowing costs potentially decreasing our profitability. Additionally, increased borrowing costs faced by our customers could result in decreased demand for our products.
Inflation may cause our customers to reduce or delay orders for our goods and services thereby causing a decrease in sales of our goods and services. The United States Federal Reserve, the European Central Bank, and several other central banks, have undertaken or signaled increases in benchmark interest rates. Rising interest rates increases our borrowing costs potentially decreasing our profitability.
Management has determined that this deficiency constitutes a material weakness in our internal control over financial reporting. We have identified and are implementing remedial measures to address the control deficiency that led to the material weakness. However, there can be no assurance that our remedial measures will correct the deficiency.
The material weakness related primarily to the implementation of a new Enterprise Resource Planning (ERP) system. Management has determined that this deficiency constitutes a material weakness in our internal control over financial reporting. We are in the process of identifying and implementing remedial measures to address the control deficiencies that led to the material weakness.
In some instances, we, our customers, and the users of our products and services can be unaware of an incident or its magnitude and effects.
In some instances, we, our customers, and the users of our products and services can be unaware of an incident or its magnitude and effects. In addition, global privacy legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment.
More information regarding the material weakness and our remediation efforts is provided in “Item 9A. Controls and Procedures.” Changes in or the implementation of accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial results .
Controls and Procedures.” Changes in or the implementation of accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial results . Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
Extended closure of one or more of our large facilities or a material decrease in our available workforce could have a material negative impact on our financial position and results of operations.
Extended closure of one or more of our facilities or a decrease in our available workforce could have a negative impact on our financial position and results of operations. Labor shortages in the geographies where we operate could prevent us from converting backlog to revenue. Similarly, the operations of our customers or suppliers may be disrupted.
A failure to design or manufacture products or technologies or to achieve timely certification or market acceptance of new products or technologies could have an adverse effect on our profitability. We continue to introduce new railcar product innovations and technologies.
Some of our credit facilities and existing indebtedness use variable rates which may make the amount of interest we pay on our variable rate indebtedness difficult to predict. 17 A failure to design or manufacture products or technologies or to achieve timely certification or market acceptance of new products or technologies could have an adverse effect on our profitability.
Additionally, malicious hackers, state-sponsored organizations, terrorists, employees and third-party service providers, or intruders into our physical facilities may attempt to gain unauthorized access and corrupt the processes used to operate our businesses and to design and manufacture our products.
We face attempts by malicious hackers, state-sponsored organizations, intruders and potentially terrorists, employees, and third-party service providers into our physical facilities to gain unauthorized access, or introduce malicious software to our network or those of our customers to, among other things, steal proprietary information related to our business, products, employees, and customers; interrupt our systems and services or those of our customers; corrupt the processes used to operate our businesses and to design and manufacture our products; or demand ransom to return control of such systems and services.
In addition, if the U.S. economy enters a recession, we may experience sales declines and may have to decrease prices, either of which could have a material adverse impact on our financial results. 20 Monetary and other policy interventions by governments and central banks, including the increase of interest rates, as well as uncertainly about governmental macroeconomic policies, could negatively impact our business and results of operations.
Risks Related to Market and Economic Factors Inflation as well as monetary and other policy interventions by governments and central banks in response to inflation, including the increase of interest rates, as well as uncertainly about governmental macroeconomic policies, could negatively impact our business and results of operations.
We currently identify the following factors as the most significant risks to our business due to COVID-19, governmental actions, and economic conditions. • We may be prevented from operating our manufacturing facilities, maintenance shops, wheel shops or other worksites due to the illness of our employees, “stay-at-home” regulations, and employee reluctance to appear for work for many different reasons including the implementation of any government-imposed vaccination or testing mandates.
A resurgence or development of new strains or variants of COVID-19 or the occurrence of another widespread health crisis and the governmental reaction thereto may prevent us from operating our facilities due to the illness of our employees, “stay-at-home” regulations, and employee reluctance to appear for work for many different reasons including the implementation of any government-imposed vaccination or testing mandates.
General inflation in the United States, Europe and other geographies has risen to levels not experienced in recent decades. General inflation, including rising prices for energy, metals, components, and other inputs as well as rising wages negatively impact our business by increasing our operating costs.
General inflation in the United States, Europe and other geographies has risen to levels not experienced in recent decades. General inflation also negatively impacts our business by decreasing the capital for our customers to deploy to purchase our goods and services.
Accordingly, we may not be able to continue to pay dividends in any given amount in the future, or at all. Our business and operations could be negatively affected if we become subject to shareholder activism, which could cause us to incur significant expense, hinder execution of our business strategy and impact our stock price.
Our business and operations could be negatively affected if we become subject to shareholder activism, which could cause us to incur significant expense, hinder execution of our business strategy and impact our stock price. Shareholder activism, which could take many forms, including potential proxy contests and public information campaigns, continues to increase.
The deterioration of conditions in the global capital markets, weakening of macroeconomic conditions and changes in the credit markets and the financial services industry could negatively impact our business, results of operations, financial condition or liquidity. Our leasing subsidiaries' operations relies in large part upon banks and capital markets to fund its operations and contractual commitments and refinance existing debt.
A material or adverse change in exchange rates could result in significant deterioration of profits or in losses for us. The deterioration of conditions in the global capital markets, weakening of macroeconomic conditions and changes in the credit markets and the financial services industry could negatively impact our business, results of operations, financial condition or liquidity.
The likelihood of cancellations, modifications, rejection and non-payment for our products generally increases during periods of market weakness. The timing of converting backlog to revenue is also materially impacted by our decision whether to lease railcars, sell railcars, or syndicate railcars with a lease attached to an investor. Actual revenue may not equal our anticipated revenues based on our backlog.
If a customer cancels an order, we may be unable to recover the entire amount we anticipated receiving from the order. The timing of converting backlog to revenue is also materially impacted by our decision whether to lease railcars, sell railcars, syndicate railcars with a lease attached to an investor, or contribute railcars to our lease fleet.
Conversely, third parties might assert that our products, services, or other business activities infringe their patents or other intellectual property rights. Infringement and other intellectual property claims and proceedings brought against us, whether successful or not, could result in substantial litigation and judgment costs and harm our reputation. Insurance coverage could be costly, unavailable or inadequate.
Conversely, third parties might assert that our products, services, or other business activities infringe their patents or other intellectual property rights.
If indicators suggest it is more likely than not that the fair value of a reporting unit is less than its carrying value, it may result in an impairment of goodwill. As of August 31, 2022, we had $84.3 million of goodwill in our Manufacturing segment and $43.0 million in our Maintenance Services segment.
If indicators suggest it is more likely than not that the fair value of a reporting unit is less than its carrying value or that the carrying amount of intangible or long-lived assets may not be recoverable, it may result in an impairment. Impairment charges would impact our results of operations in the period in which they are identified.
The COVID-19 coronavirus pandemic, and potential future related decline in global economic activity, as well as governmental reaction to the pandemic could continue to negatively impact our business, liquidity and financial position, results of operations, stock price, and ability to convert backlog to revenue.
A resurgence or development of new strains or variants of COVID-19 or the occurrence of another widespread health crisis and the governmental reaction thereto could materially and adversely impact our business, liquidity and financial position, results of operations, and, in turn, the price of our common stock.
We face risks related to cybersecurity threats and incidents that increase our costs and could disrupt our business and operations. We regularly face attempts by others to gain unauthorized access through the Internet, or to introduce malicious software, to our information technology systems.
Our failure to create and implement systems for monitoring, mitigating, managing, and recovering from such events could increase the length and severity of such disruptions, and could subject us to losses including penalties, cancellation of orders, and/or other losses. We face risks related to cybersecurity threats and incidents that increase our costs and could disrupt our business and operations.
Removed
If we are unable to adjust our selling prices or have adequate protection in our contracts against changes in material prices, our margins could be adversely affected.
Added
Shortages of skilled labor, increased labor costs, or failure to maintain good relations with our workforce could adversely affect our operations. We depend on skilled labor in all areas of our business. Some of our facilities are located in areas where demand for skilled labor often exceeds supply.
Removed
Further, although a portion of the costs we must incur to meet our contractual obligations are subject to escalation clauses which allow us to pass through costs to our customers, we will absorb some cost increases thereby decreasing margin on some of our customer contracts.
Added
If we or our joint ventures fail to complete capital expenditure projects on time and within budget, or if these projects, once completed, fail to operate as anticipated, or fail to improve the efficiencies of our operations, or to generate additional revenue as anticipated, such failure could adversely affect our business, financial condition and results of operations.
Removed
As a result of these impacts and due to the lack of new railcar orders in Europe during the third quarter of 2022, we have slowed down production at our European manufacturing facilities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeP ROPERTIES We operate at the following primary facilities as of August 31, 2022: Description Location Status Manufacturing Segment Operating facilities: 6 locations in the United States Owned 3 locations in Mexico Owned – 2 locations Leased – 1 location 3 locations in Poland Owned 3 locations in Romania Owned 1 location in Turkey Owned Administrative offices: 2 locations in the United States Leased Maintenance Services Segment Operating facilities: 17 locations in the United States Leased – 9 locations Owned – 8 locations Leasing & Management Services Segment Corporate offices, railcar marketing and leasing activities: Lake Oswego, Oregon Leased We believe that our facilities are in good condition and that the facilities, together with anticipated capital improvements and additions, are adequate to meet our operating needs for the foreseeable future.
Biggest changeP ROPERTIES We operate at the following primary facilities as of August 31, 2023: Description Location Status Manufacturing Segment Operating facilities: 4 locations in the United States Owned 3 locations in Mexico Owned – 2 locations Leased – 1 location 3 locations in Poland Owned 3 locations in Romania Owned Administrative offices: 2 locations in the United States Leased Maintenance Services Segment Operating facilities: 17 locations in the United States Leased – 9 locations Owned – 8 locations Leasing & Management Services Segment Corporate offices, railcar marketing and leasing activities: Lake Oswego, Oregon Leased We believe that our facilities are in good condition and that the facilities, together with anticipated capital improvements and additions, are adequate to meet our operating needs for the foreseeable future.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeCenturion has served in various management positions for the Company since 2005, most recently as President of North American Manufacturing Operations. Brian J. Comstock , 60, is Executive Vice President, Chief Commercial and Leasing Officer, a position he has held since January 2021. Mr.
Biggest changeBaker has led Greenbrier's Legal and Compliance departments since joining the Company in May 2008. Prior to joining the Company, Mr. Baker served as General Counsel to Lattice Semiconductor Corporation, Altera Corporation and Vitelic Corporation. Brian J. Comstock , 61, is Executive Vice President, Chief Commercial and Leasing Officer, a position he has held since January 2021. Mr.
Executive officers are designated by the Board of Directors. No director or executive officer has a family relationship with any other director or executive officer of the Company. 29 PART II
Executive officers are designated by the Board of Directors. No director or executive officer has a family relationship with any other director or executive officer of the Company. 28 PART II
Item 4. MINE SAF ETY DISCLOSURES Not applicable. 28 Information about ou r Executive Officers Current information regarding our executive officers is presented below. Lorie L. Tekorius, 55, is President and Chief Executive Officer and serves on the Board of Directors. Ms.
Item 4. MINE SAF ETY DISCLOSURES Not applicable. 27 Information about ou r Executive Officers Current information regarding our executive officers is presented below. Lorie L. Tekorius, 56, is Chief Executive Officer (CEO) and President and serves on the Board of Directors. Ms.
Tekorius has served as President since August 2019 and was promoted to Chief Executive Officer on March 1, 2022. Ms. Tekorius was elected to the Board of Directors on March 28, 2022. Ms.
Tekorius has served as President since August 2019 and was promoted to Chief Executive Officer in March 2022. Ms. Tekorius was elected to the Board of Directors in March 2022. Ms.
Tekorius has served in various management positions for the Company since 1995, most recently as Executive Vice President and Chief Operating Officer and prior to that, as Executive Vice President and Chief Financial Officer. Martin R. Baker, 66, is Senior Vice President, General Counsel and Chief Compliance Officer, a position he has held since joining the Company in May 2008.
Tekorius has served in various management positions for the Company since 1995, most recently as Executive Vice President and Chief Operating Officer and prior to that, as Executive Vice President and Chief Financial Officer. Martin R. Baker, 67, is Senior Vice President, Chief Legal and Compliance Officer. Mr.
Comstock has served in various management positions for the Company since 1998, most recently as Executive Vice President, Sales and Marketing. Adrian J. Downes, 59, is Senior Vice President, Chief Financial Officer and Chief Accounting Officer. Mr. Downes has served as Senior Vice President and Chief Accounting Officer since joining the Company in March 2013. Mr.
Comstock has served in various management positions for the Company since 1998, most recently as Executive Vice President, Sales and Marketing. Laurie Dornan, 53, is Senior Vice President, Chief Human Resources Officer, a position she has held since November 2020. Ms. Dornan has served in various human resources leadership positions since joining the Company in 2014.
Removed
Prior to joining the Company, Mr. Baker was Corporate Vice President, General Counsel and Secretary of Lattice Semiconductor Corporation. Alejandro Centurion, 66, served as Executive Vice President of the Company and President of Greenbrier Manufacturing Operations until August 31, 2022, a position he has held since January 2015. Mr.
Added
Prior to Greenbrier, she served in various leadership roles with Lattice Semiconductor Corporation, Nautilus, Inc. and Electro Scientific Industries. Adrian J. Downes, 60, is Senior Vice President, Chief Financial Officer, a position he has held since June 2019. In March 2013, Mr. Downes joined the Company as Senior Vice President and Chief Accounting Officer. In August 2018, Mr.
Removed
Downes was promoted to Acting Chief Financial Officer in August 2018 and was promoted to Chief Financial Officer in May 2019. William A. Furman, 78, served as the Executive Chairman until August 31, 2022 and continues to serve as a Director. Mr.
Added
Downes assumed the role of Acting Chief Financial Officer and in June 2019 was appointed Chief Financial Officer. Before joining the company, Mr. Downes served in executive leadership roles for Knowledge Universe, SUPERVALU Inc. and Albertsons, Inc. Rick Galvan , 51, is Senior Vice President, Greenbrier Rail Services (GRS), a position he has held since January 2021.
Removed
Furman previously served as Chief Executive Officer from 1994 until March 1, 2022, and as Chairman of the Board of Directors from January 2014 until his appointment to Executive Chairman on March 28, 2022. Mr. Furman was Vice President of the Company, or its predecessor company, from 1974 to 1994 and President of the Company from 1994 to 2019.
Added
Prior to this role, Mr. Galvan served as the Senior Vice President of Operations for GRS. Mr. Galvan has over 30 years of experience in the railroad industry serving in various management functions including positions at Canadian National Railway, Kansas City Southern, and Burlington Northern Santa Fe.
Added
William Krueger , 58, is Senior Vice President, President Greenbrier Manufacturing Operations, a position he has held since September 2022. Mr. Krueger joined Greenbrier in 2020 as Senior Vice President GMO. In that role, he led integration and transformation efforts at Greenbrier’s manufacturing operations in Arkansas and Missouri, acquired in 2019.
Added
As part of leading Greenbrier’s Manufacturing segment, Krueger also manages global railcar design, engineering, and quality functions. Before joining the Company, Mr. Krueger held a number of operations roles in the automotive industry including positions at General Motors, Toyota, and Nissan. Matthew J.
Added
Meyer , 42, is Senior Vice President, Finance and Chief Accounting Officer and joined the Company in February 2023. Prior to joining the Company, Mr. Meyer was Chief Accounting Officer of Horizon Global Corporation from December 2019 to February 2023, and Corporate Controller from November 2018 to December 2019. Prior to that, Mr. Meyer has held various finance leadership roles.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock. The share repurchase program has an expiration date of January 31, 2023. There were no share repurchases during the year ended August 31, 2022 under this program.
Biggest changeIssuer Purchases of Equity Securities The Board of Directors has authorized the Company to repurchase shares of the Company’s common stock. On January 5, 2023, the expiration date of this share repurchase program was extended to January 31, 2025.
Each of the indices assumes that all dividends were reinvested and that the investment was maintained to and including August 31, 2022, the end of the Company’s 2022 fiscal year. 30 The comparisons in this table are required by the SEC, and therefore, are not intended to forecast or be indicative of possible future performance of our Common Stock.
Each of the indices assumes that all dividends were reinvested and that the investment was maintained to and including August 31, 2023, the end of the Company’s 2023 fiscal year. 29 The comparisons in this table are required by the SEC, and therefore, are not intended to forecast or be indicative of possible future performance of our Common Stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been traded on the New York Stock Exchange under the symbol GBX since July 14, 1994. There were approximately 550 holders of record of common stock as of October 24, 2022.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been traded on the New York Stock Exchange under the symbol GBX since July 14, 1994. There were approximately 550 holders of record of common stock as of October 20, 2023.
The graph assumes an investment of $100 on August 31, 2017 in each of the Company's Common Stock and the stocks comprising the indices.
The graph assumes an investment of $100 on August 31, 2018 in each of the Company's Common Stock and the stocks comprising the indices.
Removed
The amount remaining for repurchase was $100.0 million as of August 31, 2022. Performance Graph The following graph demonstrates a comparison of cumulative total returns for the Company's Common Stock, the Dow Jones U.S. Industrial Transportation Index and the Standard & Poor’s (S&P) 500 Index.
Added
Share repurchases under this program during the three months ended August 31, 2023 were as follows: (in millions, except shares which are reflected in thousands, and per share amounts) Total Number of Shares Purchased Average Price Paid Per Share (Including Commissions) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs June 1, 2023 - June 30, 2023 247 $ 30.41 247 $ 46.4 July 1, 2023 - July 31, 2023 — $ — — $ 46.4 August 1, 2023 - August 31, 2023 — $ — — $ 46.4 Performance Graph The following graph demonstrates a comparison of cumulative total returns for the Company's Common Stock, the Dow Jones U.S.
Added
Industrial Transportation Index, the Standard & Poor’s (S&P) 500 Index, and the S&P SmallCap 600 Index. The S&P SmallCap 600 is included as it is used in measuring the Company's relative total stockholder return for purposes of determining the performance of certain stock awards granted beginning in 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThese were partially offset by: • The income tax benefit for the year ended August 31, 2021, which primarily related to accelerated depreciation and the impact of the CARES Act which allowed us to carry back tax losses to years when tax rates were higher, resulting in a tax benefit. • An increase in Selling and administrative expense for the year ended August 31, 2022 primarily attributed to higher employee related costs as well as higher costs for legal, consulting and travel associated with increased business activity. 36 Manufacturing Segment Year Ended August 31, 2022 vs 2021 (In millions, except railcar deliveries) 2022 2021 Increase (Decrease) % Change Revenue $ 2,476.6 $ 1,311.1 $ 1,165.5 88.9 % Cost of revenue $ 2,300.9 $ 1,189.2 $ 1,111.7 93.5 % Margin (%) 7.1 % 9.3 % (2.2 )% * Operating profit ($) $ 97.2 $ 48.3 $ 48.9 101.2 % Operating profit (%) 3.9 % 3.7 % 0.2 % * Deliveries 18,700 11,300 7,400 65.5 % * Not meaningful Our Manufacturing segment primarily generates revenue from manufacturing a wide range of freight railcars and from the conversion of existing or in-service railcars through our facilities in North America and Europe.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K, which was filed with the United States Securities and Exchange Commission on October 31, 2022. 35 Manufacturing Segment Year Ended August 31, 2023 vs 2022 (In millions, except railcar deliveries) 2023 2022 Increase (Decrease) % Change Revenue $ 3,357.7 $ 2,476.6 $ 881.1 35.6 % Cost of revenue $ 3,083.4 $ 2,300.9 $ 782.5 34.0 % Margin (%) 8.2 % 7.1 % 1.1 % * Operating profit ($) $ 140.9 $ 97.2 $ 43.7 45.0 % Operating profit (%) 4.2 % 3.9 % 0.3 % * Deliveries 24,900 18,700 6,200 33.2 % * Not meaningful Our Manufacturing segment primarily generates revenue from manufacturing a wide range of freight railcars and from the conversion of existing railcars through our facilities in North America and Europe.
Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax (expense) benefit for either external or internal reporting purposes.
Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.
Critical Accounting Policies and 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.
Critical Accounting 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.
Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time. 34 Financial Overview Revenue, Cost of revenue, Margin and Earnings from operations (operating profit) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time. 33 Financial Overview Revenue, Cost of revenue, Margin and Earnings from operations (operating profit) presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
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 program may be modified, suspended, or discontinued at any time without prior notice. Under the share repurchase program, shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. The timing and amount of purchases is based upon market conditions, securities law limitations and other factors.
The joint venture is treated as a partnership for tax purposes and, as a result, the partnership’s entire pre-tax earnings are included in Earnings (loss) before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax (expense) benefit.
The joint venture is treated as a partnership for tax purposes and, as a result, the partnership’s entire pre-tax earnings are included in Earnings before income taxes and earnings from unconsolidated affiliates, whereas only our 50% share of the tax is included in Income tax expense.
The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of August 31, 2022, we were in compliance with all such restrictive covenants.
The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of August 31, 2023, we were in compliance with all such restrictive covenants.
Amounts are based on interest rates as of August 31, 2022. Off Balance Sheet Arrangements We do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.
Amounts are based on interest rates as of August 31, 2023. We do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.
Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Management Services. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity.
Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Management Services and divestitures previously discussed. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity.
Earnings From Unconsolidated Affiliates Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the after-tax results from these unconsolidated affiliates. Earnings from unconsolidated affiliates was $11.3 million and $3.5 million for the years ended August 31, 2022 and 2021, respectively.
Earnings From Unconsolidated Affiliates Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the after-tax results from these unconsolidated affiliates. Earnings from unconsolidated affiliates was $9.2 million and $11.3 million for the years ended August 31, 2023 and 2022, respectively.
As of August 31, 2022, lines of credit totaling $67.2 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.6% and Euro Interbank Offered Rate (EURIBOR) plus 1.5%, were available for working capital needs of our European manufacturing operations.
Europe – As of August 31, 2023, lines of credit totaling $72.8 million secured by certain of our European assets, with variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.6% and Euro Interbank Offered Rate (EURIBOR) plus 1.5% to EURIBOR plus 1.9%, were available for working capital needs of our European manufacturing operations.
As of August 31, 2022, a $600.0 million revolving line of credit, maturing August 2026, secured by substantially all of our U.S. assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities, was available to provide working capital and interim financing of equipment, principally for the Company’s U.S. and Mexican operations.
North America – As of August 31, 2023, a $600.0 million revolving line of credit, maturing August 2026, secured by substantially all of our U.S. assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities, existed to provide working capital and interim financing of equipment, principally for our U.S. and Mexican operations.
Our current cash balance is part of our strategy to maintain strong liquidity to respond to current uncertainties. Senior secured credit facilities, consisting of four components, aggregated to $1.14 billion as of August 31, 2022. We had an aggregate of $147.9 million available to draw down under committed credit facilities as of August 31, 2022.
Our current cash balance is part of our strategy to maintain strong liquidity to respond to current uncertainties. Senior secured credit facilities, consisting of four components, aggregated to $1.4 billion as of August 31, 2023. We had an aggregate of $364.4 million available to draw down under credit facilities as of August 31, 2023.
Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information.
We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information.
Federal tax rate differential between 2016 - 2017 tax rates of 35% and the current rate of 21%. The effective tax rate can fluctuate year-to-year due to discrete items and changes in the mix of foreign and domestic pre-tax earnings. It can also fluctuate with changes in the proportion of pre-tax earnings attributable to our Mexican railcar manufacturing joint venture.
The effective tax rate can fluctuate year-to-year due to discrete items and changes in the mix of foreign and domestic pre-tax earnings. It can also fluctuate with changes in the proportion of pre-tax earnings attributable to our Mexican railcar manufacturing joint venture.
Advances under this facility bear interest at SOFR plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% depending on the type of borrowing.
Advances under this North American credit facility bear interest at the Secured Overnight Financing Rate (SOFR) plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% depending on the type of borrowing.
The demand for, and mix of, products and services delivered changes from period to period, which causes fluctuations in our results of operations. The 70.4% increase in revenue for the year ended August 31, 2022 as compared to the prior year was primarily due to an 88.9% increase in Manufacturing revenue.
The demand for, and mix of, products and services delivered changes from period to period, which causes fluctuations in our results of operations. The 32.5% increase in revenue for the year ended August 31, 2023 as compared to the prior year was primarily due to an 35.6% increase in Manufacturing revenue.
The increase in Manufacturing cost of revenue was primarily attributed to a 65.5% increase in railcar deliveries and higher steel and other input costs in the current year. Margin as a percentage of revenue was 10.3% and 13.3% for the years ended August 31, 2022 and 2021, respectively.
The increase in Manufacturing cost of revenue was primarily attributed to a 33.2% increase in railcar deliveries and higher material and other input costs in the current year. Margin as a percentage of revenue was 11.2% and 10.3% for the years ended August 31, 2023 and 2022, respectively.
Year Ended August 31, (In millions) 2022 2021 Capital expenditures: Leasing & Management Services $ (323.2 ) $ (103.8 ) Manufacturing (48.3 ) (26.6 ) Maintenance Services (9.2 ) (8.6 ) Total capital expenditures (gross) $ (380.7 ) $ (139.0 ) Proceeds from sale of equipment 155.5 15.9 Total capital expenditures (net of proceeds) $ (225.2 ) $ (123.1 ) Capital expenditures primarily relate to additions to our lease fleet and on-going investments into our facilities, including the safety and productivity of our facilities.
Year Ended August 31, (In millions) 2023 2022 Capital expenditures: Leasing & Management Services $ (272.9 ) $ (323.2 ) Manufacturing (71.9 ) (48.3 ) Maintenance Services (17.3 ) (9.2 ) Total capital expenditures (gross) $ (362.1 ) $ (380.7 ) Proceeds from sale of equipment 78.8 155.5 Total capital expenditures (net of proceeds) $ (283.3 ) $ (225.2 ) Capital expenditures primarily relate to additions to our lease fleet and on-going investments into our facilities, including the safety, productivity and efficiency of our facilities.
As of August 31, (In millions) 2022 2021 Credit facility balances: North America $ 160.0 $ 160.0 GBX Leasing — 147.0 Europe 51.6 50.2 Mexico 85.0 15.0 Total Revolving notes $ 296.6 $ 372.2 As of August 31, 2022, outstanding commitments under the North American credit facility included letters of credit which totaled $6.9 million.
As of August 31, (In millions) 2023 2022 Credit facility balances: North America $ — $ 160.0 GBX Leasing 139.9 — Europe 47.2 51.6 Mexico 110.0 85.0 Total Revolving notes $ 297.1 $ 296.6 As of August 31, 2023, outstanding commitments under the North American credit facility included letters of credit which totaled $4.9 million.
Capital expenditures for 2023 are expected to be approximately $240 million for Leasing & Management Services, approximately $80 million for Manufacturing and approximately $10 million for Maintenance Services. Capital expenditures for 2023 primarily relate to additions to our lease fleet reflecting our enhanced leasing strategy and continued investments into the safety and productivity of our facilities.
Capital expenditures for 2024 are expected to be approximately $280 million for Leasing & Management Services, approximately $190 million for Manufacturing and approximately $15 million for Maintenance Services. Capital expenditures for 2024 primarily relate to additions to our lease fleet and continued investments into the safety and productivity of our facilities.
Interest and Foreign Exchange Interest and foreign exchange expense was composed of the following: Year Ended August 31, Increase (decrease) (In millions) 2022 2021 2022 vs 2021 Interest and foreign exchange: Interest and other expense $ 55.7 $ 44.7 $ 11.0 Foreign exchange (gain) loss 1.7 (1.4 ) 3.1 $ 57.4 $ 43.3 $ 14.1 The $14.1 million increase in interest and foreign exchange expense during the year ended August 31, 2022 compared to the prior year was primarily attributed to an increase in interest expense from higher levels of borrowings and interest rates.
Interest and Foreign Exchange Interest and foreign exchange expense was composed of the following: Year Ended August 31, Increase (decrease) (In millions) 2023 2022 2023 vs 2022 Interest and foreign exchange: Interest and other expense $ 79.2 $ 55.7 $ 23.5 Foreign exchange loss 6.2 1.7 4.5 $ 85.4 $ 57.4 $ 28.0 The $28.0 million increase in Interest and foreign exchange expense during the year ended August 31, 2023 compared to the prior year was primarily attributed to an increase in interest expense from higher interest rates and borrowings.
At August 31, 2022 cash and cash equivalents and restricted cash were $559.1 million, a decrease of $112.3 million from $671.4 million at the prior year end.
At August 31, 2023 cash and cash equivalents and restricted cash were $302.7 million, a decrease of $256.4 million from $559.1 million at the prior year end.
Year Ended August 31, (In millions) 2022 2021 Operating profit (loss): Manufacturing $ 97.2 $ 48.3 Maintenance Services 21.7 6.5 Leasing & Management Services 108.3 68.9 Corporate (109.2 ) (82.7 ) $ 118.0 $ 41.0 35 Consolidated Results Year Ended August 31, 2022 vs 2021 (In millions) 2022 2021 Increase (Decrease) % Change Revenue $ 2,977.7 $ 1,747.9 $ 1,229.8 70.4 % Cost of revenue $ 2,671.7 $ 1,516.3 $ 1,155.4 76.2 % Margin (%) 10.3 % 13.3 % (3.0 )% * Net earnings attributable to Greenbrier $ 46.9 $ 32.4 $ 14.5 44.8 % * Not meaningful Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various average selling prices and margins.
Year Ended August 31, (In millions) 2023 2022 Operating profit (loss): Manufacturing $ 140.9 $ 97.2 Maintenance Services 36.9 21.7 Leasing & Management Services 103.3 108.3 Corporate (104.7 ) (109.2 ) $ 176.4 $ 118.0 34 Consolidated Results Year Ended August 31, 2023 vs 2022 (In millions) 2023 2022 Increase (Decrease) % Change Revenue $ 3,944.0 $ 2,977.7 $ 966.3 32.5 % Cost of revenue $ 3,502.9 $ 2,671.7 $ 831.2 31.1 % Margin (%) 11.2 % 10.3 % 0.9 % * Net earnings attributable to Greenbrier $ 62.5 $ 46.9 $ 15.6 33.3 % * Not meaningful Through our integrated business model, we provide a broad range of custom products and services in each of our segments, which have various average selling prices and margins.
The first line of credit provides up to $30.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2024.
The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through 42 February 2025. The third line of credit provides up to $30.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at a variable rate.
Leasing & Management Services margin as a percentage of revenue increased 1.9% for the year ended August 31, 2022 compared to the prior year. The increase in margin percentage was primarily attributed to higher syndication activity.
Leasing & Management Services Margin as a percentage of revenue increased 0.9% for the year ended August 31, 2023 compared to the prior year. The increase in Margin percentage was primarily attributed to higher lease rates and growth of the lease fleet.
Available borrowings under the credit facility are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.
Available borrowings under the credit facility are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios. GBX Leasing – As of August 31, 2023, a $550.0 million nonrecourse warehouse credit facility existed to support the operations of GBX Leasing.
This amount consists of $97.3 million available on the North American credit facility, $15.6 million on the European credit facilities and $35.0 million on the Mexican credit facilities.
This amount consists of $273.8 million available on the North American credit facility, $25.6 million on the European credit facilities and $65.0 million on the Mexican credit facilities.
The European lines of credit include $40.8 million which are guaranteed by us. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from September 2022 through October 2023. 43 As of August 31, 2022, our Mexican railcar manufacturing operations had four lines of credit totaling $120.0 million.
The European lines of credit include $35.9 million which are guaranteed by our Company. European credit facilities are regularly renewed. Currently, these European credit facilities have maturities that range from October 2023 through July 2025. Mexico – As of August 31, 2023, our Mexican railcar manufacturing operations had three lines of credit totaling $175.0 million.
Cash Flows From Investing Activities Cash used in investing activities primarily relates to capital expenditures net of proceeds from the sale of assets and investment activity with our unconsolidated affiliates.
Cash Flows From Investing Activities Cash used in investing activities primarily relates to capital expenditures net of proceeds from the sale of assets, divestitures during the year and investment activity with our unconsolidated affiliates. The change in cash used in investing activities for 2023 compared to 2022 was primarily attributable to a decrease in proceeds from the sale of assets.
Year Ended August 31, (In millions, except per share amounts) 2022 2021 Revenue: Manufacturing $ 2,476.6 $ 1,311.1 Maintenance Services 347.7 298.3 Leasing & Management Services 153.4 138.5 2,977.7 1,747.9 Cost of revenue: Manufacturing 2,300.9 1,189.2 Maintenance Services 322.0 280.4 Leasing & Management Services 48.8 46.7 2,671.7 1,516.3 Margin: Manufacturing 175.7 121.9 Maintenance Services 25.7 17.9 Leasing & Management Services 104.6 91.8 306.0 231.6 Selling and administrative 225.2 191.8 Net gain on disposition of equipment (37.2 ) (1.2 ) Earnings from operations 118.0 41.0 Interest and foreign exchange 57.4 43.3 Net loss on extinguishment of debt — 6.3 Earnings (loss) before income tax and earnings from unconsolidated affiliates 60.6 (8.6 ) Income tax (expense) benefit (18.1 ) 40.2 Earnings before earnings from unconsolidated affiliates 42.5 31.6 Earnings from unconsolidated affiliates 11.3 3.5 Net earnings 53.8 35.1 Net earnings attributable to noncontrolling interest (6.9 ) (2.7 ) Net earnings attributable to Greenbrier $ 46.9 $ 32.4 Diluted earnings per common share $ 1.40 $ 0.96 Performance for our segments is evaluated based on operating profit.
Year Ended August 31, (In millions, except per share amounts) 2023 2022 Revenue: Manufacturing $ 3,357.7 $ 2,476.6 Maintenance Services 406.4 347.7 Leasing & Management Services 179.9 153.4 3,944.0 2,977.7 Cost of revenue: Manufacturing 3,083.4 2,300.9 Maintenance Services 364.0 322.0 Leasing & Management Services 55.5 48.8 3,502.9 2,671.7 Margin: Manufacturing 274.3 175.7 Maintenance Services 42.4 25.7 Leasing & Management Services 124.4 104.6 441.1 306.0 Selling and administrative 235.3 225.2 Net gain on disposition of equipment (17.3 ) (37.2 ) Asset impairment, disposal, and exit costs 46.7 — Earnings from operations 176.4 118.0 Interest and foreign exchange 85.4 57.4 Earnings before income tax and earnings from unconsolidated affiliates 91.0 60.6 Income tax expense (24.6 ) (18.1 ) Earnings before earnings from unconsolidated affiliates 66.4 42.5 Earnings from unconsolidated affiliates 9.2 11.3 Net earnings 75.6 53.8 Net earnings attributable to noncontrolling interest (13.1 ) (6.9 ) Net earnings attributable to Greenbrier $ 62.5 $ 46.9 Diluted earnings per common share $ 1.89 $ 1.40 Performance for our segments is evaluated based on operating profit.
The increase in Manufacturing revenue was primarily attributed to a 65.5% increase in railcar deliveries. The 76.2% increase in cost of revenue for the year ended August 31, 2022 as compared to the prior year was primarily due to a 93.5% increase in Manufacturing cost of revenue.
The increase in Manufacturing revenue was primarily attributed to a 33.2% increase in railcar deliveries and higher syndication revenues. The 31.1% increase in cost of revenue for the year ended August 31, 2023 as compared to the prior year was primarily due to a 34.0% increase in Manufacturing cost of revenue.
Net gain on disposition of equipment was $37.2 million and $1.2 million for the years ended August 31, 2022 and 2021, respectively. The increase in Net gain on disposition of equipment was primarily attributed to sales of assets from our lease fleet during the year ended August 31, 2022.
The decrease in Net gain on disposition of equipment was primarily attributed to fewer sales of assets from our lease fleet during the year ended August 31, 2023.
The increase in operating profit was primarily attributed to higher volumes and an increase in scrap metal pricing and lower selling and administrative costs. 38 Leasing & Management Services Segment Year Ended August 31, 2022 vs 2021 (In millions) 2022 2021 Increase (Decrease) % Change Revenue $ 153.4 $ 138.5 $ 14.9 10.8 % Cost of revenue $ 48.8 $ 46.7 $ 2.1 4.5 % Margin (%) 68.2 % 66.3 % 1.9 % * Operating profit ($) $ 108.3 $ 68.9 $ 39.4 57.2 % Operating profit (%) 70.6 % 49.7 % 20.9 % * * Not meaningful Our Leasing & Management Services segment generates revenue from leasing railcars from our lease fleet which includes GBX Leasing, providing various management services, syndication revenue associated with new railcar sales with leases attached, interim rent on leased railcars for syndication and the sale of railcars purchased from third parties with the intent to resell.
This was partially offset by lower scrap metal pricing in the current year. 37 Leasing & Management Services Segment Year Ended August 31, 2023 vs 2022 (In millions) 2023 2022 Increase (Decrease) % Change Revenue $ 179.9 $ 153.4 $ 26.5 17.3 % Cost of revenue $ 55.5 $ 48.8 $ 6.7 13.7 % Margin (%) 69.1 % 68.2 % 0.9 % * Operating profit ($) $ 103.3 $ 108.3 $ (5.0 ) (4.6 )% Operating profit (%) 57.4 % 70.6 % (13.2 )% * * Not meaningful Our Leasing & Management Services segment generates revenue from leasing railcars from our lease fleet, providing various management services, syndication revenue associated with leases attached to new railcar sales, and interim rent on leased railcars for syndication.
The $14.5 million increase in net earnings attributable to Greenbrier for the year ended August 31, 2022 as compared to the prior year was primarily due to the following: • An increase in margin dollars primarily due to higher railcar deliveries and syndication revenue for the year ended August 31, 2022. • An increase in Net gain on disposition of equipment for the year ended August 31, 2022.
The $15.6 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2023 as compared to the prior year was primarily due to an increase in margin dollars that was mainly attributable to higher railcar deliveries and syndications.
The tax rate was primarily attributable to the geographic mix of earnings, partially offset by net favorable discrete items. In 2021 our income tax benefit was $40.2 million on $8.6 million of pre-tax loss.
In 2022 our income tax expense was $18.1 million on $60.6 million of pre-tax earnings for an effective tax rate of 29.9%. The tax rate was primarily attributable to the geographic mix of earnings, partially offset by net favorable discrete items.
Changes in these estimates, which may include the effects of inflation and policy reactions thereto, continued increases in pricing of materials and components, or potential macroeconomic events may cause future assessment conclusions to differ. 45 Income taxes - The asset and liability method is used to account for income taxes.
Changes in these estimates, which may include the effects of inflation and policy reactions thereto, increases in pricing of materials and 44 components, changes in demand, or potential macroeconomic events may cause future assessment conclusions to differ. For further information, see Note 8 to the Consolidated Financial Statements.
During the year ended August 31, 2022 we issued asset backed securities of $323.3 million, and used proceeds to pay down our warehouse credit facility for GBX Leasing.
During the year ended August 31, 2023 we paid off the North America credit facility, drew the remaining $75.0 million on our leasing term loan facility and drew $139.9 million on the GBXL warehouse credit facility as we continued to grow the fleet. 41 During 2022 we issued asset backed securities of $323.3 million, and used proceeds to pay down our warehouse credit facility for GBX Leasing.
Cash Flows From Financing Activities The change in cash provided by (used in) financing activities for 2022 compared to 2021 was primarily attributed to proceeds from the issuance of debt, net of repayments.
Proceeds from sales of assets are expected to be approximately $80 million for 2024. Cash Flows From Financing Activities The change in cash provided by (used in) financing activities for 2023 compared to 2022 was primarily attributed to lower net proceeds from the issuance of debt and higher share repurchases.
Backlog units for lease may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Multi-year supply agreements are a part of rail industry practice. A portion of the orders included in backlog reflects an assumed product mix.
Our backlog includes $970 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Multi-year supply agreements are a part of rail industry practice.
Maintenance Services cost of revenue increased $41.6 million or 14.8% for the year ended August 31, 2022 compared to the prior year. The increase was primarily due to higher costs associated with an increase in volumes and an increase in material and labor costs.
Maintenance Services cost of revenue increased $42.0 million or 13.0% for the year ended August 31, 2023 compared to the prior year. The increase was primarily due to higher costs associated with operating at higher volumes. Maintenance Services Margin as a percentage of revenue increased 3.0% for the year ended August 31, 2023 compared to the prior year.
The increase was primarily attributed to an increase of $32.5 million net gain on disposition of equipment and higher syndication activity. 39 Selling and Administrative Year Ended August 31, 2022 vs 2021 (In millions) 2022 2021 Increase (Decrease) % Change Selling and Administrative $ 225.2 $ 191.8 $ 33.4 17.4 % Selling and administrative expense was $225.2 million or 7.6% of revenue for the year ended August 31, 2022 and $191.8 million or 11.0% of revenue for the year ended August 31, 2021.
The decrease was primarily attributed to lower Net gains on disposition of equipment for the year ended August 31, 2023, partially offset by higher Margin as a result of growth in the lease fleet. 38 Selling and Administrative Year Ended August 31, 2023 vs 2022 (In millions) 2023 2022 Increase (Decrease) % Change Selling and Administrative $ 235.3 $ 225.2 $ 10.1 4.5 % Selling and administrative expense was $235.3 million or 6.0% of revenue for the year ended August 31, 2023 and $225.2 million or 7.6% of revenue for the year ended August 31, 2022.
The share repurchase program does not obligate us to acquire any specific number of shares in any period. There were no shares repurchased under the share repurchase program during 2022, 2021 or 2020. Cash, Borrowing Availability and Credit Facilities As of August 31, 2022, we had $543.0 million in Cash and cash equivalents and $147.9 million in available borrowings.
There were no shares repurchased under the share repurchase program during the year ended August 31, 2022. Cash, Borrowing Availability and Credit Facilities As of August 31, 2023, we had $281.7 million in Cash and cash equivalents and $364.4 million in available borrowings.
The increase in operating profit was primarily attributed to an increase in railcar deliveries. 37 Maintenance Services Segment Year Ended August 31, 2022 vs 2021 (In millions) 2022 2021 Increase (Decrease) % Change Revenue $ 347.7 $ 298.3 $ 49.4 16.6 % Cost of revenue $ 322.0 $ 280.4 $ 41.6 14.8 % Margin (%) 7.4 % 6.0 % 1.4 % * Operating profit ($) $ 21.7 $ 6.5 $ 15.2 233.8 % Operating profit (%) 6.2 % 2.2 % 4.0 % * * Not meaningful Our Maintenance Services segment primarily generates revenue from railcar component manufacturing and servicing and from providing railcar maintenance services.
The increase in operating profit was primarily attributed to an increase in railcar deliveries at improved margins and included the $46.7 million of net loss on divestitures in 2023. 36 Maintenance Services Segment Year Ended August 31, 2023 vs 2022 (In millions) 2023 2022 Increase (Decrease) % Change Revenue $ 406.4 $ 347.7 $ 58.7 16.9 % Cost of revenue $ 364.0 $ 322.0 $ 42.0 13.0 % Margin (%) 10.4 % 7.4 % 3.0 % * Operating profit ($) $ 36.9 $ 21.7 $ 15.2 70.0 % Operating profit (%) 9.1 % 6.2 % 2.9 % * * Not meaningful Our Maintenance Services segment generates revenue from wheel and axle servicing, railcar maintenance and the production of a variety of component parts in North America.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Summary The financial results for 2022 reflect a year of transition and agility. We delivered strong results despite a volatile macroeconomic environment.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Summary The financial results for 2023 reflect another year of transformation and profitable growth. We delivered strong results despite challenges that impacted our business throughout the year.
The second line of credit provides up to $35.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at LIBOR plus 3.75%. The Mexican railcar manufacturing joint venture will be able to draw amounts available under this facility through June 2023.
The first line of credit provides up to $100.0 million and matures in June 2026. Advances under this facility bear interest at SOFR plus 4.25%. The second line of credit provides up to $45.0 million, of which we and our joint venture partner have each guaranteed 50%. Advances under this facility bear interest at SOFR plus 2.55%.
Net Earnings Attributable to Noncontrolling Interest Net earnings attributable to noncontrolling interest was $6.9 million and $2.7 million for the years ended August 31, 2022 and 2021, respectively, which primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations. 41 Liquidity and Capital Resources Year Ended August 31, (In millions) 2022 2021 Net cash used in operating activities $ (150.4 ) $ (40.5 ) Net cash used in investing activities (224.0 ) (117.8 ) Net cash provided by (used in) financing activities 244.9 (22.7 ) Effect of exchange rate changes 17.2 10.3 Net decrease in cash and cash equivalents and restricted cash $ (112.3 ) $ (170.7 ) We have been financed through cash generated from operations and borrowings.
The increase from the prior year is primarily a result of an increase in earnings due to improved operating results at our European operations and the gain on sale of Rayvag. 40 Liquidity and Capital Resources Year Ended August 31, (In millions) 2023 2022 Net cash provided by (used in) operating activities $ 71.2 $ (150.4 ) Net cash used in investing activities (280.0 ) (224.0 ) Net cash provided by (used in) financing activities (76.2 ) 244.9 Effect of exchange rate changes 28.6 17.2 Net decrease in cash and cash equivalents and restricted cash $ (256.4 ) $ (112.3 ) We have been financed through cash generated from operations and borrowings.
Maintenance Services revenue increased $49.4 million or 16.6% for the year ended August 31, 2022 compared to the prior year. The increase was primarily attributed to higher volumes due to increased demand and an increase in scrap metal pricing and volume as we scrap wheels and other components.
Maintenance Services revenue increased $58.7 million or 16.9% for the year ended August 31, 2023 compared to the prior year. The increase was primarily attributed to improved pricing and higher volumes. This was partially offset by lower scrap metal pricing in the current year.
Under terms of the orders, the exact mix and pricing will be determined in the future, which may impact backlog. Approximately 6% of backlog units and estimated backlog value as of August 31, 2022 was associated with our Brazilian manufacturing operations which is accounted for under the equity method.
Approximately 3% of backlog units and 2% of estimated backlog value as of August 31, 2023 was associated with our Brazilian manufacturing operations which is accounted for under the equity method. Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms and conditions.
Maintenance Services operating profit increased $15.2 million or 233.8% for the year ended August 31, 2022 compared to the prior year.
Manufacturing operating profit increased $43.7 million or 45.0% for the year ended August 31, 2023 compared to the prior year.
Dividend & Share Repurchase Program A quarterly dividend of $0.27 per share was declared on October 18, 2022. The Board of Directors has authorized our company to repurchase shares of our common stock. The share repurchase program has an expiration date of January 31, 2023. The amount remaining for repurchase was $100.0 million as of August 31, 2022.
We also amended our $200 million term facility to provide an additional $75.0 million in term debt. Dividend & Share Repurchase Program A quarterly dividend of $0.30 per share was declared on October 18, 2023. The Board of Directors has authorized our company to repurchase in aggregate up to $100.0 million of our common stock.
Maintenance Services margin as a percentage of revenue increased 1.4% for the year ended August 31, 2022 compared to the prior year. The increase in margin percentage was primarily attributed to an increase in volumes and scrap metal pricing. These were partially offset by higher material and labor costs during the year ended August 31, 2022.
Manufacturing Margin as a percentage of revenue increased 1.1% for the year ended August 31, 2023 compared to the prior year. The increase in Margin percentage for the year ended August 31, 2023 was primarily attributed to operating at consistently higher production levels. This was partially offset by increased costs associated with component outsourcing to support the higher production.
If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit. We performed our annual goodwill impairment test during the third quarter of 2022 and concluded that goodwill for all reporting units was not impaired.
Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.
The increase in cost of revenue was primarily attributed to a 65.5% increase in the volume of railcar deliveries and higher steel and other input costs as well as inefficiencies in our Manufacturing operations in part due to ramping up production and supply chain issues during the year ended August 31, 2022.
Manufacturing cost of revenue increased $782.5 million or 34.0% for the year ended August 31, 2023 compared to the prior year. The increase in cost of revenue was primarily attributed to a 33.2% increase in the volume of railcar deliveries and higher material and other input costs during the year ended August 31, 2023.
The increase was primarily attributable to higher profitability at our Brazil operations.
The decrease was primarily related to lower sales volumes at our Brazil operations.
Goodwill - In accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles–Goodwill and Other (ASC 350), the Company evaluates goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses a two-step process to assess the realizability of goodwill.
For further information, see Note 5 to the Consolidated Financial Statements. Goodwill - In accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles–Goodwill and Other (ASC 350), we evaluate goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amounts of our reporting units exceed their fair value.
Net Gain on Disposition of Equipment Net gain on disposition of equipment primarily includes the sale of assets from our lease fleet (Equipment on operating leases, net) and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to accommodate customer demand and to manage risk and liquidity.
Assets are periodically sold in the normal course of business in order to optimize our fleet and to manage risk and liquidity. Net gain on disposition of equipment was $17.3 million and $37.2 million for the years ended August 31, 2023 and 2022, respectively.
Leasing & Management Services cost of revenue increased $2.1 million or 4.5% for the year ended August 31, 2022 compared to the prior year. The increase was primarily due to an increase in costs from the additions to our lease fleet, partially offset by lower costs associated with railcars we had purchased from third parties with the intent to resell.
Leasing & Management Services cost of revenue increased $6.7 million or 13.7% for the year ended August 31, 2023 compared to the prior year. The increase was primarily due to higher costs from owning a larger fleet.
The railcar acquisition advanced our strategy to increase the scale of our lease fleet assets. • We increased our global headcount by nearly 40% during a challenging labor market to support higher levels of business activity. 33 Manufacturing Backlog Our backlog remains strong at August 31, 2022 with an increase in backlog units and value highlighted by the following: • Our railcar backlog was 29,500 units with an estimated value of $3.5 billion as of August 31, 2022 with deliveries that extend into 2024. • We generated new railcar orders of 24,600 units valued at approximately $2.9 billion. • We increased our backlog compared to the prior year by approximately 2,900 units and $670 million. • In addition to our new railcar backlog, we had sustainable conversion orders at August 31, 2022 of approximately $180 million.
This increase was partially offset by $46.7 million of charges associated with the divestitures previously discussed. 32 Manufacturing Backlog Our backlog remains strong at August 31, 2023 and includes a diverse portfolio of railcar types, highlighted by the following: • Our railcar backlog was 30,900 units with an estimated value of $3.8 billion as of August 31, 2023 with deliveries that extend into 2026. • During 2023, we generated new railcar orders of 30,000 units valued at approximately $3.8 billion. • We increased our backlog compared to the prior year by approximately 1,400 units.
As of August 31, 2022, a $350.0 million non-recourse warehouse credit facility existed to support the operations of GBX Leasing, a joint venture in which we own approximately 95%. Advances under this facility bear interest at SOFR plus 1.85% plus 0.11% as a SOFR adjustment.
Advances under this facility bear interest at SOFR plus 1.85% plus 0.11% as a SOFR adjustment. Interest rate swap agreements cover 87% of the outstanding balance to swap the floating interest rate to a fixed rate. The warehouse credit facility converts to a term loan in August 2025 which matures in August 2027.
Cash Flows From Operating Activities The change in cash used in operating activities for 2022 compared to 2021 was primarily due to a net increase in working capital as we increased production rates and from higher steel and other input costs. Cash flows from operating activities benefited from a cash tax refund received in 2022.
Cash Flows From Operating Activities The change in cash provided by (used in) operating activities for 2023 compared to 2022 was primarily due to an increase in Net earnings and net favorable change in working capital driven by more efficient working capital usage when compared to the prior year.
We also manufacture a broad range of ocean-going and river barges for transporting merchandise between ports within the United States. Manufacturing revenue increased $1.2 billion or 88.9% for the year ended August 31, 2022 compared to the prior year. The increase in revenue was primarily attributed to a 65.5% increase in railcar deliveries.
Manufacturing revenue increased $881.1 million or 35.6% for the year ended August 31, 2023 compared to the prior year. The increase in revenue was primarily attributed to a 33.2% increase in railcar deliveries, including syndications and higher average selling price.
To mitigate the exposure to changes in interest rates, we have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $478.7 million of variable rate debt to fixed rate debt as of August 31, 2022. 44 We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.
To mitigate the exposure to changes in interest rates, we have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $654.0 million of variable rate debt to fixed rate debt as of August 31, 2023.
For further information regarding our environmental costs, see Note 21 of the Consolidated Financial Statements. New Accounting Pronouncements See Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 46
For further information regarding our environmental costs, see Note 22 of the Consolidated Financial Statements. 45
The overall margin as a percentage of revenue was negatively impacted by a decrease in Manufacturing margin from 9.3% to 7.1% was primarily attributed to higher costs and inefficiencies in our Manufacturing operations in part due to ramping up production. Many of our customer contracts include price escalation provisions.
Consolidated Margin as a percentage of revenue was positively impacted by an increase in Manufacturing Margin from 7.1% to 8.2% primarily attributed to operating at consistently higher production levels during the current year.
We identify a few general trends impacting our business at present, all of which we believe are reflected in our results for the year ended August 31, 2022. First, we believe the North American freight rail equipment market continues to emerge from the cyclical decrease in economic activity which began prior to the emergence of COVID-19.
We identified a few general trends that impacted our business, all of which we believe are reflected in our results for the year ended August 31, 2023. Overall, demand for our products and services remains strong in the marketplace.
Manufacturing cost of revenue increased $1.1 billion or 93.5% for the year ended August 31, 2022 compared to the prior year.
Leasing & Management Services operating profit decreased $5.0 million or 4.6% for the year ended August 31, 2023 compared to the prior year.
Removed
Second, we believe global economic activity continues to recover from the historic decrease resulting from the COVID-19 pandemic. We were able to leverage these trends to accomplish the following: • Significant increases in production throughout 2022; • Growth in new order activity year over year; and • Strong ending backlog value and units.
Added
Supply chain challenges, inflation, rising interest rates, rail service congestion and labor shortages continued to impact our business and required focused attention from management.
Removed
Despite these accomplishments, inflation, rising interest rates, price volatility, supply chain disruptions and geopolitical disquiet, demand concerted management focus for successful execution across the business. We believe we have the necessary management expertise and are well-positioned to navigate the immediate challenges.
Added
We were able to manage these factors to accomplish the following in 2023: • Achieved record annual revenues and deliveries; • Strong ending backlog value and units; • Increased our quarterly dividend 11% at Q3; and • Repurchased 1.9 million shares.
Removed
While we believe the current market and broader economic environment most likely will present many positive opportunities for our business, as we navigate the recovery, we face a number of challenges which include: • Inflation and policy reactions thereto, currency volatility and rising interest rates; • An increase in the price and the shortage of certain materials and components; • Shipping and transportation delays; • Shortages of skilled labor; and • Adverse effects on the European market and the global economic markets, generally from the war in Ukraine. 32 Business Highlights Despite the challenging operating environment, we achieved the following accomplishments in 2022: • We progressively increased our revenue during the year.
Added
We also launched a multi-year strategy during the year which we outlined at our first-ever Investor Day in April 2023. The strategy has three basic tenets: 1. Maintain our manufacturing leadership position across geographies; 2. Optimize our industrial footprint for efficiency and margin enhancement while addressing the needs of our customers; and 3.
Removed
The sequential growth in revenue was primarily driven by higher deliveries throughout the year. • Our revenue increased by $1.2 billion and 70.4% compared to the prior year driven by a 65.5% increase in railcar deliveries. • In February 2022, we completed our first offering of railcar asset-backed securities. • In September 2021, we acquired more than 3,600 railcars in a successful portfolio acquisition.
Added
Increase our recurring revenue to reduce the impact of manufacturing cyclicality. Our strategic focus aligns with three financial goals. Those are (a) increasing recurring revenue, (b) expanding our aggregate gross margin and (c) raising our return on invested capital.
Removed
Marine backlog as of August 31, 2022 was $31 million with deliveries that extend into 2023. Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog.
Added
As part of our strategic goal to optimize our footprint, during the year we launched a review of our global business capacity. This resulted in three divestitures, including our Gunderson Marine business and closure of our Gunderson Facility, Southwest Steel, a foundry business in Longview, Texas, and our interest in Rayvag, a manufacturing facility located in Turkey.
Removed
When certain of our manufacturing costs increase, we are able to increase the sales price to our customers. While this has no impact to our margin dollars, the increase in revenue and cost of sales has a negative impact to our margin as a percentage of revenue.
Added
Additionally, we acquired the minority interest in GBX Leasing from our partner, and now wholly own our lease fleet. 31 Business Highlights Despite the challenging operating environment, we accomplished the following in 2023: • Revenue increased by $966.3 million and 32.5% compared to the prior year, driven primarily by a 33.2% increase in railcar deliveries; • Margin improved $135.1 million and 44.2% compared to the prior year, driven primarily by a 33.2% increase in railcar deliveries and operating efficiencies across segments; • Added 1,200 railcars to our owned lease fleet, representing nearly 10% growth during the year; and • Increased Earnings from Operations by $58.4 million and 49.5% compared to the prior year.
Removed
The increase was also due to the additional revenue associated with an increase in steel and other input costs during the year ended August 31, 2022, as many of our customer contracts include price escalation provisions when certain of our manufacturing costs increase.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+9 added−7 removed10 unchanged
Biggest changeThe communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 48 Qualitative goodwill impairment assessment of the Europe Manufacturing and Wheels & Parts reporting units As discussed in Note 7 to the consolidated financial statements, the goodwill balance as of August 31, 2022 was $127.3 million, of which $27.7 million related to the Europe Manufacturing reporting unit and $43.0 million related to the Wheels & Parts reporting unit.
Biggest changeThe communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 47 Sufficiency of audit evidence within the North American manufacturing businesses As discussed in Item 9A.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2022, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 28, 2022 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 25, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
At August 31, 2022, a uniform 10% increase in variable interest rates would result in approximately $1.4 million of additional annual interest expense. 47 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors The Greenbrier Companies, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of The Greenbrier Companies, Inc. and subsidiaries (the Company) as of August 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended August 31, 2022, and the related notes (collectively, the consolidated financial statements).
At August 31, 2023, a uniform 10% increase in variable interest rates would result in approximately $1.2 million of additional annual interest expense. 46 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors The Greenbrier Companies, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of The Greenbrier Companies, Inc. and subsidiaries (the Company) as of August 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended August 31, 2023, and the related notes (collectively, the consolidated financial statements).
Dollar relative to the foreign currencies would result in a decrease in equity of $14.6 million, or 1.1% of Total equity - Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.
Dollar relative to the foreign currencies would result in a decrease in equity of $14.9 million, or 1.2% of Total equity - Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.
Interest Rate Risk We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $478.7 million of variable rate debt to fixed rate debt. Notwithstanding these interest rate swap agreements, we are still exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates.
Interest Rate Risk We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $654.0 million of variable rate debt to fixed rate debt. Notwithstanding these interest rate swap agreements, we are still exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates.
In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At August 31, 2022, net assets of foreign subsidiaries aggregated to $146.1 million and a 10% strengthening of the U.S.
In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At August 31, 2023, net assets of foreign subsidiaries aggregated to $149.5 million and a 10% strengthening of the U.S.
At August 31, 2022, 79% of our outstanding debt had fixed rates and 21% had variable rates.
At August 31, 2023, 85% of our outstanding debt had fixed rates and 15% had variable rates.
At August 31, 2022 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $73.6 million.
At August 31, 2023 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros aggregated to $70.9 million.
Removed
As discussed in Note 2, the Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit likely exceeds its fair value using either a qualitative or a quantitative assessment.
Added
Controls and Procedures, a material weakness was identified as of August 31, 2023 and included in management’s report on internal control over financial reporting.
Removed
If the qualitative assessment is performed and the Company determines that fair value of each reporting unit more likely than not exceeds its carrying value, no further assessment is necessary. For the annual impairment test that occurred during 2022, the Company performed a qualitative assessment to test the goodwill related to its Europe Manufacturing and Wheels & Parts reporting units.
Added
The description of the material weakness states that the Company did not effectively design and maintain controls over information technology (IT) general controls in one IT environment in its primary North America manufacturing businesses that are relevant to the preparation of the Company’s consolidated financial statements.
Removed
We identified the evaluation of the Company’s qualitative assessment that it was more likely than not the fair value of the Europe Manufacturing and Wheels & Parts reporting units exceeded their carrying values as a critical audit matter.
Added
The Company did not (i) maintain change management controls to ensure configuration data changes affecting the IT application were appropriate (ii) design and maintain program development controls to ensure the data migration, program testing and approval of new software development is aligned with business and IT requirements and (iii) maintain user access controls to ensure segregation of duties in the Company’s financial application.
Removed
There was subjective auditor judgement in evaluating the impact of (1) macroeconomic considerations, as well as industry and market indicators included in the Company’s goodwill impairment assessment, and (2) the entity-specific financial performance, including management’s current and prior year cost reduction initiatives on the reporting units’ actual financial results.
Added
The control deficiencies resulted from incomplete risk assessment, inadequate training of personnel and ineffective control activities related primarily to the implementation of a new ERP system in the Company's primary North America manufacturing businesses.
Removed
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the goodwill impairment process. This included controls related to the evaluation of the qualitative factors used by the Company to assess the Europe Manufacturing and Wheels & Parts reporting units.
Added
As a result, process level automated controls that are dependent on the affected IT environment and manual controls that rely on system-generated data or reports from the affected IT environment were ineffective because they could have been adversely impacted.
Removed
We evaluated the Company’s assessment of the macroeconomic considerations, as well as industry and market indicators by comparing them to publicly available industry and market information.
Added
We identified the evaluation of the sufficiency of audit evidence over the Company’s primary North American manufacturing businesses as a critical audit matter. Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgment because of the pervasiveness of the material weakness noted above. The following are the primary procedures we performed to address this critical audit matter.
Removed
We evaluated the entity-specific financial performance, including management’s cost reduction initiatives, by: • comparing actual and projected performance to projected results of relevant prior periods, and • assessing cost savings resulting from current and prior year actions on the reporting units’ actual financial results. /s/ KPMG LLP We have served as the Company’s auditor since 2011.
Added
We applied auditor judgment to determine the nature and extent of procedures to be performed over the Company’s primary North American manufacturing businesses including evaluating our scoping thresholds and control risk assessments considering the material weakness noted above.
Added
For relevant financial statement account balances at the North America manufacturing businesses, we: • increased the number of sample selections compared to what we would have otherwise made if the Company’s controls were designed and operating effectively • tested the underlying records of selected transaction data obtained from the impacted information technology system to support the use of the information in the conduct of the audit • inspected supporting documentation and evidence of authorization for a selection of manual and automated journal entries.
Added
We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company’s auditor since 2011. Portland, Oregon October 25, 2023 48

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