NYSE: GBX. Stephens Investment Conference November Investor Contact: Website:

Transcription

1 NYSE: GBX Stephens Investment Conference November 2017 Investor Contact: Website:

2 Safe Harbor Statement UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This presentation may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words such as anticipates, believes, forecast, potential, goal, contemplates, expects, intends, plans, projects, hopes, seeks, estimates, strategy, could, would, should, likely, will, may, can, designed to, future, foreseeable future and similar expressions to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog and awards that are not indicative of Greenbrier s financial results; uncertainty or changes in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of Greenbrier s indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; policies and priorities of the federal government regarding international trade, taxation and infrastructure; sovereign risk to contracts, exchange rates or property rights; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, costs or inefficiencies associated with expansion, start-up, or changing of production lines or changes in production rates, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; integration of current or future acquisitions and establishment of joint ventures; succession planning; discovery of defects in railcars or services resulting in increased warranty costs or litigation; physical damage or product or service liability claims that exceed Greenbrier s insurance coverage; train derailments or other accidents or claims that could subject Greenbrier to legal claims; actions or inactions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other railcar or railroad regulation; and issues arising from investigations of whistleblower complaints; all as may be discussed in more detail under the headings Risk Factors and Forward Looking Statements in Greenbrier s Annual Report on Form 10-K for the fiscal year ended August 31, 2017, and Greenbrier s other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forwardlooking statements, which reflect management s opinions only as of the date hereof. Except as otherwise required by law, Greenbrier does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. 1

3 Integrated Business Model Greenbrier s integrated business model delivers superior value to customers by creating customized freight car solutions over the entire life of a railcar. Our diversified portfolio of quality products and services enhances our financial performance across the business cycle. Manufacturing Wheels, Repair and Parts Leasing and Services 2

4 Leading Integrated Transportation Equipment & Service Provider Three business units working together Manufacturing (1) Aftermarkets (1) Leasing & Services (1) Leading manufacturer of railcars in North America and Europe Leading domestic manufacturer of ocean-going barges New railcar backlog valued at $2.8 billion Marine backlog of ~$42 million Investments in railcar manufacturer and component supplier in Brazil Formation of Greenbrier-Astra Rail, a premier European freight railcar manufacturing, engineering and repair business Wheels & Parts nine wheel service locations and four railcar part reconditioning locations GBW Railcar Services - 50/50 JV provides repair services across more than 30 locations $ millions 3,000 2,500 2,000 1,500 1,000 IPO IPO Fleet Information 7,200 long-term owned units 1,100 short-term owned units 355,000 managed units Formation of joint venture company to exclusively manage MUL railcars Historical Revenue 2, (1) Data as of 8/31/

5 Investment Highlights Industry Dynamics North American Drivers Rail cycle driven by current business and industry trends Broadening product demand across cycles Changing tank car regulatory environment International Drivers Developing South American, GCC and Eurasia markets Unique Strategic Position Market leader Provides customized solutions Transformational initiatives create growth platform Enhanced Leasing model Product & service diversification Extensive North American aftermarket repair network Scalable and flexible across diversified product mix Strong Financial Profile Diverse revenue and earnings stream Strong railcar backlog and track record over multiple cycles Strong financial performance Continued focus on cash flow, investing in high return projects and shareholder return Seasoned management team 4

6 Greenbrier s Strategy Core North American Market International Diversification Continue product enhancements and new product development Expand to global markets where demand for railcars is growing Focus on profitability, cash flow and developing human capital Preserve and protect areas of unique competencies in engineering, manufacturing and services Partner creatively with strong local businesses Eastern Europe, Brazil, Eurasia, Gulf Cooperation Council (GCC) 5

7 North American Market

8 Transportation Industry Dynamics Favor Rail Rail significantly more fuel efficient than trucks 70 N.A. Freight Traffic Environmental concerns favor rail Highway congestion, driver shortage, regulation and aging highway infrastructure constrain trucking Car Loadings (in Millions) Calendar Years Source: FTR Associates Rail Equipment Outlook (September 2017) 7

9 N.A. Railcar Deliveries Returning to Normalized Levels Current demand impacted by industry backlog and over-supply in certain car types, partially offset by stronger rail loadings and lower velocity 90,000 80,000 70,000 North American Rail Car Deliveries Changing tank car regulatory environment Other areas of growth driven by grain and automotive traffic Aging fleet will drive replacement demand Units 60,000 50,000 40,000 30,000 20,000 10,000 Long-term average: ~50,000 units Strong railroad balance sheets and capital expenditure budgets 8 0 Calendar Years Source: FTR Associates Rail Equipment Outlook (September 2017)

10 Flexibility Key in Changing Demand Environment 90,000 80,000 70,000 Long-term average: ~50,000 units 60,000 50,000 40,000 30,000 20,000 10,000 0 Calendar Years Covered hopper Boxcar Tanks Intermodal Flat cars (auto) Coal Other hoppers / gondolas Source: FTR Associates Rail Equipment Outlook (September 2017) 9

11 Aftermarket Demand Drivers Wheel demand driven by rail ton-miles which has been impacted by significant decline in coal U.S. Rail Ton-miles Ton-miles and equipment upgrades drive repair spending Approaching substantial tank car maintenance cycle Changing tank car regulatory environment Millions Calendar Years 10 Source: FTR Associates Rail Equipment Outlook (September 2017)

12 Leasing & Services Demand Drivers Users seek flexibility Financial institutions seek yield Trend of increasing private ( leasing/shipping companies ) railcar ownership expected to continue Creates opportunity for partnering, service contracts and enhanced margins 11

13 International Market

14 Estimated European Freight Wagon Ownership in % = 700,000 units State railroads own approximately 50-60% of the Western European freight fleet but this is expected to decrease Lessors / Shippers 25% Private Operators 15% State Railroads 60% State railroads under intense pressure due to increased competition from deregulation, stagnant economy, and the influence of low oil prices which favor transport on roads 62% Largely absent from the new wagon market since 2008 Expected to increase reliance on lessors Source: SCI Private rail operators playing an increasingly important role in the new wagon market Taking share from inefficient state railroads Adding new and more efficient equipment to their fleets, which further improves value proposition 13

15 European Deliveries Around Recent Long-term Average 8,000 7,000 6, Average: ~ 5,900 units Western European Deliveries 5,000 Units 4,000 3,000 2,000 1, est. Demand for freight wagons in Europe has not yet recovered to pre-recession levels of ~7,000 8,000 units Replacement demand for ~500,000 fleet with life of 40 years is estimated to be ~12,500 wagons annually Source: SCI 14

16 Brazilian Industry Deliveries 6,000 5,000 4, Average: ~3,900 units Units 3,000 2,000 1, est. Greenbrier-Maxion has achieved an average market share of over 70% Excluding any large infrastructure investments, market demand is expected to be near average deliveries 15 Source: ABIFER (Brazilian Association of the Railroad Industry)

17 Brazil Market Outlook - Key Drivers 58% 56% ANTT projects a 10% growth in modal share for railroads Modal share projections 29% 24% 26% 34% 29% 12% 12% 4% 4% 5% 2% 2% 3% Roads Railraods Waterways Pipeline Air Freight Market Poised for Growth Mode of Transportation Shift in modal transportation Freight rail volumes are expected to increase substantially requiring significant infrastructure and railcar investment over the next several years Aging Fleet (market of ~130,000 railcars) Over 50% of the freight cars in 2016 had an age profile of 30 years and older Other market dynamics Increase of innovation, growing exportation of agriculture, and growth in other Latin American markets 16 Source: ANTT (Brazil s Department of Transportation)

18 Unique Strategic Position

19 History of Quality and Innovation TTX excellent supplier award for 23 years New Railcar Manufacturing Diversified product portfolio car types; proprietary car types Wheels & Parts developing testing and inspection innovations to advance safety & quality of wheels and axles Repair tank car retrofits and certifications, repurposing of railcars Leasing & Services Enhanced syndication model, proprietary fleet maintenance and management solutions and capabilities, Regulatory Services Group 18

20 Transformational Initiatives Create Diversified Growth Platform Improves competitive position due to diverse product mix at lowercost, flexible manufacturing facilities Diversifies business mix by expanding repair and wheel maintenance business - large aftermarket business provides stability and strategic benefits throughout business cycles Enhances leasing activities, capturing more value throughout the railcar life cycle Expands available market by increasing throughput and diversifying product portfolio while maintaining the quality customers demand Expands geographic reach into new international markets with entries into Romania, Brazil and Saudi Arabia Greenbrier is stronger today, both operationally and financially, than in previous cycles due to these initiatives. 19

21 Growing Addressable Manufacturing Market 118, Total Addressable Market 2015 Total Addressable Market 2007 Total Addressable Market 434, , ,000 1,405,000 1,401,000 1,163,000 Total market = ~1,597,000 railcars N.A market not addressed by GBX N.A. market addressed by GBX Total market = ~1,605,000 railcars N.A. market addressed by GBX N.A. market not addressed by GBX (Coal) 200,000 Total market = ~2,419,000 railcars N.A. market addressed by GBX N.A. market not addressed by GBX (Coal) Europe maket Brazil market Manufactured new railcars for ~27% of the North American market (Boxcars, Flat Cars, Gondolas and Intermodal) Manufactured all railcar types except for coal railcars Grew new railcar manufacturing market by ~410% Represents railcar market size in geographies where Greenbrier competes; Legacy European operations were focused on niche, specialty car types and did not participate in general purpose railcar fleet activity 20

22 Resulting in Revenue and Share Growth Revenue North American Industry Backlog $ in millions (% of Total Revenue) $2,500 $2,000 $1,500 $1,000 $500 FY 2018 Guidance of $2.4 - $2.6 billion $943 $92 $102 $749 (10%) (11%) (79%) $2,169 $131 $313 $1,725 (10%) (12%) (78%) 100% 80% 60% 40% 20% Others, 16% TRN, 36% RAIL, 14% ARI, 21% Others, 13% TRN, 38% RAIL, 5% ARI, 4% GBX, 36% $- Leasing & Services FY 2006 FY 2017 Wheels & Parts Manufacturing 0% GBX, 13% September 30, 2006* 100% = 88,116 units September 30, % = 64,253 units * September 30, 2006 represents the prior industry backlog peak Source: RSI ARCI, public filings (October 2017) 21

23 Greenbrier s Transformation Adj. EBITDA Value ($ in millions) $500.0 $400.0 $300.0 $200.0 Adj. EBITDA Peak 3 year average = $110.4 million 3 year average ~3.5x higher than prior peak $433.8 $474.0 Adj. EBITDA Value ($ in millions) $100.0 $- $500.0 $400.0 $300.0 $200.0 $100.0 $- $253.8 $90.4 $111.9 $ Adj. EBITDA Trough 3 year average = $84.6 million $113.1 $64.5 $76.1 $ x higher $ ? Greenbrier has shown a consistent ability to grow earnings so that peaks and troughs are steadily improving 22

24 Greenbrier s Railcar Backlog ($ in millions except per unit values) Provides Earnings Visibility $5,000 $140 Backlog Value ($ in millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $69 $89 $87 $79 $80 $112 $106 $106 $3,330 $114 $4,710 $116 $3,190 $98 $2,800 $120 $100 $80 $60 $40 Average Sales Price/Unit ($ in thousands) $1,000 $500 $1,440 $1,520 $1,160 $1,230 $1,200 $830 $420 $ Backlog Units 12,100 16,200 13,400 5,300 15,400 10,700 14,400 31,500 41,300 27,500 28,600 $20 $- In FY 2017, Greenbrier received orders exceeding 16,500 units valued at ~$1.5 billion. 23

25 Consolidated Financial Trends ($ in millions) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- Revenue FY 2018 Guidance of $2.4 - $2.6 billion $2, Deliveries (000 s of units) (3) 16.0 FY 2018 Guidance 20,000-22,000 units $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- $(1.00) Adjusted EPS (1) FY 2018 Guidance up to $4.00 $ (1) Adjusted EPS & Adjusted EBITDA exclude Goodwill impairment, Restructuring charges and other Special Items (2) Net debt is defined as Gross debt less Cash (3) 2017 includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is accounted for under the equity method 24

26 Strong Balance Sheet and Liquidity Provide Flexibility Net Funded Debt (2) / Adjusted EBITDA (1) 5.5x Liquidity Summary ($ in millions) Borrowing Availability Cash $ x $573 $611 $ x 2.0x 1.1x 0.5x 0.2x 0.0x $204 $99 $105 $242 $50 $192 $401 $353 $185 $54 $97 $299 $304 $321 $441 $173 $268 $223 $350 $ (1) Adjusted EBITDA exclude gain on contribution to GBW, restructuring charges, goodwill impairment and other special items (2) Net debt is defined as Gross debt plus debt discount less Cash 25

27 Balanced Approach to Capital Deployment Organically in high ROIC projects Strategically in core competencies Shareholder focused actions Over $200 million of capital returned to shareholders through dividends and share repurchase since October 2013 Board increased quarterly dividend by 4.5% to $0.23 per share or an annualized rate of $0.92 in October 2017 Since initiating a dividend in July 2014, Greenbrier has established a history of steady increases 26

28 Clear Path to Growth and Shareholder Value Solid Railcar Backlog Diversified Revenue Streams Strong Balance Sheet & Liquidity Focus During Current Market Product and customer diversity provides visibility Unique model that enhances financial performance across the cycle, with powerful cross selling opportunities Flexible balance sheet and positive cash flow trend Manage our core North American market and diversify internationally into growing rail markets 27

29 Appendix

30 4Q FY 2017 Key Metric Highlights Backlog 28,600 units valued at $2.8 billion Diverse backlog reflects a broad range of cartypes including various-sized covered hoppers, non-energy tank cars, automotive carrying railcars, boxcars, gondola cars and intermodal units Marine backlog of ~$42 million Deliveries of 5,500 units including syndication activity of 1,600 units Newly formed lease warehouse facility adds flexibility and improves capital efficiency. Backlog 31,000 27,500 28,600 25,800 22,600 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Total Deliveries 5,500 4,600 4,000 3,900 2,600 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Syndicated Deliveries 1, Q 16 1Q 17 2Q 17 3Q 17 4Q 17 29

31 4Q FY 2017 Income Statement Highlights Revenue to $611.4 million Revenue ($ millions) Gross margin of 16.3% $595.2 $552.3 $566.3 $439.2 $611.4 Adjusted (1) EBITDA to $73.3 million Adjusted EBITDA margin of 12.0% Adjusted (1) Diluted EPS of $0.86 Continued focus on profitability and growth 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Adjusted (1) EBITDA ($ millions) $104.4 $85.7 $94.5 $63.8 $73.3 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Adjusted (1) Diluted EPS $1.06 $0.79 $1.09 $1.03 $0.86 (1) 4Q 17 adjusted $3.5 million net of tax or $0.11 per share associated with a goodwill impairment charge recorded by GBW 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 30

32 4Q FY 2017 Balance Sheet & Cash Flow Highlights Strong operating cash flow exceeding $200 million Operating Cash Flow ($ millions) $137.0 $207.6 Due to syndication timing and other working capital changes Board increased quarterly dividend by 4.5% to $0.23 per share or an annualized rate of $0.92 Board extends share repurchase authorization to March 2019 $950 million of available liquidity $29.0 $52.9 $(9.1) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Net Capital Expenditure & Invest. In Unconsol. Affiliates (1) ($ millions) $73.6 $3.4 $(2.1) $65.7 $35.0 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Net Funded Debt (2) ($ millions) $81.3 $68.4 $29.5 $108.1 (1) Investment in Unconsolidated Affiliates included to reflect net investments in unconsolidated joint ventures (2) Excludes debt discounts and issuance costs 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 $(9.5) 31

33 Two Ways to Sell New Railcars Direct Direct Sales Lease Customer orders railcar to buy and use We build railcar and deliver it to customer Revenue recognized in Manufacturing segment Lease Syndication Customer orders railcar to lease We build railcar and lease it Railcars held temporarily on balance sheet generating interim lease income for GBX Called Leased railcars for syndication on Balance Sheet Interim lease income recognized in Leasing & Services segment Railcars aggregated and sold ( syndicated ) to multiple third party investors (non-recourse to GBX) Sales price premium over direct sale from attached lease Revenue from sale recognized in Manufacturing segment Long term Management fees earned from investors on railcars after syndication Revenue recognized in Leasing & Services segment 32

34 Leasing & Services Supplemental Information Lease Syndication Model Over $1.1 billion of Syndication volume during the last two years (reported in Manufacturing segment) One of two channels to market, expanding customer universe beyond traditional base Dwell time of rent producing railcars on balance sheet ( Leased railcars for syndication ) averages 3 months, as railcar leases are aggregated and sold in bundles to investors In addition to premium pricing above direct sales, creates stream of multi-year management fee income Able to source externally produced railcars to diversify offerings Fleet Information Owned & Managed Fleet Owned Equipment on operating lease right-sized over last few years Additional monetization without new additions would be tax inefficient with over $65 million of Deferred Taxes related to the Lease fleet Asset sales to MUL will be largely reinvested and will refresh tax profile of the fleet Secures Leasing term loan of $179 million Managed fleet services include railcar remarketing, maintenance management, car hire accounting and various other services Managed fleet has grown over 41% over 4 years as Syndication volume increased Accounts for ~20.7% of North American railcar fleet Units Aug. 31, 2016 Nov. 30, 2016 Feb. 28, 2017 May 31, 2017 Aug. 31, 2017 Long term owned units ( Equipment on operating lease ) 6,700 6,800 6,700 6,800 7,200 Short term owned units ( Leased railcars for syndication ) 2,200 1,700 1,300 2,200 1,100 Total owned fleet 8,900 8,500 8,000 9,000 8,300 Managed fleet (units) 264, , , , ,000 33

35 Manufacturing Quarterly Trends ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Revenues $ $ $ $ $ Gross Margin $101.7 $97.5 $98.9 $71.9 $83.0 Gross Margin % 21.0% 21.5% 22.2% 22.7% 16.3% Operating Margin % 18.5% 18.4% 19.2% 18.3% 13.5% Capital Expenditures $15.7 $9.0 $6.2 $11.5 $28.2 New Railcar Backlog $3,190 $2,970 $2,440 $3,100 $2,800 4Q Business Conditions Revenue increase driven by higher deliveries Margin % decrease due to change in product mix New Railcar Backlog (units) 27,500 25,800 22,600 31,000 28,600 Deliveries (units) 4,600 4,000 3,900 2,600 5,200 (1) Revenue and Gross Margin % FY 18 Outlook $ in Billions $2.4 $2.0 $1.6 $1.2 $0.8 $0.4 $ Revenue Gross Margin 24% 20% 16% 12% 8% 4% 0% Deliveries of 20,000 to 22,000 units including Greenbrier-Maxion (Brazil) which will account for up to 10% of FY 2018 deliveries Capital expenditures are expected to be approximately $70 million, primarily related to enhancements of our existing manufacturing facilities and European operations (1) Excludes 300 Brazil deliveries since they do not impact Manufacturing Revenue and Margins. 34

36 Wheels & Parts Quarterly Trends ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Revenues $74.8 $69.6 $82.7 $85.2 $75.1 Gross Margin $5.2 $4.7 $7.2 $7.2 $5.2 Gross Margin % 7.0% 6.7% 8.7% 8.5% 7.0% Operating Margin % 5.7% 4.2% 6.7% 5.0% 3.0% 4Q Business Conditions Revenue decrease primarily attributable to lower wheel and component volumes and scrap sales Margin % decrease due to lower volumes, change in product mix and continued challenging operating environment Capital Expenditures $4.4 $1.2 $0.7 $0.6 $0.6 Revenue and Gross Margin % (1) FY 18 Outlook $600 $500 12% 10% Expect similar operating conditions in the near term $ in Thousands $400 $300 $200 $100 $ % 6% 4% 2% 0% Capital expenditures are expected to be approximately $5 million for maintenance and strategic initiatives. Revenue Gross Margin 35 (1) Pre-2014 results include legacy Repair operations which were contributed to GBW Railcar JV in July 2014

37 Leasing & Services Quarterly Trends ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Revenues $35.8 $28.6 $38.1 $36.8 $27.8 Gross Margin $12.7 $10.6 $12.9 $10.6 $11.7 Gross Margin % 35.5% 37.1% 33.8% 28.7% 42.1% Operating Margin % 25.3% 25.8% 26.0% 19.2% 27.2% Net Capital Expenditures $52.3 ($6.8) ($9.0) $20.1 ($0.4) Lease Fleet Utilization 91.0% 94.2% 93.8% 93.6% 92.1% Revenue and Gross Margin % 4Q Business Conditions Revenue reflects lower volume of externally sourced railcar syndications Margin % increase primarily due to more normalized mix of revenue Grew managed fleet by approximately 70,000 railcars and now provide management services for over 20% of North American fleet FY 18 Outlook $ in Millions $300 $250 $200 $150 $100 $50 $ % 60% 50% 40% 30% 20% 10% 0% Capital expenditures (including corporate) expected to be ~$90 million, with $150 million of Proceeds from the sale of leased assets due to broadening of MUL relationship Continued growth in management services Revenue Gross Margin 36

38 GBW Railcar Services (1) Quarterly Trends ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Revenues $84.1 $70.3 $64.2 $62.7 $56.3 Earnings (loss) from operations ($0.5) ($4.6) ($6.9) ($5.5) ($15.4) Total assets $247.6 $238.3 $227.2 $218.8 $ Q Business Conditions Revenue and operating results reflect challenging operating environment, especially in general repair operations In 4Q 17 GBW recorded a pre-tax impairment loss of $11.2 million, which is included in their earnings from operations $ in millions $400 $300 $200 $100 Revenue FY 18 Outlook Operating challenges expected to improve modestly $ (1) GBW Railcar Services reflected in the Earnings from Unconsolidated Affiliates line on the income statement

39 U.S. Supplier Locations 38

40 Quarterly Adjusted EBITDA Reconciliation Supplemental Disclosure Reconciliation of Net Earnings to Adjusted EBITDA (In millions, unaudited) Aug. 31, 2016 Nov. 30, 2016 Quarter Ending Feb. 28, 2017 May 31, 2017 Aug. 31, 2017 Net earnings $60.4 $48.0 $49.0 $31.2 $32.3 GBW goodwill impairment Interest and foreign exchange Income tax expense Depreciation and amortization Adjusted EBITDA $104.4 $85.7 $94.5 $63.8 $73.3 See slide 43 for definition of Adjusted EBITDA 39

41 Annual Adjusted EBITDA Reconciliation Supplemental Disclosure Reconciliation of Net Earnings (loss) to Adjusted EBITDA (In millions, unaudited) Year Ending August 31, Net earnings (loss) $29.8 $38.9 $18.5 $14.2 ($57.9) $8.3 $8.4 $61.2 ($5.4) $149.8 $265.3 $284.8 $160.5 Interest and foreign exchange Income tax expense (benefit) (16.9) (0.9) Depreciation and amortization Goodwill impairment (1) Gain on contribution to GBW (29.0) Loss (gain) on debt extinguishment (2.1) Special items (11.9) Adjusted EBITDA $90.4 $111.9 $128.8 $113.1 $64.5 $76.1 $102.9 $160.8 $162.9 $253.8 $433.8 $474.0 $317.3 (1) 2009 Goodwill impairment relates to $1.3 million from manufacturing segment, $3.1 million from Leasing and Services segment and $51.3 million from Wheels and Parts segment Goodwill impairment relates to our Wheels and Parts segment Goodwill impairment reflects our portion of a Goodwill impairment change recorded by GBW See slide 43 for definition of Adjusted EBITDA 40

42 Quarterly Adjusted EPS Reconciliation Supplemental Disclosure Reconciliation of Net Earnings Attributable to Greenbrier to Adjusted Net Earnings (In millions, except per share amounts, unaudited) Net earnings attributable to Greenbrier Aug. 31, 2016 Nov. 30, 2016 Quarter Ending Feb. 28, 2017 May 31, 2017 Aug. 31, 2017 $33.6 $25.0 $34.5 $32.8 $23.7 GBW goodwill impairment Adjusted net earnings $33.6 $25.0 $34.5 $32.8 $27.3 Weighted average diluted shares outstanding Adjusted EPS $1.06 $0.79 $1.09 $1.03 $0.86 See slide 43 for definition of Adjusted EBITDA 41

43 Annual Adjusted EPS Reconciliation Supplemental Disclosure Reconciliation of Net Earnings (loss) Attributable to Greenbrier to Adjusted Net Earnings (loss) (In millions, except per share amounts, unaudited) Year Ending August 31, Net earnings (loss) attributable to Greenbrier $4.3 $6.5 $58.7 ($11.1) $111.9 $192.8 $183.2 $116.1 Goodwill impairment (after-tax) (1) Gain on contribution to GBW (after-tax) Loss (gain) on debt extinguishment (after-tax) (13.6) (1.3) Special items (after-tax) (11.9) Adjusted net earnings (loss) ($8.9) $15.9 $58.7 $62.5 $99.3 $192.8 $183.2 $119.6 Weighted average diluted shares outstanding Adjusted EPS ($0.44) $0.60 $1.91 $2.00 $3.07 $5.93 $5.73 $3.76 (1) 2013 Goodwill impairment relates to our Wheels and Parts segment Goodwill impairment reflects our portion of a Goodwill impairment change recorded by GBW See slide 43 for definition of Adjusted EPS 42

44 Adjusted Financial Metric Definition Adjusted Net Earnings (loss), Adjusted EBITDA, and Adjusted EPS are not financial measures under generally accepted accounting principles (GAAP). We define Adjusted Net Earnings (loss) as Net Earnings (loss) attributable to Greenbrier before goodwill impairment (after-tax), gain on contribution to GBW (after-tax), loss (gain) on debt extinguishment (after-tax) and special items (after-tax). We define Adjusted EBITDA as Net earnings (loss) before interest and foreign exchange, Income tax expense (benefit), goodwill impairment, gain on contribution to GBW, loss (gain) on debt extinguishment, special items, Depreciation and amortization. We define Adjusted EPS as Adjusted Net Earnings (loss) before interest and debt issuance costs (net of tax) on convertible notes divided by Weighted average diluted shares outstanding. We define Return on Invested Capital as Earnings from Operations less Cash paid for Income taxes, which is then annualized and divided by the sum of average Revolving notes plus Notes payable plus Total equity less Cash in excess of $40 million operating cash, which is averaged based on the quarterly ending balances. Adjusted Net Earnings (loss), Adjusted EBITDA, and Adjusted EPS are performance measurement tools used by rail supply companies and Greenbrier. We believe the presentation of Adjusted EBITDA provides useful information as it excludes the impact of financing, foreign exchange, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company s core business. We believe Adjusted EBITDA assists investors in understanding our underlying core operating performance and improves the period to period comparability. You should not consider Adjusted Net Earnings (loss), Adjusted EBITDA, and Adjusted EPS in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because Adjusted Net Earnings (loss), Adjusted EBITDA and Adjusted EPS are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures presented may differ from and may not be comparable to similarly titled measures used by other companies. 43

45 NYSE: GBX Stephens Investment Conference November 2017 Investor Contact: Website: