GREENBRIER COMPANIES INC (GBX)

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

Executive Summary

We operate in two reportable segments: Manufacturing and Leasing & Fleet Management. Our segments are operationally integrated. The Manufacturing segment designs, builds and markets freight railcars and component parts in North America and Europe. We also perform sustainable conversions and railcar maintenance, which includes wheel and axle services. The Leasing & Fleet Management segment owns and leases approximately 20,600 railcars as of May 31, 2026. We offer railcar management, regulatory compliance services and leasing services to railroads and other railcar owners in North America.

We continue to operate in an environment characterized by macroeconomic uncertainty, including inflationary pressures, global trade tensions and tariffs, volatility in foreign exchange and interest rates and geopolitical instability. These conditions, along with the potential for a sustained economic slowdown or ongoing supply chain disruptions, could materially and adversely affect our operations and financial performance. Direct impacts may include increased costs for raw materials, labor, and manufacturing inputs, while indirect impacts may include reduced demand for new railcar orders and leasing activity.

We are monitoring developments related to tariffs and trade policies, including those imposed under Section 232 of the Trade Expansion Act of 1962 on steel and aluminum, the impact of the recent Notice of Determination on freight couplers from the U.S. Customs and Border Protection and the administration of trade policy in North America. Uncertainty in these areas has adversely affected, and may continue to adversely affect, North American industry-wide demand for new railcars, including demand for our products, and therefore, our results of operations. We remain focused on managing and, to the extent possible, mitigating the potential impacts of these evolving conditions on our business.

Despite these potential headwinds, we believe we are well-positioned to continue to execute on our multi-year strategy. In addition, we believe our integrated business model provides flexibility across economic cycles. We maintain a diversified customer base and disciplined approach to managing working capital and operating costs.

We continue to execute on our strategic plan of increasing recurring revenue, expanding aggregate gross margin and raising return on invested capital. Recurring revenue is defined as Leasing & Fleet Management revenue excluding the impact of syndication transactions.

Backlog

Our railcar backlog was 13,800 units with an estimated value of $2.0 billion as of May 31, 2026, with deliveries extending into 2028 and beyond. Our backlog includes approximately $720 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. Approximately 12% of backlog units and 13% of estimated backlog value as of May 31, 2026 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. 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.

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Segment Information

Effective September 1, 2025, we changed our measurement basis for allocating revenue and expenses associated with syndication activity between our Manufacturing and Leasing & Fleet Management reportable segments. This change reflects the information currently provided to our CODM to assess performance and allocate resources and had no impact on our consolidated results of operations or financial position. Prior period segment results have been recast to conform to the current period presentation. See Note 12 - Segment Information to the Condensed Consolidated Financial Statements for additional information for additional information on our reportable segments.

Risks, uncertainties and other important factors described in Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025 may have a material negative impact on our business, liquidity, results of operations and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude these items will impact our business.

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Three Months Ended May 31, 2026 Compared to the Three Months Ended May 31, 2025

Overview

Revenue, Cost of revenue, Margin and Earnings from operations presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.

Performance for our segments is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

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Consolidated Results

* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.

Revenue decreased $266.2 million or 31.6% for the three months ended May 31, 2026 as compared to the three months ended May 31, 2025 primarily due to a 38.5% decrease in deliveries and a change in railcar manufacturing product mix.

Cost of revenue decreased $195.8 million or 28.3% for the three months ended May 31, 2026 as compared to the three months ended May 31, 2025 primarily due to a 38.5% decrease in deliveries and a change in railcar manufacturing product mix.

Margin percentage decreased 3.9% for the three months ended May 31, 2026 compared to the three months ended May 31, 2025 primarily due to an unfavorable change in railcar manufacturing product mix and operating at lower volumes during the three months ended May 31, 2026.

Net earnings attributable to Greenbrier decreased $41.2 million for the three months ended May 31, 2026 as compared to the three months ended May 31, 2025 primarily due to:

•
$70.4 million decrease in Margin attributable to a 38.5% decrease in deliveries and a change in railcar manufacturing product mix.

This was partially offset by the following:

•
$15.1 million decrease in Income tax expense due to lower pre-tax earnings and net favorable discrete items related to our foreign subsidiaries.

•
$10.7 million decrease in Selling and administrative expense primarily attributed to lower employee-related costs.

•
$8.8 million change in Net (earnings) loss attributable to noncontrolling interest primarily a result of lower railcar deliveries at our Mexican railcar manufacturing joint venture.

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Manufacturing Segment

* Not meaningful

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of railcar products and components, syndication activity associated with leases attached to new railcar sales and performing sustainable conversion services. Manufacturing also generates revenue by providing railcar maintenance services.

Manufacturing Revenue decreased $264.3 million or 33.3% for the three months ended May 31, 2026 compared to the three months ended May 31, 2025 primarily due to a 38.5% decrease in deliveries and a change in railcar manufacturing product mix.

Manufacturing Cost of revenue decreased $196.0 million or 29.1% for the three months ended May 31, 2026 compared to the three months ended May 31, 2025. The decrease was primarily attributed to a 38.5% decline in deliveries and a change in railcar manufacturing product mix during the three months ended May 31, 2026.

Manufacturing Margin percentage decreased 5.3% for the three months ended May 31, 2026 compared to the three months ended May 31, 2025. The decrease was primarily attributed to an unfavorable change in railcar manufacturing product mix and operating at lower volumes during the three months ended May 31, 2026.

Manufacturing Earnings from operations decreased $68.1 million for the three months ended May 31, 2026 compared to the three months ended May 31, 2025. The decrease was primarily attributed to a 38.5% decrease in deliveries and a change in railcar manufacturing product mix during the thre

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

We operate in two reportable segments:

1.
Manufacturing - We design, build and market freight railcars in North America and Europe. We are also a leading provider of freight railcar wheel services, component parts, maintenance and retrofitting services in North America.

2.
Leasing & Fleet Management - We own a lease fleet of railcars that originate primarily from our manufacturing operations. We offer railcar management, regulatory compliance services and leasing services to railroads and other railcar owners in North America. We also place railcars on lease to customers and sell the railcars with leases attached to investors.

We operate an integrated business model which we believe is difficult to duplicate and provides greater value for our customers and investors.

We continue to operate in an environment characterized by ongoing macroeconomic uncertainty, including inflationary pressures, potential impacts from global trade tensions and tariffs and volatility in foreign exchange and interest rates. We believe that a sustained economic slowdown or continued supply chain disruption could significantly affect our operations and financial performance. Such developments could impact our business both directly and indirectly. Direct impacts may include higher costs for raw materials, labor and manufacturing inputs. Indirectly, a weaker macroeconomic environment could reduce demand for new railcar orders and leasing activity.

Despite these potential headwinds, we believe we are well-positioned to continue to execute on our multi-year strategy. In addition, we believe our integrated business model provides flexibility across economic cycles. We maintain a diversified customer base and disciplined approach to managing working capital and operating costs.

While we believe that macroeconomic uncertainty is affecting demand across the markets in which we operate, we delivered strong results in 2025, which included the following:

•
Expanded our Margin as a percentage of Revenue from 15.8% in 2024 to 18.7% in 2025.

•
Increased Net earnings attributable to Greenbrier by $44.0 million or 27.5% compared to the prior year.

•
Generated $266 million of Net cash provided by operating activities.

•
Increased our owned lease fleet by 1,500 railcars, representing a 9.7% increase since August 31, 2024.

•
Renewed and extended our $600 million domestic revolving facility and $250 million term loan in May 2025, extending the maturity date of both instruments until 2030.

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We believe our results highlight our continued focus on our strategic plan as we remain focused on increasing recurring revenue, expanding aggregate gross margin and raising return on invested capital. Recurring revenue is defined as Leasing & Fleet Management revenue excluding the impact of syndication transactions.

With a global footprint, supply chain and customer base, we are focused on navigating the impact of changing trade policies, such as tariffs, as well as general geopolitical and macroeconomic uncertainty.

In the fourth quarter of 2025, we continued the rationalization of our European operations and approved the closure of manufacturing facilities in Poland and Türkiye. Combined with the closure of one of our manufacturing facilities in Romania announced earlier this year, our European headcount is expected to be reduced by 30% while maintaining the same production capacity.

Financial Highlights

Despite the challenging operating environment, we accomplished the following in 2025:

•
Margin as a percentage of Revenue improved by 2.9% to 18.7% for the year ended August 31, 2025. The increase from the prior year was driven by operating efficiencies in our Manufacturing segment.

•
Earnings from operations increased by $35.6 million or 11.0% compared to the prior year. The increase was primarily attributed to an increase in Margin in our Manufacturing and Leasing & Fleet Management segments during the year ended August 31, 2025. The increase in Margin was primarily due to operating efficiencies in Manufacturing and higher rents associated with a larger fleet and improved lease rates in Leasing & Fleet Management.

•
Diluted Earnings per common share (EPS) increased by 28.0% to $6.35 for the year ended August 31, 2025.

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Manufacturing Backlog

Our railcar backlog was 16,600 units with an estimated value of $2.2 billion as of August 31, 2025, with expected deliveries extending into 2027 and beyond. Our backlog includes approximately $460 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. Approximately 12% of backlog units and estimated value as of August 31, 2025 was associated with our Brazilian manufacturing operation 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. 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.

Change In Reportable Segments

Effective September 1, 2024, we combined our former Maintenance Services and Manufacturing segments into a single reportable segment, Manufacturing. The combined Manufacturing reportable segment reflects a comprehensive production operation that allows us to streamline production processes and resources to better serve our customers. Separately, we renamed our former Leasing & Management Services reportable segment to Leasing & Fleet Management. These changes reflect the realignment of our organizational structure and reporting regularly provided to our chief operating decision maker to assess performance and allocate resources. These changes had no impact on our consolidated results of operations or financial position. Prior period segment results have been recast to reflect our new reportable segments. Financial information about our reportable segments as well as geographic information is located in Note 17 - Segment Information to the Consolidated Financial Statements.

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Financial Overview

Revenue, Cost of revenue, Margin and Earnings from operations presented below include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.

Performance for our segments is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

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Consolidated Results

* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.

The 8.6% decrease in Revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries. This was partially offset by a 7.2% increase in Leasing & Fleet Management Revenue primarily attributed to an increase in rents associated with growth of the fleet and improved lease rates.

The 11.8% decrease in Cost of revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries and operating efficiencies within our Manufacturing segment during the year ended August 31, 2025.

Margin percentage increased 2.9% for the year ended August 31, 2025 compared to the prior year primarily due to operating efficiencies in our Manufacturing segment.

The $44.0 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2025 as compared to the prior year was primarily due to the following:

•
$49.0 million increase in Margin for the year ended August 31, 2025 primarily due to operating efficiencies within our Manufacturing segment and a $27.3 million increase in rents associated with growth of the fleet and improved lease rates in our Leasing & Fleet Management segment.

•
$25.1 million decrease in Interest and foreign exchange expense primarily attributed to higher interest income and a $10.6 million increase in foreign exchange gain primarily due to the change in the Mexican Peso's foreign exchange rate relative to the U.S. Dollar during the year ended August 31, 2025.

These were partially offset by the following:

•
$29.4 million increase in Income tax expense due to higher pre-tax earnings and geographic mix of earnings during the year ended August 31, 2025.

For discussion related to the results of operations and changes in financial condition for 2024 compared to 2023 refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K, which was filed with the U.S. Securities and Exchange Commission on October 24, 2024.

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Manufacturing Segment

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