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GC

GREENBRIER COMPANIES INC (GBX)·Q3 2025 Earnings Summary

Executive Summary

  • Strong quarter with broad-based beats: Q3 revenue $842.7M and diluted EPS $1.86, both up sequentially and year over year, with aggregate gross margin at 18.0% and operating margin at 11.0% . EPS and revenue materially exceeded S&P Global consensus for Q3 (EPS* $0.99 vs $1.86 actual; revenue* $785.7M vs $842.7M actual). Values retrieved from S&P Global.
  • Guidance improved on profitability: FY25 aggregate gross margin guidance raised to 17.7%–18.3% (from 17.0%–17.5%) and operating margin to 10.6%–11.0% (from 10.2%–10.7%); deliveries (21.5k–23.5k) and revenue ($3.15B–$3.35B) affirmed .
  • Commercial and fleet health intact: 3,900 orders (> $500M), 5,600 deliveries, backlog 18,900 units (~$2.5B), lease utilization 98% (owned fleet 16,800) .
  • Capital deployment and liquidity: ~$140M operating cash flow, ~$22M buybacks (507k shares), $0.32 dividend (45th consecutive), renewed/extended $850M bank facilities with maturities to 2030, liquidity ~ $770M .

What Went Well and What Went Wrong

  • What Went Well

    • Sustained margin strength: aggregate gross margin 18.0% (7th straight quarter at/above mid-teens); operating margin 11.0% . CEO: “Our aggregate gross margin percent continues to surpass our mid-teens long-term target” .
    • Elevated cash generation and efficiency: nearly $140M operating cash flow; CFO cited working capital efficiencies; Q3 tax rate improved to 22.8% on FX discrete items .
    • Strategic execution: European footprint rationalization ahead of plan (last wagon shipped in May) with expected ≥$10M annual savings; Mexico insourcing nearing completion .

  • What Went Wrong

    • Order timing/backlog optics: Backlog 18,900 units drew scrutiny; management emphasized programmatic restorations not included in backlog figures and strong inquiry pipeline .
    • Below-the-line volatility: FX can swing interest/FX line; CFO noted ~$5M pre-tax FX benefit in Q3 and guided interest expense ~$22–$25M in Q4; visibility remains limited .
    • Mix/production adjustments: Continued adjustments to production rates and lines to match demand across geographies; European facility closure depressed deliveries near term, though profitability held .

Financial Results

Q3 YoY comparison (Q3 FY2024 vs Q3 FY2025)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$820.2 $842.7
Diluted EPS ($)$1.06 $1.86

Sequential comparison (Q2 FY2025 vs Q3 FY2025)

MetricQ2 2025Q3 2025
Revenue ($USD Millions)$762.1 $842.7
Aggregate Gross Margin %18.2% 18.0%
Earnings from Operations ($M)$83.6 $92.6
Operating Margin %11.0% 11.0%
Core EBITDA ($M)$123.9 $128.5
Diluted EPS ($)$1.56 (GAAP); $1.69 Core $1.86

Q1–Q3 FY2025 trend

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$875.9 $762.1 $842.7
Aggregate Gross Margin %19.8% 18.2% 18.0%
Operating Income ($M)$111.8 $83.6 $92.6
Operating Margin %12.8% 11.0% 11.0%
Diluted EPS ($)$1.72 $1.56 (GAAP); $1.69 Core $1.86

Q3 2025 vs S&P Global consensus

MetricEstimate*ActualSurprise
Revenue ($USD Millions)$785.7M*$842.7M +$57.0M
Diluted EPS ($)$0.985*$1.86 +$0.88
EBITDA ($USD Millions)$98.3M*$128.5M Core +$30.2M

Values retrieved from S&P Global.

Segment performance (Q2 vs Q3 FY2025)

SegmentQ2 2025Q3 2025
Manufacturing Revenue ($M)$700.3 $778.2
Manufacturing Gross Margin %13.6% 13.6%
Manufacturing Operating Income ($M)$69.0 $83.3
Manufacturing Operating Margin %9.9% 10.7%
Deliveries (units, excl. Brazil)5,000 5,200
Leasing & Fleet Mgmt Revenue ($M)$61.8 $64.5
Leasing Gross Margin %70.7% 71.2%
Leasing Operating Income ($M)$45.6 $45.3
Leasing Operating Margin %73.8% 70.2%
Owned Fleet (units)16,600 16,800
Utilization %98.3% 98.2%

KPIs and operating metrics

KPIQ2 2025Q3 2025
Orders (units)3,100 3,900
Deliveries (units, total)5,500 5,600
Backlog (units)20,400 18,900
Backlog Value ($B)~$2.6B ~$2.5B
Net gain on equipment sales ($M)$9.6 $7.0
Operating cash flow ($M)~$94 (Q2) ~ $140 (Q3)

Guidance Changes

MetricPeriodPrevious Guidance (Apr 2025)Current Guidance (Jul 2025)Change
Deliveries (units)FY202521,500–23,500 21,500–23,500 Maintained
Revenue ($)FY2025$3.15B–$3.35B $3.15B–$3.35B Maintained
Aggregate Gross Margin %FY202517.0%–17.5% 17.7%–18.3% Raised
Operating Margin %FY202510.2%–10.7% 10.6%–11.0% Raised
Manufacturing Capex ($)FY2025$120M $145M Raised
Leasing & Fleet Mgmt Gross Capex ($)FY2025$300M $270M Lowered
Gross Capex ($)FY2025$420M $415M Lowered
Equipment Sales Proceeds ($)FY2025$60M $75M Raised
Net Capex ($)FY2025$360M $340M Lowered
Dividend/Capital ReturnQ3/FY2025Dividend $0.32; $100M buyback authorization at Q2 Dividend $0.32 (45th); $78M buyback remaining Maintained dividend; buyback capacity utilized

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Margins/efficiencyAggregate GM 19.8%; focus on insourcing and productivity; op margin up; ROIC improving Aggregate GM 18.2%; raised FY25 GM/OM guidance; European rationalization costs near-term Aggregate GM 18.0%; raised FY25 GM/OM again; CFO cites mix, efficiencies, syndication, recurring rev Stable-strong
Trade/tariffs/macroProducts USMCA-compliant; macro uncertainty; contracts have pass-throughs Tariffs impact inputs; raised profitability guidance despite lower deliveries; pass-through language Expect policy clarity tailwinds; mention 45Z and bonus depreciation as catalysts Improving visibility
Production/backlogBacklog $3.0B; use restoration work to flex footprint Backlog 20.4k units; production similar 1H vs 2H; mix shifts Backlog 18.9k units; production rates adjusted; inquiries improving Mixed optics, pipeline better
Leasing/recurring revenueTTM recurring revenue $148M; renewals strong; utilization ~99% TTM recurring revenue $157M; utilization strong; syndication to accelerate 2H TTM recurring revenue nearly $165M; utilization 98%; disciplined growth; used car market activity Growing
Europe/Mexico footprintOrganizational redesign; flexibility across footprint Announced Romania facility rationalization; near-term delivery impact Last wagon shipped in May; ≥$10M annual savings expected; Mexico insourcing near completion Executing/benefits accruing
Liquidity/creditLiquidity $549M; focus on working capital Liquidity >$750M; OCF ~$94M Liquidity ~ $770M; $850M facilities extended to 2030; OCF ~ $140M Strengthening

Management Commentary

  • “Our aggregate gross margin percent continues to surpass our mid-teens long-term target… These results reflect our continued progress on operational initiatives across the business.” — Lorie Tekorius, CEO .
  • “We are raising aggregate gross margin %… and operating margin %… and affirming delivery and revenue guidance.” — Michael Donfris, CFO .
  • “We delivered our last freight wagon from the Arad, Romania, facility in late May, ahead of initial expectations… savings of at least $10 million annually.” — Lorie Tekorius .
  • “Recurring revenue reached nearly $165 million over the last four quarters… Fleet utilization also remained high at 98%.” — Brian Comstock .

Q&A Highlights

  • Below-the-line/FX and interest: CFO guided Q4 interest expense to ~$22–$25M; FX can be volatile, with ~$5M pre-tax benefit in Q3 .
  • Orders/backlog optics: Analyst flagged 18,900 backlog as low; management highlighted non-backlog restoration work and diverse demand as supportive of production and margins .
  • Refurbishment vs replacement: Many aging cars will exit the fleet; restoration targets mid-life cars and is margin-accretive; does not eliminate replacement demand .
  • Mix and leasing strategy: More direct sale activity recently; opportunistic used railcar purchases to grow fleet while maintaining discipline and syndication partnerships .
  • Catalysts: Potential demand drivers from 45Z renewable fuels incentives and potential bonus depreciation/expensing .

Estimates Context

  • Q3 beats: EPS* $0.985 vs actual $1.86; Revenue* $785.7M vs actual $842.7M; EBITDA* $98.3M vs Core EBITDA $128.5M (company-reported Core EBITDA) . Values retrieved from S&P Global.
  • Trailing two quarters: Q1 beat on EPS*/revenue*; Q2 missed EPS*/revenue* (driven by lower deliveries and European rationalization costs), with recovery in Q3 as syndication and mix improved . Values retrieved from S&P Global.

Quarterly consensus vs actual (S&P Global; EPS and revenue)

PeriodEPS Estimate*EPS ActualRevenue Estimate* ($M)Revenue Actual ($M)
Q1 20251.155*1.72 849.5*875.9
Q2 20251.780*1.56 (GAAP); 1.69 Core 898.5*762.1
Q3 20250.985*1.86 785.7*842.7

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with upward margin guidance is the key stock catalyst: profitability trajectory is improving even as production rates are flexed to demand .
  • Execution and mix underpin margins: operational efficiencies, disciplined leasing growth, and syndication timing are sustaining mid-teens+ aggregate margins .
  • Backlog optics mask non-backlog restoration work; management’s pipeline commentary suggests order conversion could improve with policy clarity (45Z, bonus depreciation) .
  • Leasing fundamentals remain robust (98% utilization; recurring revenue rising), supporting a more resilient earnings base across cycles .
  • Balance sheet/liquidity de-risked: $850M facilities extended to 2030; liquidity ~ $770M; continued dividend and buybacks provide support .
  • Watch FX and interest expense in Q4 (guided interest ~$22–$25M) and European footprint benefits (≥$10M annual savings) as potential EPS drivers .
  • Estimate revisions likely trend higher on EPS and margin metrics for FY25 given Q3’s outperformance and raised profitability guidance .