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GREENBRIER COMPANIES INC (GBX)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 core EPS of $1.26 beat S&P Global consensus $1.18, while GAAP diluted EPS of $1.16 reflected $0.10 of European rationalization costs; revenue of $759.5M was modestly below the $764.1M consensus, with aggregate gross margin expanding to 18.9% and operating margin at 9.5% . EPS beat was driven by solid manufacturing execution and leasing margins, partly offset by a 36.4% effective tax rate and lower deliveries versus Q3 .
  • Record FY2025 diluted EPS of $6.35 and record core EBITDA of ~$512M capped a year of >$265M operating cash flow and ~11% ROIC; long‑term targets for aggregate gross margin and core ROIC were achieved ahead of schedule .
  • FY2026 guidance: deliveries 17.5K–20.5K units (incl. ~1.5K Brazil), revenue $2.7B–$3.2B, aggregate GM% 16.0%–16.5%, operating margin 9.0%–9.5%, EPS $3.75–$4.75; capex $320M gross ($205M net) with $240M targeted to Leasing & Fleet Mgmt .
  • Catalysts: durability of mid‑teens gross margin in a softer build environment, execution on $20M annualized European savings, back‑half FY2026 production ramp, and capital allocation (46th consecutive $0.32 dividend; $78M buyback capacity) .

What Went Well and What Went Wrong

What Went Well

  • Margin strength and efficiency: Q4 aggregate GM% improved to 18.9% (+90 bps q/q) on “stronger operating performance at our Mexico facilities” and disciplined execution, marking the eighth straight quarter at/above mid‑teens .
  • Structural improvements and resilience: “Greenbrier today is a stronger, more agile organization… record financial results for 2025 on 2,000 fewer deliveries than in Fiscal 2024,” supported by insourcing in Mexico and overhead efficiencies .
  • Leasing momentum and recurring revenue: Lease fleet grew ~10% in FY2025 to ~17,000 units with 98% utilization; recurring revenue reached ~$169M LTM vs $113M starting point; non‑recourse leasing debt averages mid‑4% rates .

What Went Wrong

  • Volume headwinds and timing: Revenue fell to $759.5M from $842.7M in Q3 on lower deliveries (4,900 vs. 5,600) and timing of gains on equipment sales; operating margin compressed to 9.5% .
  • Elevated tax rate: Effective tax rate spiked to 36.4% (vs. 22.8% in Q3 and structural ~28%–30%) due to jurisdictional mix and discrete items, partially muting EPS conversion .
  • Order/backlog moderation and mix/pricing: Orders slowed to 2,400 units and backlog declined to 16,600 units ($2.2B); management cited pricing pressure in commoditized cars (e.g., grain hoppers), though tanks/specialty remain disciplined .

Financial Results

Quarterly headline metrics

MetricQ4 FY2024Q2 FY2025Q3 FY2025Q4 FY2025
Revenue ($M)$1,053.0 $762.1 $842.7 $759.5
Operating Income ($M)$123.8 $83.6 $92.6 $72.1
Operating Margin %—11.0% 11.0% 9.5%
GAAP Diluted EPS ($)$1.92 $1.56 $1.86 $1.16
Core Diluted EPS ($)—$1.69 $1.86 $1.26
Aggregate Gross Margin %—18.2% 18.0% 18.9%
Core EBITDA ($M)—$123.9 $128.5 $114.8
Effective Tax Rate %—32.3% 22.8% 36.4%
Deliveries (units)—5,500 5,600 4,900

Segment breakdown (Q3 vs Q4)

Segment MetricQ3 FY2025Q4 FY2025
Manufacturing revenue ($M)$778.2 $692.3
Manufacturing gross margin %13.6% 13.6%
Manufacturing op income ($M) / margin %$83.3 / 10.7% $59.1 / 8.5%
Manufacturing deliveries (units)5,200 4,600
Leasing & Fleet Mgmt revenue ($M)$64.5 $67.2
Leasing gross margin %71.2% 74.0%
Leasing op income ($M) / margin %$45.3 / 70.2% $43.0 / 64.0%
Owned fleet (units)16,800 17,000
Fleet utilization %98.2% 98.2%

Operating KPIs

KPIQ2 FY2025Q3 FY2025Q4 FY2025
New orders (units)3,100 3,900 2,400
Deliveries (units)5,500 5,600 4,900
Backlog (units)20,400 18,900 16,600
Backlog value ($B)$2.6 $2.5 $2.2
Lease fleet (units)16,600 16,800 17,000
Lease utilization %98.3% 98.2% 98.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Deliveries (units)FY2026—17,500–20,500 New
RevenueFY2026—$2.7B–$3.2B New
Aggregate Gross Margin %FY2026—16.0%–16.5% New
Operating Margin %FY2026—9.0%–9.5% New
EPSFY2026—$3.75–$4.75 New
Manufacturing CapexFY2026—$80M New
Leasing & Fleet Mgmt Capex (gross)FY2026—$240M New
Equipment Sales ProceedsFY2026—$115M New
Net CapexFY2026—$205M New
Aggregate Gross Margin %FY202517.0%–17.5% (Q2 update) 17.7%–18.3% (Q3 update) Raised
Operating Margin %FY202510.2%–10.7% (Q2 update) 10.6%–11.0% (Q3 update) Raised
Deliveries (units)FY202521.5K–23.5K (Q2 update) 21.5K–23.5K (Q3 update) Maintained
RevenueFY2025$3.15B–$3.35B (Q2 update) $3.15B–$3.35B (Q3 update) Maintained
Leasing & Fleet Mgmt CapexFY2025$300M (Q2 update) $270M (Q3 update) Lowered
Gross CapexFY2025$420M (Q2 update) $415M (Q3 update) Lowered
Equipment Sales ProceedsFY2025$60M (Q2 update) $75M (Q3 update) Raised
Net CapexFY2025$360M (Q2 update) $340M (Q3 update) Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025, Q3 FY2025)Current Period (Q4 FY2025)Trend
Insourcing/Mexico efficiencyQ2 focused on footprint optimization and efficiency; raised margin guidance . Q3 highlighted insourcing expansion in Mexico aiding margins .“Insourcing capacity expansion in Mexico is effectively complete” and contributing to GM% gains .Improving efficiency; structural margin lift.
Europe footprint rationalizationQ2 announced closure of a Romanian facility with related costs . Q3 confirmed one closure; ≥$10M annual savings .Q4 closed two additional facilities; ~$20M annualized savings while maintaining capacity .Accelerated savings; capacity preserved.
Demand/production cadenceFY2025 deliveries guidance maintained through Q3 .Back‑half FY2026 ramp expected; Q1–Q2 FY2026 at Q4 run‑rates, then Q3–Q4 pickup based on backlog/customer needs .Near‑term softer, improving 2H FY2026.
Pricing/mix—Pricing pressure in commoditized hoppers; discipline in tanks/specialty .Mixed: pressure in commodities, stable specialty.
Tariffs/macro resilience—Contract structures and U.S. footprint provide flexibility; monitoring policy dynamics .Managed risk posture.
Leasing/recurring revenueStrategy to double recurring revenue over five years reiterated through Q2/Q3 .Recurring revenue ~$169M LTM; fleet ~17K units; utilization ~98% .Steady growth; high utilization.
Capital allocation/liquidityQ3: renewed/extended $850M bank facilities; buybacks, dividend .Liquidity >$800M; 46th consecutive $0.32 dividend; $78M buyback capacity .Healthy liquidity; ongoing returns.

Management Commentary

  • Strategy and operating excellence: “We achieved record earnings and EBITDA… exceeded long‑term targets for aggregate gross margin and return on invested capital,” reflecting “disciplined execution and operational excellence” .
  • Structural resilience: “Greenbrier today is a stronger, more agile organization… record financial results for 2025 on 2,000 fewer deliveries than in Fiscal 2024” .
  • Manufacturing/insourcing: “Insourcing capacity expansion in Mexico is effectively complete,” enabling sustained GM% improvement .
  • Europe rationalization: “We’re proceeding with the closure of two additional facilities… annualized savings of $20 million… these actions… will not impact our European production capacity” .
  • CFO detail: “Aggregate gross margin for the fourth quarter was 19%, an improvement of 90 basis points sequentially… partially offset by a $3 million impact related to our European footprint rationalization… effective tax rate of 36.4%… due to jurisdictional income mix” .

Q&A Highlights

  • Production cadence/back‑half weighting: Management expects Q1–Q2 FY2026 production similar to Q4 FY2025 with a ramp in Q3–Q4; some slots remain open intentionally to stay responsive to customer timing .
  • Mexico insourcing and cost-out: The multi‑year insourcing program in Central Mexico is complete and is reducing hours/unit and costs, providing lift in softer markets .
  • Tariffs and flexibility: Contract structures and U.S. footprint provide protection/pivot options amid tariff changes; ongoing engagement with policymakers .
  • Europe consolidation scope: From six facilities (3 Romania/3 Poland) to three (2 Romania/1 Poland) via consolidation, maintaining capacity while lowering overhead .
  • Pricing dynamics: Competitive pressure in commoditized covered hoppers; discipline maintained in tanks and specialty railcars .

Estimates Context

  • Q4 FY2025 vs S&P Global consensus: Core EPS $1.26 vs $1.18 estimate (beat); Revenue $759.5M vs $764.1M estimate (slight miss); EBITDA definition differences noted (company Core EBITDA $114.8M vs S&P EBITDA estimate ~$105.2M)* .
  • Management drivers: Margin gains from Mexico efficiency and strong leasing, offset by lower deliveries and higher tax rate .
Metric (Q4 FY2025)Consensus Estimate*Actual
EPS ($)1.18*1.26 (core diluted)
Revenue ($M)764.1*759.5
EBITDA ($M)105.2*114.8 (Core EBITDA)

Values retrieved from S&P Global.
Note: S&P “Primary EPS” may align with adjusted/core EPS; EBITDA definitions differ from company “Core EBITDA.”

Key Takeaways for Investors

  • Quality of earnings remains high: EPS beat on stronger margins and leasing performance despite lower deliveries and a high tax rate; watch normalization of the ETR toward the 28%–30% structural range as a potential EPS tailwind .
  • FY2026 guide embeds disciplined mid‑teens GM% and 9%–9.5% operating margin at a lower build rate, underscoring structural efficiency gains and mix/Leasing contribution .
  • Orders/backlog trended down sequentially (2,400 orders; 16.6K backlog units, $2.2B), but management signals improving inquiries and a back‑half FY2026 production ramp; execution on conversion will be a key stock driver .
  • Europe footprint savings ($20M annualized) should aid margins and SG&A, with capacity maintained—a credible lever in a modest demand backdrop .
  • Pricing bifurcation persists: pressure in commoditized hoppers vs. disciplined tanks/specialty; commercial discipline and mix will be crucial for sustaining margin profile .
  • Capital allocation remains supportive: 46th consecutive $0.32 dividend and remaining $78M buyback authorization; liquidity >$800M positions GBX to invest through the cycle .
  • Monitor leasing growth and non‑recourse financing: recurring revenue trajectory (~$169M LTM) and mid‑4% average rates on lease debt support through‑cycle stability .

Additional Items During the Quarter

  • Dividend: Board declared a $0.32 quarterly dividend payable Dec 3, 2025 (46th consecutive) .
  • Buybacks: Repurchased ~10K shares in Q4 and 517K in FY2025; $78M remaining under authorization .
  • Long‑term targets: Aggregate GM% achieved at 18.7% and Core ROIC at 10.9%; recurring revenue progress tracked at ~$169M LTM .
Data sources:  
- Q4 FY2025 earnings 8‑K and Exhibit 99.1 (press release), segment/financial/KPI tables, and FY2026 guidance **[923120_0001193125-25-253533_d54114dex991.htm:0]** **[923120_0001193125-25-253533_d54114dex991.htm:1]** **[923120_0001193125-25-253533_d54114dex991.htm:2]** **[923120_0001193125-25-253533_d54114dex991.htm:3]** **[923120_0001193125-25-253533_d54114dex991.htm:4]** **[923120_0001193125-25-253533_d54114dex991.htm:5]** **[923120_0001193125-25-253533_d54114dex991.htm:6]** **[923120_0001193125-25-253533_d54114dex991.htm:7]** **[923120_0001193125-25-253533_d54114dex991.htm:8]** **[923120_0001193125-25-253533_d54114dex991.htm:9]** **[923120_0001193125-25-253533_d54114dex991.htm:10]** **[923120_0001193125-25-253533_d54114dex991.htm:11]**.  
- Q4 FY2025 earnings call transcript (prepared remarks and Q&A) **[0000923120_2209223_1]** **[0000923120_2209223_2]** **[0000923120_2209223_3]** **[0000923120_2209223_5]** **[0000923120_2209223_6]** **[0000923120_2209223_7]** **[0000923120_2209223_8]** **[0000923120_2209223_9]** **[0000923120_2209223_10]** **[0000923120_2209223_11]**.  
- Prior quarters’ earnings 8‑Ks for trend and FY2025 guidance updates **[923120_0001193125-25-074671_d942559dex991.htm:0]** **[923120_0001193125-25-074671_d942559dex991.htm:1]** **[923120_0001193125-25-074671_d942559dex991.htm:2]** **[923120_0001193125-25-074671_d942559dex991.htm:3]** **[923120_0001193125-25-074671_d942559dex991.htm:7]** **[923120_0001193125-25-154013_d867478dex991.htm:0]** **[923120_0001193125-25-154013_d867478dex991.htm:1]** **[923120_0001193125-25-154013_d867478dex991.htm:3]** **[923120_0001193125-25-154013_d867478dex991.htm:7]**.  
- Dividend press release **[923120_20251023SF05784:0]**.  
- Estimates: S&P Global consensus and “actuals” where shown by the estimates tool (see note).*