The Greenbrier Companies, Inc.

Hello and welcome to the Greenbrier Company's second quarter of fiscal year 2020 earnings conference call. Following today's presentation, we will conduct a question and answer session. Each analyst should limit themselves to only two questions. Until that time, all lines will be placed in a listen-only mode. At the request of the Greenbrier Company, this conference call is being recorded for instant replay purposes. At this time, I would like to turn the conference over to Mr. Justin Roberts, Vice President and Treasurer of Mr. Roberts, you may begin.

Thank you, Missy. Good morning, everyone, and welcome to our second quarter of fiscal 2020 conference call. On today's call, I'm joined by Greenbrier's chairman and CEO, Bill Furman, Lori Sikorius, president and COO, and Adrian Downs, senior vice president and CFO. They will provide an update on Greenbrier's near-term priorities as we manage through the COVID-19 pandemic. pandemic, and then we will discuss the results for the second quarter. Following our introductory remarks, we will open up the call for questions. In addition to the press release issued this morning, which includes supplemental data, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website. Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2020 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. And with that, I'll pass it over to Bill.

Thank you, Justin, and good morning, everyone. As we begin, I want to take a moment to extend good wishes for the health of everyone in the line with us today. I also call out the work of the many health professionals, emergency responders, government officials, and individuals who are on the front lines battling this pandemic, and those in our armed forces and National Guard around the world and here in America. Finally, I thank all the Green Bar employees in our factories, offices, and at home, each now operating under essential industry status. The world is not only in a severe health crisis, but obviously, and economic crisis affecting businesses differently. As you will hear today, the ability to continue to operate our factories with a strong backlog in hand allows us to protect liquidity and maneuver in a way other industries and other businesses cannot under current circumstances. We're now operating under two essential priorities. Number one, to provide for the safety and security of our workforce and number two, to provide for the liquidity and economic well-being of the enterprise and its shareholders. In the face of this pandemic, management priorities and behavior immediately shifted to the extraordinary challenges at hand. We quickly implemented contingency plans and assembled incident response teams. We assessed the risks to our business in real time and are taking swift actions to ensure Greenbrier is defensively positioned to manage through a period that presents a range of unknown and unknowable challenges. We're safely operating, and I emphasize safely operating, all our manufacturing and essential service sites, including those sites that manage over a quarter of industry rail cars in the United States and North America. Greenbrier's operations constitute essential infrastructure and essential businesses as defined by the U.S. Department of Homeland Security and other U.S. and international agencies, including all stay-at-home orders issued in the jurisdictions where we operate at home and abroad. Greenbrier supports operations vital for the national transportation system, the Department of Defense, and other federal agencies. We perform our functions under the statutory and regulatory authority of the Department of Transportation, the Surface Transportation Board, the Federal Railroad Administration, and under the Jones Act in our marine operations. Accordingly, Greenbrier will help maintain the delivery of vital goods, including food, medical supplies, and fuel to communities in the United States and in all the nations that we supply around the world. We will keep our nations and those nations smoothly functioning in the railroad system. Along with the welfare of our employees, we are determined to protect the economic well-being of the enterprise during unprecedented market and economic conditions. As discussed in our earnings release today, we are laser-focused on liquidity. Our goal is to produce $1 billion in available, reliable liquidity within the remaining five months of our fiscal year, ending in August of 2020. Before the onset of the pandemic, we had already begun to reduce the size of our manufacturing footprint due to anticipated lower levels of railcar demand and reduced aftermarket activity. Adjustments to production and staffing levels that began in September of last year continued into the second and third quarter as we idled excess capacity in North American manufacturing facilities, largely in Mexico, as well as at Green Bar Rail services locations. Since we began this initiative, we have adjusted global operations through workforce reductions equal to approximately 20% of Green Bar's global workforce. These reductions now exceed 3,500 workers. Yesterday, we took steps which would add another 200 workers over time. Our colleagues who left us this fiscal year are people who each made important contributions to our success. have spent their entire careers in this business. They are leaving us through no fault of their own. Each affected employee is a person with a name and a family. This is a fact we never forget. We recognize that this is a period of shared sacrifice. As a result, I have taken a voluntary immediate reduction in my salary of $250,000, and for our board of directors, each has voluntarily reduced their cash compensation. We have frozen pay increases for members of management. Moreover, cash and earnings will automatically flow from curtailed bonus payments if we do not meet targeted performance metrics and along with a discretionary reduction that I or the compensation committee of the board of directors can request. All that remains to be seen, but it is an automatic relief valve for difficult times baked in to a company that is well-seasoned in dealing with difficult times in a cyclical business. This is not our first rodeo. Green Barn's business is flexible enough to quickly adapt to changing market conditions. Our franchise is strong, and we hold the position as the number one or number two players in three core markets. In South America, more specifically Brazil, North America, and Europe. The strength of this franchise is demonstrated by the fact that half of this quarter's earnings were generated from abroad. Quarters, I'm not sure, not earnings, but orders. And of that half, about 1,000 cars are to be built in North America by a good customer in the Gulf Cooperative Council. We have a strong, experienced management team. Greenbrier, again, has navigated through difficult markets in the past. Historically, we've come out stronger as a result of our combined efforts. Not only did we recover, but we transformed and dramatically increased the scale of our business through hard work, focus, execution, and diversification of our revenue stream. Although this is a stressful time, no matter how the remainder of this year plays out, we know our role in the transportation industry remains vital. Beyond layoffs and other obvious reductions. We're committed to take aggressive actions to shrink Greenbar's cost profile, its balance sheet, to improve its balance sheet, and Lori and Adrian will speak more to this a little later. Based on our current backlog, we are left with very little open production capacity for the remainder of both the fiscal and the calendar year. At Gundersen, our marine backlog extends through the fiscal year and the calendar year. Our backlog at production Current production rate stretches into 2021 and beyond. A large multi-year manufacturing backlog of railcar units provides one source of stability in difficult times as we operate our facilities. These long-term customers are very reliable and have virtually never wavered in fulfilling commitments, even if they have to, at times, put cars in storage. All that provides resilience and a bridge to when industry dynamics and economic conditions improve. In addition to the liquidity goals I mentioned, we have stress-tested Greenbar's balance sheet to ensure our liquidity, and we have run very many scenarios to look at worst case. While we have suspended earnings guidance, we expect to remain profitable. We do not know nor can anyone know how this crisis will evolve and resolve. Today, this is the biggest risk we all face together. Scenarios may emerge that we cannot reasonably anticipate, but we are confident we're managing those factors within our control, and we're also to manage others through the worst of times. This means we are prepared to adapt to the new economic realities. We'll take the difficult and necessary actions to protect green bars economic base, preserve its financial stability, focus on our core business, remove essential activities, and restore shareholder value for years to come. Now, over to you, Lori, for your comments.