The Greenbrier Companies, Inc.

Hello and welcome to the Greenbrier Company's fourth quarter of fiscal 2022 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 in a listen-only mode. At the request of the Greenbrier Company, this conference call is being recorded for replay purposes. At this time, I would like to turn the conference over to Mr. Justin Roberts, Vice President and Treasurer. Mr. Roberts, you may begin.

Thank you, Andrea. Good morning, everyone, and welcome to our fourth quarter and fiscal 2022 conference call. Today, I'm joined by Lori Ticorius, Greenbrier's CEO and President, Brian Comstock, Executive Vice President and Chief Commercial and Leasing Officer, and Adrienne Downs, Senior Vice President and CFO. Following our update on Greenbrier's performance in 2022 and our outlook for fiscal 2023, we will open up the call for questions. In addition to the press release issued this morning, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website. As a reminder, 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 2023 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 turn the call over to Lori. Good morning.

Good morning. Thank you, Justin. And good morning, everyone. I appreciate you joining us today. Before returning to our results, I want to commend our business unit and all our colleagues in production for completing another year of outstanding safety performance. Our recordable injury rate declined by nearly 16%, and our DART rate was down 17% from 2021. This is the second year in a row with double-digit improvements following steady improvements over the past three years. This impressive performance occurred at the same time we increased our global workforce by 35% and during a 50% rise in enterprise-wide production rates. In North America, our production rates increased by 75%. Based on this higher production activity and workforce growth, it's obvious why we're proud of our safety records. It demonstrates the importance Greenbar places on the safety and well-being of our workforce. Now turning to our business performance, the fourth quarter was Greenbar's strongest operating quarter of the fiscal year. The growing impact of our leasing platform, including continued strong syndication activity, helped drive record quarterly revenue against a volatile macroeconomic backdrop. Our performances quarter highlights the value of our integrated business model as well as the strength of our leadership team. Aggregate gross margins and manufacturing margins continue to trend higher as we realize operational efficiencies and absorb the dilutive impact of pass-throughs tied to input cost escalation. Our North American manufacturing business navigated a massive boost in output during fiscal 2022. In a traditional upcycle, such a significant increase in hiring and production rates would be daunting. In a year of emerging COVID variants, ongoing supply chain disruptions, and railway congestion, the ramp navigated by our manufacturing team is historic and heroic. I extend my thanks and the thanks of our board and leadership team to all of our colleagues working on Greenberg production lines around the world. And as we look across the globe, We know the economy faces headwinds from the Russian invasion of Ukraine. With winter approaching, escalating energy prices, together with record inflation levels and rising interest rates, present an unprecedented set of conditions. Economic forecasts predict a recession in Europe. We are focused on managing our operations on the continent through current and future challenges. We're realistic and responsive to the economic conditions in Europe, Yet there's still a sense of relative optimism in the rail freight sector. Traffic volumes are holding up well, and rail freight is playing an increasingly important role in the transportation of critical goods in response to the invasion of Ukraine. Europe's wagon supply chain has largely recovered from the disruption caused by the war, albeit with higher prices in most areas. Railcar delivery projections for the next few years are strong and back to pre-war levels. Our work with our customers has brought more certainty to our production costs, and our sales pipeline and backlog are growing again as new order inquiries remain stable. In our maintenance service business, we continue to gain momentum demonstrated by increased margins. The action plan to increase efficiencies in our repair facilities, which included increasing headcount in certain U.S. locations, is beginning to improve results. We're cautiously optimistic about the moderating U.S. economy and expect recent economic volatility to ebb in calendar 2023 as the Federal Reserve smooths its pace of additional interest rate hikes. Sustained monetary tightening may impact employment and economic growth, but we remain optimistic that the rail equipment sector can withstand a gradual cooling of the economy. Supply chain issues have improved and are nowhere near results Continuing challenges include the impact of ongoing congestion on the rail lines, a shortage of available labor in certain geographies, and limited access to certain components. We expect these headwinds to diminish during the second half of our fiscal year. Overall, commodity prices, excluding energy, have declined from recent peak levels which, in the main, should be favorable for rail freight traffic in the months ahead. As we enter the first quarter of our new fiscal year, we're encouraged by the momentum in our business. As a team, we're focused on a few key initiatives that are rooted in our core values of quality, customer service, and respect for people. These initiatives are focused on continuing our manufacturing excellence, expanding our services business to reduce the cyclicality of Green Bear's financial results, ongoing investment and development of our workforce, continuing our commitment to ESG and ongoing policy advocacy to ensure our perspective on issues is understood and addressed. I plan to discuss these initiatives and our business outlook in greater detail at Greenberg's first Investor Day, scheduled for early February. We look forward to sharing more details on this important event soon. Greenberg's board and leadership team balance capital deployment between organic growth opportunities, short-term high-return internal projects, and returning capital to shareholders. For the last few years, our primary focus has been on safeguarding the business through liquidity preservation until economic stability normalizes. As a result of recent stock market volatility and to drive long-term shareholder value, we believe there may be a near-term opportunity to repurchase shares through our existing share repurchase authority at what we perceive are discounted levels. Share repurchase activity supplements the growth initiatives I highlighted and demonstrates our continued balance sheet strength, cash-generating abilities, and focus on returning value to shareholders. When I consider the value creation opportunities for Greenbrier, I see a very attractive offering, a stable and reliable dividend, assets that are strong cash generators, a healthy business with robust market share, and a growing leasing and services platform. As we enter fiscal 2023, I'm highly confident in our team's ability to seize the opportunities before us and to navigate unforeseeable challenges. And now I'll turn it over to Brian to discuss the railcard demand environment and releasing activity.