The Greenbrier Companies, Inc.

Hello and welcome to the Greenbrier Company's first quarter of fiscal 2024 earnings conference call. Following today's presentation, we will conduct a question and answer session. Each analyst should limit themselves to one question with a follow-up if needed. Until that time, all lines will be in a listen-only mode. At the request of the Greenbrier Companies, 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 and Happy New Year to everyone. Welcome to our call today for our fiscal first quarter. Today, I'm joined on the call by Lori Ticorius, Greenbrier's CEO and President, Brian Comstock, Executive Vice President and Chief Commercial and Leasing Officer, and Adrian Downs, Senior Vice President and CFO. Following our update on Greenbrier's performance in Q1 and an update on our outlook for the remainder of fiscal 24, 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. 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 2024 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. And as a reminder, I'd like to invite you to join us for our annual shareholder meeting today at 12 p.m. Pacific, 3 p.m. Eastern. A link is available on our website, and we'll go live about 15 minutes before the call. With that, I'm going to hand it over to Lori.

Thank you, Justin. And good morning, everyone, and Happy New Year. I hope everyone had a great and safe holiday season. And while Monday marked the start of a new calendar year, we're in the fifth month of our fiscal year. And with the first quarter in the books, our fiscal 2024 is off to a great start as we continue to execute our strategies. Our financial performance indicates early progress as we execute Greenbar's multi-year Better Together strategy. Three fundamental priorities drive this strategy. First, we'll maintain our manufacturing leadership position across geographies. The second priority ensures we meet our customers' needs while optimizing our industrial footprint for efficiency and margin enhancement. Third, and equally important, we're pursuing disciplined growth in leasing and services. We remain committed to enhancing our manufacturing performance while growing recurring revenue and generating tax-efficient cash flows through investments in the lease fleet. The detailed work of facility rationalizations in manufacturing and maintenance services that began in fiscal 2023 continues. We'll transform to be simpler and more profitable. Aggregate gross margins and gross margins in our manufacturing segment specifically this quarter reflect this strategic push. And while I'm sure everyone on today's call understands this, I think it bears repeating that we do not expect progress on our strategic initiatives to be linear. In some cases, we're ahead of our internal schedules, and others, we're laying the foundation to execute the plans. Our goals target a multi-year completion window, and there will be ups and downs, but I'm pleased with our performance at this early stage. Turning to our results, we generated over $800 million in revenue and aggregate gross margins of 15%, an increase of 250 base points. This aligns with our target to achieve aggregate gross margins in the mid-teens by fiscal 2026. One quarter of mid-teen margins is an excellent start, but it would be premature to declare the mission accomplished on our multi-year strategy. First quarter manufacturing gross margin of 11.1% is an increase of 180 basis points compared with the prior quarter. As we previously disclosed, the sale of our Gundersen Marine operation and our Texas foundry have resulted in permanent cost savings of approximately $20 million per year. Our insourcing initiative to bring fabrication in-house for basic primary parts and sub-assemblies as part of our make-versus-buy strategy is proceeding on schedule. We expect to achieve our total cost savings targets of $50 to $55 million from this initiative in fiscal 2025. Moving across the business, maintenance services continues its positive momentum even though wheel volumes were seasonally lower heading into winter. On a solid revenue base, gross margin remains strong at 14.6%. Several initiatives are underway to continue to enhance this unit's efficiency by improving car flow, material planning, and cycle times at all of our facilities. And then as Brian will explain shortly, our expanded leasing strategy is gating traction. This is a critical component of our multi-year plan. and is expected to result in the doubling of recurring revenues within the next five years. The market conditions for railcar leasing remain positive, allowing us to generate compensatory lease originations and renew leases at higher rates. As we continue to grow the lease fleet and work towards achieving our recurring revenue target, we remain disciplined and focused on building a high-quality, balanced portfolio. Our Q1 performance maintains the health of our balance sheets allowing us to invest in our business while continuing to return capital to shareholders. This has been our longstanding and preferred approach to capital allocation. I'm pleased to report that our board declared a quarterly dividend of $0.30 per share this week, representing Greenberg's 39th consecutive quarterly dividend. The broader economy is dynamic, and geopolitical strife again commands our attention and concerns. For instance, we're closely monitoring conditions at the southern U.S. border. While the work performed by our skilled manufacturing and logistics colleagues so far has successfully avoided severe impacts to Greenbrier, the current migration response is unsustainable. We have joined many, including railroad leaders, shippers, and even our competitors, to draw government attention to this situation. Collectively, we will ensure policymakers hear our concerns and address impediments to commercial activity and trade at our southern border. Meanwhile, the economy in both North America and Europe is showing signs of resilience, and our outlook remains positive. We expect North America and Europe to continue to see stable demand across railcar types, underpinning both new builds and lease renewals. We have excellent near-term visibility for fiscal 2024 and are focused on maximizing our platform's potential as we successfully pursue our multi-year targets. We're confident in the long-term strategy because it focuses on what we can control and does not rely on an optimistic or aspirational demand scenario. I look forward to sharing our progress on future calls. And now over to you, Brian.