The Greenbrier Companies, Inc.

Hello, and welcome to the Greenbrier Companies third quarter fiscal 2026 earnings conference call. Following today's presentation, we will conduct a question and answer session. 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 instant replay purposes. At this time, I would like to turn the conference over to Travis Williams, Head of Investor Relations. Mr. Williams, you may begin.

Thank you, Operator. Good afternoon, and everyone, welcome to our third quarter fiscal 2026 conference call. Today, I'm joined by Lorie Tekorius, Greenbrier's CEO and President, Brian Comstock, Executive Vice President and President of the Americas, and Michael Donfris, Senior Vice President and CFO. Following our update on Greenbrier's Q3 performance, our outlook for fiscal 2026, we will open a call for questions. Our earnings release and supplemental slides can be found 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 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2026 and beyond to differ materially from those expressed in the forward-looking statements made by or on behalf of Greenbrier. We will refer to recurring revenue throughout our comments today. Recurring revenue is defined as leasing and management services revenue, excluding the impact of syndication transactions. With that, I will turn it over to Lorie.

Thank you, Travis, and good afternoon, everyone. We appreciate you joining us today. Greenbrier delivered solid commercial, operational, and financial results in the third quarter. Global macroeconomic conditions in our markets support freight rail car lease rates and utilization, where Greenbrier is further strengthening as we serve our shipper customers. Those same conditions pressure demand for new freight rail cars. Though maintenance and replacement needs continue, and provide a foundation for future orders. This combination of market dynamics and a dedicated focus on operational efficiency led to sequentially improved gross margin and earnings. The improvements that have been made across Greenbrier over the last several years are yielding benefits and combined with operating discipline, cost control and commercial excellence create a more resilient earnings profile through cycles. or in other words, we're demonstrating our ability to deliver higher lows across the cycle due to the strength of our business platform. Our commercial team continues to expand Greenbrier's market reach, adding new customers while strengthening relationships with longstanding partners supported by our lease origination capabilities. These proficiencies leverage our integrated go-to-market model across direct sales, Leasing Partnerships, and Syndication. Turning to the market, in our core North American market, railcar deliveries have averaged about 35,000 per year since 2020. The current industry forecasts indicate less than 25,000 new railcars for calendar 2026, which will be the lowest level recorded since 2010. And the projection for calendar 2027 shows an increase to over 34,000 deliveries. Rail loading trends are up in several key commodity categories, including grain, petroleum products, chemicals, and intermodal. Although intermodal activity is uneven, as some commodities are shifting towards trucking to navigate service-related friction in the rail network. And while the uptick in freight rail modal share is uneven, We believe the longer-term outlook is positive. Our experience tells us it's a matter of when, not if, new rail car demand will increase. And activity coming out of a trough tends to arrive sooner and more robustly than anticipated. In Europe, wagon deliveries are expected to be around 9,000 units for calendar 2026 and the next several years. We're utilizing our lease origination capabilities strategically in this market as well to serve our customers while managing productivity and reducing costs. Our manufacturing segment, which includes maintenance, wheels, and parts activity in North America, executed well in the third quarter. Operating efficiency, cost discipline, and solid program and maintenance work helped drive the overall performance in the current macro environment. Our lease origination capabilities provide key flexibility to manage new car production and support utilization across our manufacturing footprint. In addition, our insourcing investment is delivering broad-based, sustained efficiency gains that will further improve earnings power as demand grows. In leasing and fleet management, We saw significant expansion of our own lease fleet with continued high utilization. We remain focused on growing this platform and doubling our recurring revenue base by 2028 through both our own manufacturing operations and secondary market opportunities as they arise. The enterprise-wide improvements that have been made at Greenbrier are supported by a strong financial foundation. A healthy and well-capitalized balance sheet and ample liquidity provides flexibility to support operations, invest in the business, return capital to shareholders and execute our strategy. As we look ahead, our focus remains squarely on operational execution, commercial discipline, capital allocation and ongoing enhancement of through cycle performance. You can expect Greenbrier's solid results across the cycle to continue driving long-term shareholder value. Finally, I want to thank our employees for their focus, commitment, and execution. Each and every one of their efforts demonstrates the strength of Greenbrier's culture and the durability of the platform that we've built. And with that, I'll turn the call over to Brian to discuss our operations in more detail.

Thanks, Lorie, and good afternoon, everyone. Starting with commercial activity, we received orders for 2,200 rail cars during the quarter, valued at $340 million. Demand was led by tank cars and covered hoppers with additional activity in gondolas, open-top hoppers, and heavy-duty flats. In addition to constructive rail loading trends, it's also worth noting the significant increases in trucking spot rates driven by driver shortages, elevated fuel costs, and carrier attrition. While this alone doesn't signal a broad-based freight demand recovery, sustained higher truck rates would improve the relative competitiveness of rail and intermodal service. Turning to backlog, we ended the quarter with 13,800 rail cars valued at $2 billion. Our commercial team remains highly engaged with customers across North America, Europe, and Brazil. and we are seeing solid activity across several card types. As Lorie noted, our lease origination capabilities were a prominent feature of the quarter. Lease originations represented 60% of total global orders, including 71% of North American awards and 53% of European awards. This highlights the value of our commercial model flexible production capacity, and our ability to respond to customer needs. The leasing and fleet management segment delivered another strong quarter. We expanded the owned lease fleet to 20,600 rail cars, and utilization remained exceptionally strong at 99%. Renewal rates were healthy, reflecting both the quality of our fleet and the depth of our customer relationships. During the quarter, we continued to pursue disciplined fleet growth through secondary market acquisitions of approximately 4,400 rail cars and remain active in evaluating additional opportunities. These are strategic investments that support lease fleet growth, recurring revenue, and long-term value creation. Moving to our manufacturing segment, production rates were aligned with current demand level. consistent with our proactive management of the business. Headcount continues to be adjusted in line with our team's remained focus on maintaining operational efficiency as market conditions evolve. At these production levels, operating performance and margin progression improved, reflecting the benefits of our insourcing strategy and focus on cost competitiveness. Recent capital investments are yielding strong returns even at current production levels. Wheel set shipments exceeded expectations. The maintenance team sustained steady throughput and we continue to see progress in cycle time execution. We also are taking actions to sharpen the focus and efficiency of our maintenance service network. In Europe, Demand remains muted, but we are making progress following recent footprint actions. With the facility consolidation complete, the team has focused on streamlining the production process, reducing inventory, and improving quality and production rates. We are also seeing encouraging traction in the European leasing market. In Brazil, Greenbrier Maxion delivered another quarter of strong operational performance. driven by demand in agriculture and biodiesel sectors. Financial performance exceeded expectations supported by disciplined cost control, operating efficiency, and improved pricing. Our capital markets team continued to support the integrated model through strong monetization activity, expanded investor relationships, and secondary market These activities generate profitable through margin recognition and fee income, provide liquidity, support the lease fleet growth, and reinforce the benefits of Greenbrier's integrated platform. In summary, we continue to align production with customer demand, execute with discipline across the platform, expand our leasing capabilities, and advance key initiatives that support margin performance. And with that, I'll turn the call over to Michael to review our financial results in a bit more detail.

Thanks, Brian, and good afternoon, everyone. Total revenue for the quarter was $577 million. Leasing and fleet management revenue was $47 million, up 3% from Q2, primarily reflecting the addition of leased rail cars. Manufacturing revenue was $529 million, down about 2% sequentially. primarily due to fewer new rail car deliveries partially offset by higher maintenance program revenue. Aggregate gross margin was 14.1% within our long-term target range and improved from Q2. This performance demonstrates the strength of our integrated business model and the impact of our continued cost discipline. Earnings from operations were $32 million, or about 6% of revenues. These results reflect solid execution at current production volumes and our continued focus on the areas within our control. Our effective tax rate was about 20%, primarily driven by discrete items related to foreign exchange impacts, largely from the strengthening of the Mexican peso. Diluted earnings per share were $0.60, and EBITDA was $69 million, or about 12% of revenues. Overall, results benefited from stronger margins, favorable foreign exchange, lower net interest expense in leasing and fleet management, and a lower effective tax rate. Turning to the balance sheet, we ended the quarter with total liquidity of approximately $887 million, representing $274 million in cash and $613 million of available borrowing capacity. Operating cash flow for the quarter reflects $227 million of investment, primarily for leased rail cars purchased in the secondary market. This investment supports our strategy to grow the lease fleet, increase recurring revenue, and generate tax-advantaged cash flows while maintaining strong asset quality and enhancing long-term earnings power. Over time, we expect to finance a portion of the newly acquired fleet, preserving balance sheet flexibility. We also refinanced our leasing term loan with a new $300 million facility, extending the maturity by six years, improving credit terms, and adding a delayed draw that provides up to $125 million of additional capacity to support future growth. Our capital allocation remains disciplined and balanced. We continue to invest in opportunities that generate attractive returns while also returning capital to shareholders through dividends, and Share Repurchases. Greenbrier's Board of Directors declared a dividend of 34 cents per share, marking our 49th consecutive quarterly dividend. At quarter end, approximately $65 million remained available under our share repurchase authorization. We will continue to use that capacity opportunistically, guided by market conditions and our broader capital allocation priorities. Turning to guidance, Our fiscal 2026 outlook is based on our latest view of fourth quarter manufacturing margins and delivery timing, reflecting that some activity is moving into fiscal 2027. While near-term market conditions remain dynamic, customer engagement is strong, and we are encouraged by the business activity developing for 2027. For fiscal 2026, We continue to expect total revenue of $2.4 billion to $2.5 billion and are narrowing our expected EPS range to $3 to $3.15 per share. Additional details are included in the earnings release and accompanying slides. In summary, Greenbrier delivered solid third quarter results supported by disciplined execution, resilient aggregate gross margins, and continued strength in leasing and fleet management. We remain focused on the priorities that create value, serving our customers, managing costs, increasing recurring revenue and deploying capital with discipline. We believe these actions position Greenbrier to deliver attractive through cycle returns and create long-term shareholder value. With that, we'll open the call up for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.

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To withdraw your question, please press star and then two. At this time, we'll pause momentarily to assemble the roster. The first question will come from Andre Tomczyk with Goldman Sachs. Please go ahead.

Hey, good evening, everyone, and thanks for taking my questions. I'm just curious if we could start off on the tariff front just to get a little more clarity there. Our understanding is recent amendments to Section 232 investigations could be imposing a tariff on the full value of tank cars coming out of Mexico into the U.S. Maybe if you could just speak a little more to your current understanding of that tariff situation. and what is Greenbrier's current tank car backlog mix? And then maybe just on that, if you guys are actually incurring any tariffs there to start, that would be helpful. Thank you.

Sure. Andre, thanks. And I'll start out, and I'm sure that my colleagues here will jump in and fill in if there's anything that I'm missing. Let me start with the beginning. We are not currently entering tank cars or paying a tariff for equipment that's coming from Mexico into the United States. As you state, there has been some recent pronouncements and determinations that have industry-wide implications, and we and our industry partners are seeking guidance from CBP on how best to navigate that. So really, right now, it's a situation where there have been some pronouncements made, but It's a change to what has been industry-wide practices. And so, again, we and our partners, whether they're the Class 1 railroads, the short lines, or even other manufacturers, are seeking clarification from CBP on how to be compliant with the communications we've received.

Understood. And then maybe just if we could get a sense for the mix of tank cars that you guys have in the backlog, that would be helpful. And then just, I guess, as a follow-up there, I guess two follow-ups. Maybe if it ended up that the tariffs were applied to the tank cars, is there then a risk of retroactive payments, just to sort of be clear there? And then Separately, are there discussions with customers that there could be potential price escalations if that were to be the case? Just trying to get a sense for if you guys could actually pass through those excess costs. Thanks.

Sure, and I'll start with the last question first. Yes, we believe that any adjustments associated with tariffs would be passed through to our customers. When it comes to retroactive obligations, right now that's unclear. And again, this is where we would say that we're seeking clarification from CBP on what some of the language in their rulings means and how we as an industry need to be compliant. And then to, I think, the question I missed from the last, percentage of backlog. So the backlog that Brian talked about, about 20% of that is tank cars.

Yeah, I would just add, Lori, that while it's 20% today, I think we're seeing the mix shift in the market kind of pivot away from tank cars. And so that mix is quickly diminishing. And Lori's right. We have provisions in all of our contracts to pass through tariffs and duties as appropriate.

And just the other thing to highlight, because sometimes folks in our industry tend to forget, but we build tank cars not only in Mexico using U.S.-sourced steel and other U.S.-sourced components, but we're also building tank cars in Arkansas at our Marmaduke facility.

Interesting point. And just on that, if I could, what is the capability of shifting production there – to the Arkansas facility. Is that something feasible at a later date?

Absolutely. Well, we're building tank cars there right now, and we are evaluating how much we could shift. A lot of this comes down to getting employees to be in our shops. I think this is a struggle for many industries in the United States. It's just finding and retraining and retaining employees and a skilled workforce.

Yeah, maybe just adding on as Brian again is at the end of the day, we are increasing production at our U.S. facilities and we have the capability to take on quite a bit of that capacity if need be.

Okay, thanks. Appreciate that, Culler. Maybe just shifting to the core business with the ISM now over 50 for half a year now. Are you guys seeing any of that expectations, optimism from your customers, I guess, creep into conversations? Or do you think that the positive ISM readings are more so reflection of other areas of the economy at the moment? I'm just trying to get a sense for when the broader ISM positivity might be able to translate into improving new railcar backlogs and deliveries.

So I'll kind of come high level, and I'm sure that Brian can speak to some of what he's hearing from our customers. But what I continue to hear and have been hearing for the last several months is a lot of desire from our customers for additional rail cars. The interesting point, though, is as the macro environment continues to shift, sometimes it's creating a delay in when they want to execute on an investment in these long-lived assets. This is part of what Brian was speaking to, I think, before about trucking. We are seeing some temporary shifts over to trucking if we have a shipper customer that is trying to evaluate how best they navigate for their business, whether they're a farmer or a chemical company or otherwise, how to navigate that. But we really do, this is what we mean by we think there's quite a bit of pent-up demand for new equipment. We just need the broader economy to kind of settle down for a little bit so that people can make those long-term investment decisions.

Yeah, and I'll just add on to what Lorie said. She's spot on. Directionally, we've been watching the inquiries and the backlog, and while it's been fairly stable over the last few quarters, The pent-up demand is really beginning to rise. You're seeing it on the AI data center infrastructure area where there's a lot of heavy-duty infrastructure required. So when you look at orders to production type of ratios, one of the things that's a bit of an anomaly is some of these cars we're taking in have three to four to five times the number of labor hours as a Let's call it like a tank car or covered hopper car. And so it's not a one for one trade. It's kind of a four or five to one trade. We're also seeing significant improvement in the steel side of the industry as well, where a lot of cars are trading out. And then as Lorie said, when you look at driver service rules and just kind of what's happening in the industry, intermodal is really feeling the pressure for growth as well. So The pent-up demand is a real thing. It's a matter, it's not if, it's just kind of when. And we're starting to see signs of that here in this quarter already.

Got it. And maybe just one more for me before I hop back in the queue here. Just a little bit more specific in terms of the manufacturing margin this quarter versus last was a nice uplift here. Just curious if you could share whether Mix was a positive this quarter and then maybe how you're thinking about core price versus Mix dynamics here into the year end.

Yeah, I appreciate that. It's Brian again. Andre is, you know, at the end of the day, you know, Mix always plays a bit of a role, but Lorie kind of hit it in her comments. And I think I touched on it briefly in mine as well as, you know, the initiatives we took a couple of years ago, the insourcing initiatives are really starting to pay off. And it's not just The insourcing investment we made on manufacturing primary parts, but also the focus we have on labor efficiency, the focus our team has on overhead and variable costs associated with that have really been paying off in this time. You can look back in time at Greenbrier. I've been here a long time, and we've never had these kinds of margins at this level of production, low level of production in the history of Greenbrier. So we're excited about the opportunity for this market to kind of change and see what we can really do as the market rises back up.

Understood. Thanks, everyone. I'll hop back in the queue here.

The next question will come from Harrison Bauer with Susquehanna. Please go ahead.

Great. Thanks for taking my questions. Maybe to ask your sense of demand in a different way, how much of demand some of the regulatory backdrop on both the Section 232 proclamation on tank cars as well as your outstanding Coupler and EPA case. Is eating into customer demand and sentiment on waiting for some clarity before going forward on some higher order amounts?

It's a great question, Harrison, and I would say, you know, quite honestly, it's really not, that is not the bigger thing that's holding back our customers from making those decisions to invest in long-lived assets. It's, again, more the broader macroeconomic situation is they're figuring out how to either put existing equipment through a program, run it longer, maybe if they have POPs in demand, if they can shift that over to trucking, they do that, but that's really more where we're seeing the holdup is the macroeconomic situation, not what's going on with tariffs or couplers.

Yeah, and I'll just tag on. Again, it's spot on by Lorie, but also keep in mind that there's a lot of Canadian customers that buy assets from us as well. And those tariffs and those things do not apply to cars that are being moved into Canada. It's really are all U.S. service at this point. So we're continuing to see that demand from a lot of the oil producers and chemical producers up in the Canadian region. But generally speaking, the U.S. customers are not holding back because of any uncertainty at this point. But we are seeing a shift, again, in mix to more covered hopper cars, flat cars, special purpose assets. and really higher value backlog for Greenbrier.

Okay, thank you for that. And maybe sticking with some of the regulatory environment and on the Coupler case, could you give us an update on where you're at with the EPA determination? I know you're waiting to appeal this case. I know it's a specific office within the CDP, but just any color on sort of what's going on in the Coupler case and what your opportunities are in an adverse ruling to shift some of the coupler procurement to U.S. sourced.

Sure. So today we actually filed our administrative appeal. So we have begun that process. And I just want to take a big step back and say that the CBP determination letter does have industry-wide implications, right? This is not just a Greenbrier situation, but it impacts everyone who's building cars that are bringing them into the United States from Canada or Mexico. And their determination letter included a change in practice that just like with the 232s, we and our industry partners are seeking guidance and clarification as how best to navigate this ruling and how best to be compliant. That said, We do have, I would say, a very agile industry. We have a history of working together to figure out across a variety of landscapes how best to navigate, whether it's fluctuations in demand or situations that have to do with high prices of steel, whatever might be going on with couplers and where best to source them. So I have no doubt that as an industry, we will find a way to navigate this and come up with how best to continue serving our freight rail customers.

Yeah, maybe I would just point out to Brian Harrison is that, you know, while all of these are serious issues, the financial impact of the couplers is fairly small on a per unit basis. When you think about the total number of specialties and steel costs that's in the assets, It is, it's probably less than 1% of the total impact. So from a customer perspective, it really doesn't have significant impact to them.

Good point, Brian. Thanks. Okay, thanks for that. And, you know, maybe moving to the leasing side of things, the pretty substantial impact. Yeah, it's Brian Harrison.

It's really kind of a quarter-by-quarter call, to be honest, because we're looking at our concentration. We're looking at our covenants within our debt financing agreements. We're looking at how we balance these things materially each quarter. And so as books come to market, we evaluate whether or not that fits into our overall strategy from not only a concentration perspective and a risk perspective, but also from a commercial customer perspective. and then we weigh that against what we're building ourselves internally. And so that's going to shift from quarter to quarter depending on how that looks, but it really is about managing the fleet in a very prudent and disciplined way.

And I think discipline is, you're spot on. That's what it is, is looking at what are we building and what are those other opportunities that we can make an investment, whether it's investing in the cars that we're building, or that someone else is putting out on the market to improve the quality and diversification of our on the balance sheet fleet.

And Harrison, I would just add, you know, as we mentioned back, you know, a number of years ago on targets, you know, we're investing up to 300 million a year in the lease fleet. And so really, that's not really impacting really how we're thinking about that. So.

Okay, thanks. Broad strokes, is there a target of size of fleet that you'd want to get to by end of fiscal 2027? And maybe just some of your thoughts on the secondary market as a seller and where you would expect gains to land in the fourth quarter, what might be in that in your guide, and just an early look on gains on sale into next year. Thank you.

Yeah, I'll take maybe the more strategic question is, We've stated publicly and we continue to follow the rule that we're going to invest, as Michael said, about $300 million a year. Do we have an ultimate goal of size in mind? No, but we do want to transform the company to where the recurring revenue from the leasing is more substantial or as substantial as the manufacturing income. and so what does that mean? I don't know that we can tell you that precisely because some of it depends on mix and the previous question which you had which was relative to how many of the new cars are going to go into the fleet versus how many cars we acquire in the secondary market because it's not about overall fleet numbers. It's really about the quality assets and the earning power of each of those assets.

That's a really good point. That's something we talk a lot about here internally is we don't want to be spending money just so we can say we grew a fleet if it's not a good quality fleet. So that's where I'm really proud of the team over the last couple of years is the focus on growing a quality fleet, which I think you can see from the first half of our fiscal year where we had some substantial gains on sale, taking those opportunities into consideration. and my recollection on gains on sale for the rest of the fiscal years are going to be probably fairly modest. But Michael, I'll let you respond to that.

Right, right. We'll continue to look across the fleet and determine what makes sense as we think about concentration, as we think about just opportunistically what's out there. But you will see that it's going to probably wind down in the fourth quarter. And I would just say about 2027, it's a little bit early for us to start really kind of getting out there in terms of what we'll deliver in 2027. But we're going to go into planning here pretty soon and be ready to talk about that when the time comes.

And I think that's why having the liquidity that you highlighted, Michael, is so important because we want to be able to take advantage of whatever situation. We unfortunately do not have a crystal ball into all of the other asset owners to know when they might be putting certain fleets out on the market. So we want to be able to have strong liquidity so we can execute as it makes sense for our fleet.

Lorie, Brian, Michael, thank you all for the time today.

Thank you, Harrison. The next question will come from Ken Hexter with Bank of America. Please go ahead.

Hi, it's Adam Roszkowski on for Ken Hexter. Thanks for taking my question. Maybe just starting on the guidance. So no change to the revenue outlook, but lowering the midpoint of deliveries and gross margin and EPS. So maybe just, I know you noticed some shift into 2027, but with revenue flat, is that implying higher selling price per car? Is there more maintenance revenue kind of baked into that? Maybe just help on how should we interpret, you know, from a mixed production leasing standpoint as well. Thanks.

No, that's a really good question. You know, as we get through looking through the fourth quarter, you know, obviously we're getting closer to, you know, what's actually happening. And as we look across what we see, you know, we are, as I mentioned in prepared remarks, we are seeing a little bit move into 2027. And also what we start looking at in terms of how much we were going to ramp up in Q4 and ramp up further, we just haven't had to need to do that. So there's been a little bit on absorption that's impacting us as well. And so, you know, really a combination of those things. I wouldn't read that much into it. I'd say we're just getting much more closer to being able to call it a year.

And the other thing that I would point out is on the revenue is while the range didn't change, it's a pretty, it looks like it's a small range, but it's really $100 million, right? Right, right.

There's still enough there.

Yeah.

Got it. Thanks for that. Maybe just going to 2027, how much visibility do you have into your production schedules? And you called out industry forecasts to 34K from 25K this year, a 36% increase. Is that the right baseline to be thinking about the step-up into next year? So, any thoughts around that? Thanks.

Well, we're not prepared. I think, as Michael said, we're not really prepared to give explicit guidance on 2027. We're very happy with the pipeline that we have. We do believe that the customers, those are going to convert into orders. It's just the timing of when they convert into orders is a little bit difficult, obviously, to predict in this current environment. Oh, and just one quick reminder, so that some of the numbers that I was giving were calendar year, and even though I've been here for 31 years, I still can't figure out why we have a fiscal year that begins on September 1. So there's a little bit of a mismatch there. But Brian, what did I miss on what you're thinking about for 2020, our fiscal 27?

Yeah, when you think about fiscal 27, you know, and the visibility that we have going in, you know, I think about it in terms of backlogs. So backlogs at 13,800 cars roughly publicly Obviously, we continue to renew that backlog on a quarter-by-quarter basis. So when you think about it, if we're going to produce historically kind of along the same lines we've always historically produced, we've got visibility for the first several months into the year.

And I would say actually probably goes further out. It's just there's different gaps.

It's different lines, different gaps. Yeah, exactly.

And sometimes having those gaps has been very beneficial for us because that means that when our customers start nearing the end of their calendar year and spending their allotted dollars, we've seen some interesting activity at times happen towards the end of a calendar year. Not to get too excited.

Thanks for that. And then last one, you noted some of the trucking market drivers and potential impacts that that could have on intermodal, you know, type cars. And it sounds like the mix is a bit broad based on what you've been calling out. But just any thoughts on rail service, you know, these current levels and the extent that that, you know, or a deterioration in service or fluidity could spur maybe some upside into fiscal or calendar year 2027, however you want to frame it.

Sure. Again, we've been able to navigate any variety of markets. My overarching message is always about the railroads providing better service to our shipper customers so that we can grow modal share by rail. Let's make the pie bigger because then even if we stay at our current market share, everybody gets a bigger piece of pie. So that's the focus. I do think that that is what the class ones want to do. It's just I'm very thankful to not be the CEO of a Class 1 railroad because there's a lot more levers and dials to manage than on my side. Brian, what are you seeing?

Yeah, definitely we're seeing a resurgence of intermodal on rail. I think it'll be interesting to see how railroads can respond to that from a labor perspective and whether or not they have power available on the network. You're starting to see a degradation of velocity on rail. That's always good for the car builders, not necessarily good for the rail system itself. So we're always a bit conflicted by that. But one proxy we've always used, and it's proved to be a fairly close signal, is for every mile per hour of degradation and velocity or gain. It's about a 40,000 car demand change network-wide. So You know, you think about degrading velocity, increased pressure on intermodal to grow and some of these other areas, that could bode well for pent-up demand in our space.

I appreciate the time. Thank you.

Again, if you have a question, please press star and then 1. Please stand by as we poll for questions. Showing no questions, this will conclude our question and answer session. I would like to turn the conference back over to Lorie Tekorius for any closing remarks.

I just want to say thank you, everyone, for your attention and for your time learning and understanding more about Greenbrier, and I wish everyone a safe and happy Fourth of July.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.