Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive Summary
We operate in two reportable segments:
Manufacturing - We design, build and market freight railcars in North America and Europe. We are also a leading provider of freight railcar wheel services, component parts, maintenance and retrofitting services in North America.
Leasing & Fleet Management - We own a lease fleet of railcars that originate primarily from our manufacturing operations. We offer railcar management, regulatory compliance services and leasing services to railroads and other railcar owners in North America. We also place railcars on lease to customers and sell the railcars with leases attached to investors.
We operate an integrated business model which we believe is difficult to duplicate and provides greater value for our customers and investors.
We continue to operate in an environment characterized by ongoing macroeconomic uncertainty, including inflationary pressures, potential impacts from global trade tensions and tariffs and volatility in foreign exchange and interest rates. We believe that a sustained economic slowdown or continued supply chain disruption could significantly affect our operations and financial performance. Such developments could impact our business both directly and indirectly. Direct impacts may include higher costs for raw materials, labor and manufacturing inputs. Indirectly, a weaker macroeconomic environment could reduce demand for new railcar orders and leasing activity.
Despite these potential headwinds, we believe we are well-positioned to continue to execute on our multi-year strategy. In addition, we believe our integrated business model provides flexibility across economic cycles. We maintain a diversified customer base and disciplined approach to managing working capital and operating costs.
While we believe that macroeconomic uncertainty is affecting demand across the markets in which we operate, we delivered strong results in 2025, which included the following:
Expanded our Margin as a percentage of Revenue from 15.8% in 2024 to 18.7% in 2025.
Increased Net earnings attributable to Greenbrier by $44.0 million or 27.5% compared to the prior year.
Generated $266 million of Net cash provided by operating activities.
Increased our owned lease fleet by 1,500 railcars, representing a 9.7% increase since August 31, 2024.
Renewed and extended our $600 million domestic revolving facility and $250 million term loan in May 2025, extending the maturity date of both instruments until 2030.
We believe our results highlight our continued focus on our strategic plan as we remain focused on increasing recurring revenue, expanding aggregate gross margin and raising return on invested capital. Recurring revenue is defined as Leasing & Fleet Management revenue excluding the impact of syndication transactions.
With a global footprint, supply chain and customer base, we are focused on navigating the impact of changing trade policies, such as tariffs, as well as general geopolitical and macroeconomic uncertainty.
In the fourth quarter of 2025, we continued the rationalization of our European operations and approved the closure of manufacturing facilities in Poland and Türkiye. Combined with the closure of one of our manufacturing facilities in Romania announced earlier this year, our European headcount is expected to be reduced by 30% while maintaining the same production capacity.
Financial Highlights
Despite the challenging operating environment, we accomplished the following in 2025:
Margin as a percentage of Revenue improved by 2.9% to 18.7% for the year ended August 31, 2025. The increase from the prior year was driven by operating efficiencies in our Manufacturing segment.
Earnings from operations increased by $35.6 million or 11.0% compared to the prior year. The increase was primarily attributed to an increase in Margin in our Manufacturing and Leasing & Fleet Management segments during the year ended August 31, 2025. The increase in Margin was primarily due to operating efficiencies in Manufacturing and higher rents associated with a larger fleet and improved lease rates in Leasing & Fleet Management.
Diluted Earnings per common share (EPS) increased by 28.0% to $6.35 for the year ended August 31, 2025.
Manufacturing Backlog
Our railcar backlog was 16,600 units with an estimated value of $2.2 billion as of August 31, 2025, with expected deliveries extending into 2027 and beyond. Our backlog includes approximately $460 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Approximately 12% of backlog units and estimated value as of August 31, 2025 was associated with our Brazilian manufacturing operation which is accounted for under the equity method.
Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.
Change In Reportable Segments
Effective September 1, 2024, we combined our former Maintenance Services and Manufacturing segments into a single reportable segment, Manufacturing. The combined Manufacturing reportable segment reflects a comprehensive production operation that allows us to streamline production processes and resources to better serve our customers. Separately, we renamed our former Leasing & Management Services reportable segment to Leasing & Fleet Management. These changes reflect the realignment of our organizational structure and reporting regularly provided to our chief operating decision maker to assess performance and allocate resources. These changes had no impact on our consolidated results of operations or financial position. Prior period segment results have been recast to reflect our new reportable segments. Financial information about our reportable segments as well as geographic information is located in Note 17 - Segment Information to the Consolidated Financial Statements.
Financial Overview
Revenue, Cost of revenue, Margin and Earnings from operations presented below include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
Year Ended August 31,
(In millions, except per share amounts)
Revenue
Manufacturing
Leasing & Fleet Management
Cost of revenue
Manufacturing
Leasing & Fleet Management
Margin
Manufacturing
Leasing & Fleet Management
Selling and administrative
Net gain on disposition of equipment
Earnings from operations
Interest and foreign exchange
Earnings before income tax and earnings from unconsolidated affiliates
Income tax expense
Earnings before earnings from unconsolidated affiliates
Earnings from unconsolidated affiliates
Net earnings
Net earnings attributable to noncontrolling interest
Net earnings attributable to Greenbrier
Diluted earnings per common share
Performance for our segments is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.
Year Ended August 31,
(In millions)
Earnings (loss) from operations:
Manufacturing
Leasing & Fleet Management
Corporate
Consolidated Results
Year Ended August 31,
(In millions)
Increase
(Decrease)
Change
Revenue
Cost of revenue
Margin (%)
Net earnings attributable to Greenbrier
* Not meaningful
Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.
The 8.6% decrease in Revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries. This was partially offset by a 7.2% increase in Leasing & Fleet Management Revenue primarily attributed to an increase in rents associated with growth of the fleet and improved lease rates.
The 11.8% decrease in Cost of revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries and operating efficiencies within our Manufacturing segment during the year ended August 31, 2025.
Margin percentage increased 2.9% for the year ended August 31, 2025 compared to the prior year primarily due to operating efficiencies in our Manufacturing segment.
The $44.0 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2025 as compared to the prior year was primarily due to the following:
$49.0 million increase in Margin for the year ended August 31, 2025 primarily due to operating efficiencies within our Manufacturing segment and a $27.3 million increase in rents associated with growth of the fleet and improved lease rates in our Leasing & Fleet Management segment.
$25.1 million decrease in Interest and foreign exchange expense primarily attributed to higher interest income and a $10.6 million increase in foreign exchange gain primarily due to the change in the Mexican Peso's foreign exchange rate relative to the U.S. Dollar during the year ended August 31, 2025.
These were partially offset by the following:
$29.4 million increase in Income tax expense due to higher pre-tax earnings and geographic mix of earnings during the year ended August 31, 2025.
For discussion related to the results of operations and changes in financial condition for 2024 compared to 2023 refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K, which was filed with the U.S. Securities and Exchange Commission on October 24, 2024.
Manufacturing Segment
Year Ended August 31,
(In millions, except deliveries)
Increase
(Decrease)
Change
Revenue
Cost of revenue
Margin (%)
Earnings from operations ($)
Earnings from operations (%)
Deliveries
* Not meaningful
Our Manufacturing segment primarily generates revenue from manufacturing a wide range of railcar products and components and performing sustainable conversion services. Manufacturing also generates revenue by providing railcar maintenance services.
Manufacturing Revenue decreased $321.2 million or 9.7% for the year ended August 31, 2025 compared to the prior year. The decrease was primarily attributed to an 8.5% decrease in deliveries during the year ended August 31, 2025.
Manufacturing Cost of revenue decreased $356.4 million or 12.2% for the year ended August 31, 2025 compared to the prior year. The decrease was primarily attributed to an 8.5% decrease in deliveries and operating efficiencies during the year ended August 31, 2025.
Manufacturing Margin as a percentage of Revenue increased 2.4% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to operating efficiencies during the year ended August 31, 2025.
Manufacturing Earnings from operations increased $18.8 million or 6.1% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to operating efficiencies during the year ended August 31, 2025 partially offset by an 8.5% decrease in deliveries compared to the prior year.
Leasing & Fleet Management Segment
Year Ended August 31,
(In millions)
Increase
(Decrease)
Change
Revenue
Cost of revenue
Margin (%)
Earnings from operations ($)
Earnings from operations (%)
* Not meaningful
The Leasing & Fleet Management segment generates revenue from leasing railcars from our lease fleet, providing various fleet management services, syndication activity associated with leases attached to new railcar sales, interim rent on leased railcars for syndication and the sale of railcars purchased from third parties with the intent to resell.
Leasing & Fleet Management Revenue increased $16.7 million or 7.2% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to a $27.3 million increase in rents associated with growth of the fleet and improved lease rates. This was partially offset by a $2.1 million decrease in the sale of railcars which we had purchased from third parties with the intent to resell during the year ended August 31, 2025.
Leasing & Fleet Management Cost of revenue increased $2.9 million or 4.0% for the year ended August 31, 2025 compared to the prior year. The increase was primarily due to higher costs from a larger fleet and higher syndication activity during the year ended August 31, 2025. This was partially offset by a decrease in the volume of railcars sold that we purchased from third parties with the intent to resell during the year ended August 31, 2025.
Leasing & Fleet Management Margin as a percentage of Revenue increased 0.9% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to improved lease rates and fewer sales of railcars that we purchased from third parties with the intent to resell, which have lower margin percentages, during the year ended August 31, 2025.
Leasing & Fleet Management Earnings from operations increased $21.6 million or 15.5% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to higher rents associated with a larger fleet and improved lease rates in addition to a $3.2 million increase in net gain on disposition of equipment from higher sales of assets from our lease fleet during the year ended August 31, 2025.
Selling and Administrative
Year Ended August 31,
(In millions)
Increase
(Decrease)
Change
Selling and administrative
Selling and administrative expense was $263.3 million or 8.1% of Revenue for the year ended August 31, 2025 and $247.1 million or 7.0% of Revenue for the year ended August 31, 2024.
The $16.2 million increase was primarily attributed to higher expenses related to our European operations, including facility closure costs and other expenses in addition to higher employee-related costs during the year ended August 31, 2025.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment typically includes the sale of assets from our lease fleet (Equipment on operating leases, net) and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to optimize our lease fleet and to manage risk and liquidity.
Net gain on disposition of equipment was $15.9 million and $13.1 million for the years ended August 31, 2025 and 2024, respectively. The increase was primarily attributed to higher sales of assets from our lease fleet during the year ended August 31, 2025.
Interest and Foreign Exchange
Interest and foreign exchange expense was composed of the following:
Year Ended August 31,
Increase (Decrease)
(In millions)
Interest and foreign exchange:
Interest and other expense, net
Foreign exchange (gain) loss, net
The $25.1 million decrease in Interest and foreign exchange expense during the year ended August 31, 2025 compared to the prior year was primarily attributed to higher interest income and a $10.6 million increase in foreign exchange gain primarily due to the change in the Mexican Peso's foreign exchange rate relative to the U.S. Dollar during the year ended August 31, 2025.
Income Tax
In 2025, our Income tax expense was $91.4 million on $284.4 million of pre-tax earnings, resulting in an effective tax rate of 32.1%. This rate was higher than the U.S. statutory tax rate due to several factors, including the geographic mix of earnings, state taxes, U.S. taxation of foreign branch operations, the Base Erosion and Anti-Abuse Tax (BEAT) and minimum taxes in certain foreign jurisdictions. These impacts were partially offset by favorable changes in foreign currency exchange rates affecting our U.S. Dollar denominated foreign operations.
In 2024, our Income tax expense was $62.0 million on $223.7 million of pre-tax earnings, resulting in an effective tax rate of 27.7%. This rate was higher than the U.S. statutory tax rate, primarily driven by the geographic mix of earnings and U.S. taxes on profits earned in foreign jurisdictions. These impacts were partially offset by favorable changes in foreign currency exchange rates affecting our U.S. Dollar denominated foreign operations.
Our effective tax rate can vary from year to year due to discrete tax items and changes in the mix of foreign and domestic pre-tax earnings. It is also influenced by fluctuations in the proportion of earnings attributable to our Mexican railcar manufacturing joint venture. This joint venture is treated as a partnership for tax purposes, meaning its full pre-tax earnings are included in our consolidated earnings, while only our 50% share of the tax is included in Income tax expense.
On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA). As a result, we recorded an increase of deferred tax liabilities and decrease of income tax payable related to the provisions for 100% bonus depreciation on assets placed in service after January 19, 2025. Additionally, our effective tax rate increased due to the impact of non-deductible depreciation in the calculation of our BEAT liability. Many other provisions of the OBBBA will take effect in future tax years and we are currently assessing their potential impact.
Separately, the EU Member States have formally adopted the Pillar Two Directive, which establishes a minimum effective tax rate of 15% under the Organisation for Economic Co-operation and Development (OECD) Pillar Two Framework. These rules must be implemented by each country and became effective for us beginning September 1, 2024. We continue to monitor additional guidance from the OECD and evaluate the potential effects of these changes, though we do not expect a material impact on our effective tax rate.
Earnings From Unconsolidated Affiliates
Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the results from these unconsolidated affiliates on an after-tax basis.
Earnings from unconsolidated affiliates were $20.1 million and $11.0 million for the years ended August 31, 2025 and 2024, respectively. The increase was primarily related to $7.7 million in higher earnings at our Brazil operations for the year ended August 31, 2025.
Net Earnings Attributable to Noncontrolling Interest
Net earnings attributable to noncontrolling interest were $9.0 million and $12.6 million for the years ended August 31, 2025 and 2024, respectively. Net earnings attributable to noncontrolling interest primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations. The $3.6 million change from the prior year was primarily a result of a decrease in earnings due to lower deliveries at our Mexican railcar manufacturing joint venture.
Liquidity and Capital Resources
Year Ended August 31,
(In millions)
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents and restricted cash
We continue to be financed through cash generated from operations and borrowings. At August 31, 2025 Cash and cash equivalents and Restricted cash were $326.4 million, a decrease of $42.2 million from $368.6 million at August 31, 2024.
Cash Flows From Operating Activities
The $63.9 million decrease in cash from operating activities for the year ended August 31, 2025 compared to the year ended August 31, 2024 was primarily due to a $102.7 million change in Leased railcars for syndication due to timing of syndication activity. This was partially offset by a $40.4 million increase in Net earnings.
Cash Flows From Investing Activities
Cash used in investing activities primarily related to capital expenditures net of proceeds from the sale of assets. The $117.3 million decrease in cash used in investing activities for the year ended August 31, 2025 was primarily attributable to a $117.9 million decrease in Capital expenditures compared to the year ended August 31, 2024.
Year Ended August 31,
(In millions)
Capital expenditures:
Leasing & Fleet Management
Manufacturing
Total capital expenditures (gross)
Proceeds from sales of assets
Total capital expenditures (net of proceeds)
Capital expenditures primarily relate to additions to our lease fleet and on-going investments in the safety, productivity and improvement of our facilities. Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Fleet Management. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity. Proceeds from sales of assets are expected to be approximately $115 million for 2026.
Gross capital expenditures for 2026 are expected to be approximately $240 million for Leasing & Fleet Management and approximately $80 million for Manufacturing, which includes the change in capital expenditures accrued in Accounts payable and accrued liabilities. Capital expenditures for 2026 primarily relate to additions to our lease fleet reflecting our leasing strategy and continued investments into the safety and productivity of our facilities.
Cash Flows From Financing Activities
The $187.9 million change in Net cash provided by (used in) financing activities for the year ended August 31, 2025 compared to the year ended August 31, 2024 was primarily attributed to $153.6 million in lower proceeds from the issuance of debt, net of repayments and a $21.4 million increase in the repurchase of stock during the year ended August 31, 2025.
The senior term debt was amended in May 2025 on similar terms, extending the maturity date from August 2026 to May 2030. Principal payments of $3.1 million are to be paid quarterly in arrears with a balloon payment of $190.6 million due upon maturity. The principal balance as of August 31, 2025 was $250.0 million.
During the year ended August 31, 2024 we issued $178.5 million of asset backed securities and used proceeds to pay down $139.9 million of our Leasing warehouse facility. We also borrowed $196.6 million on the Leasing warehouse facility to grow the lease fleet. In February 2024, we paid $47.7 million to retire our 2024 Convertible Notes.
Dividend & Share Repurchase Program
A quarterly dividend of $0.32 per share was declared on October 23, 2025.
The Board of Directors has authorized our company to repurchase in aggregate up to $100.0 million of our common stock. The program may be modified, suspended, or discontinued at any time without prior notice. On January 8, 2025, the Board of Directors authorized the extension of the existing share repurchase program from January 31, 2025 to January 31, 2027 and renewed the amount remaining for repurchase to $100.0 million. Under the share repurchase program, shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. The timing and amount of purchases is based upon market conditions, securities law limitations and other factors. The program may be modified, suspended, or discontinued at any time without prior notice. The share repurchase program does not obligate us to acquire any specific number of shares in any period.
During the year ended August 31, 2025, we purchased a total of 517 thousand shares for $22.2 million under the current authorization of the share repurchase program. As of August 31, 2025, the amount remaining for repurchase under the current authorization of the share repurchase program was $77.8 million. During the year ended August 31, 2024, we purchased 38 thousand shares for $1.3 million.
Cash, Borrowing Availability and Credit Facilities
Our current cash balance is part of our strategy to maintain strong liquidity to respond to current uncertainties. As of August 31, 2025, we had $306.1 million in Cash and cash equivalents and $496.2 million in available borrowings. The available balance to draw under committed credit facilities includes $389.5 million on the North American credit facility, $20.7 million on the European credit facilities and $86.0 million on the Mexican credit facilities.
Our senior secured credit facilities aggregated to $1.3 billion as of August 31, 2025, which consisted of the following components:
Lease fleet – Nonrecourse
Leasing warehouse credit facility – As of August 31, 2025, a $450.0 million nonrecourse warehouse credit facility existed to support the operations of our leasing business in North America. Advances under the facility are secured by a pool of leased railcars and bear interest at the Secured Overnight Financing Rate (SOFR) plus 1.70%. As of August 31, 2025, interest rate swap agreements cover 91% of the outstanding balance to swap the floating interest rate to a fixed rate. The warehouse credit facility converts to a term loan in September 2027 and matures in September 2029.
Corporate and other – Recourse
North American credit facility – As of August 31, 2025, a $600.0 million revolving line of credit existed to provide working capital and interim financing of equipment, principally for our U.S. and Mexican operations. The North American credit facility is secured by substantially all of our U.S. assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities. Available borrowings are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios. Outstanding commitments under the North American credit facility included letters of credit which totaled $5.4 million and $5.9 million as of August 31, 2025 and 2024, respectively. Advances bear interest at SOFR plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% depending on the type of borrowing. The North America credit facility was renewed in May 2025, extending the maturity date from August 2026 to May 2030.
European revolving credit facilities – As of August 31, 2025, lines of credit totaling $98.3 million, secured by certain of our European assets, were available for working capital needs of our European manufacturing operations. The European lines of credit include $35.1 million which is guaranteed by us. The European credit facilities have variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.10% to WIBOR plus 1.40% and Euro Interbank Offered Rate (EURIBOR) plus 1.90%. The European credit facilities are regularly renewed and currently have maturities that range from October 2025 through September 2026.
Mexican revolving credit facilities – As of August 31, 2025, our Mexican railcar manufacturing operations had lines of credit totaling $156.0 million for working capital needs, $56.0 million of which we and our joint venture partner have each guaranteed 50%. Advances under these facilities bear interest at variable rates that range from SOFR plus 1.96% to SOFR plus 4.25%. The Mexican credit facilities have maturities that range from June 2026 through March 2027.
The following table summarizes our credit facility balances:
As of August 31,
(In millions)
Lease fleet – Nonrecourse:
Leasing warehouse credit facility
Corporate and other – Recourse:
North American revolving credit facility
European revolving credit facilities
Mexican revolving credit facilities
Other Information
The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us, the most restrictive of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into financing leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of August 31, 2025, we were in compliance with all such restrictive covenants.
From time to time, we may seek to repurchase or otherwise retire or exchange securities, including outstanding convertible notes, borrowings and equity securities, and take other steps to reduce our debt, extend the maturities of our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated transactions or other retirements, repurchases or exchanges. Such retirements, repurchases or exchanges of one note or security for another note or security (now or hereafter existing), if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity requirements and contractual restrictions, if applicable. The amounts involved in any such transactions may, individually or in the aggregate, be material and may involve all or a portion of a particular series of notes or other indebtedness which may reduce the float and impact the trading market of notes or other indebtedness which remain outstanding.
We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign exchange contracts with established financial institutions to protect the revenue or margin on a portion of forecasted foreign currency sales and expenses. Given the strong credit standing of the counterparties, no provision has been made for credit loss due to counterparty non-performance.
To mitigate the exposure to changes in interest rates, we have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $687.8 million of variable rate debt to fixed rate debt as of August 31, 2025.
We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.
The following table shows our estimated future contractual cash obligations as of August 31, 2025:
Year Ended August 31,
(In millions)
Total
Thereafter
Debt 1
Interest 2
Railcar & operating leases
1 The repayment of the $373.8 million of 2028 Convertible Notes due April 2028 is assumed to occur at the scheduled maturity instead of assuming an earlier conversion by the holders.
2 A portion of the estimated future cash obligation relates to interest on variable rate borrowings. Amounts are based on interest rates as of August 31, 2025.
Off-Balance Sheet Arrangements
We do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.
Impairment of long-lived assets - We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed based upon estimated undiscounted cash flows expected to be realized over the remaining useful life of the asset group. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group.
An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, and the determination of the fair value of real and personal property. Estimates of future cash flows are by nature highly uncertain and contemplate factors that may change over time. For further information, see Note 4 - Divestitures to the Consolidated Financial Statements.
Goodwill - We evaluate goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amounts of our reporting units exceed their fair value. We test goodwill for impairment by either performing a qualitative or quantitative assessment. When we perform a qualitative assessment, we analyze macroeconomic and industry conditions, financial performance, and cost estimates associated with a particular reporting unit. This assessment requires subjectivity based on cumulative information available at the assessment date. If a qualitative assessment indicates it is more likely than not that the carrying value of a reporting unit exceeds its respective fair value, a quantitative assessment is performed. We performed a qualitative assessment for our annual goodwill impairment test during the third quarter of 2025 and determined that it was more likely than not that the fair values of all reporting units with goodwill exceeded their carrying values; therefore, we concluded that goodwill was not impaired.
When we perform a quantitative assessment, we exercise judgment to develop estimates of the fair values of our reporting units based on a weighting of income and market approaches. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows which incorporates forecasted revenues, long-term growth rate, gross margin percentages, operating expenses, and the use of discount rates. Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.
We make certain estimates and assumptions to determine our reporting units and whether the fair value of each reporting unit is greater than its respective carrying value. The above highlighted judgments contemplated estimates and effects of macroeconomic trends that are inherently uncertain. Changes in these estimates, which may include the effects of inflation and policy reactions thereto, increases in pricing of materials and components, changes in demand, or potential macroeconomic events may cause future assessment conclusions to differ. For further information, see Note 7 - Goodwill to the Consolidated Financial Statements.
Income taxes - The asset and liability method is used to account for income taxes. We are required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for each tax jurisdiction to determine the amount of deferred tax assets and liabilities. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. We recognize a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities.
Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Judgment is required in determining our tax expense and in evaluating our tax positions, as tax laws are complex and subject to different interpretations by taxpayers and government taxing authorities. Our income tax rate is affected by the tax rates that apply to our foreign earnings and could be adversely impacted by higher or lower earnings than anticipated in a particular jurisdiction. In addition to local country tax laws and regulations which may apply minimum taxes, our income tax rate depends on the extent that our foreign earnings are taxed by the U.S. through provisions such as the global intangible low-taxed income (GILTI) tax and BEAT. We review our deferred tax assets and tax positions quarterly and adjust the balances as new information becomes available. For further information regarding income taxes, see Note 16 - Income Taxes to the Consolidated Financial Statements.
Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which reserves are established are made.
Judgments used in determining if a liability is estimable are subjective and based on known facts and our historic experience. If further developments in or resolution of an environmental matter result in facts and circumstances that differ from those assumptions used to develop these reserves, the accrual for environmental remediation could be materially misstated. Due to the uncertain nature of environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us. For further information regarding our environmental costs, see Note 20 - Commitments and Contingencies to the Consolidated Financial Statements.
Item 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protect revenue or margin on a portion of forecasted foreign currency sales and expenses. At August 31, 2025 exchange rates, notional amounts of foreign exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $412.0 million. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible to predict the impact of a movement in a single foreign currency exchange rate would have on future operating results.
In addition to exposure to transaction gains or losses, we are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At August 31, 2025, net assets of foreign subsidiaries aggregated to $154.3 million and a 10% strengthening of the U.S. Dollar relative to the foreign currencies would result in a decrease in equity of $15.4 million, or 1.0% of Total equity - Greenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. Dollar.
Interest Rate Risk
We have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $687.8 million of variable rate debt to fixed rate debt. Notwithstanding these interest rate swap agreements, we are still exposed to interest rate risk relating to our revolving debt and a portion of term debt, which are at variable rates. At August 31, 2025, 86% of our outstanding debt had fixed rates and 14% had variable rates. At August 31, 2025, a uniform 10% increase in variable interest rates would result in approximately $1.0 million of additional annual interest expense.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
The Greenbrier Companies, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of The Greenbrier Companies, Inc. and subsidiaries (the Company) as of August 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended August 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 28, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over inventory
As discussed in Notes 1, 2, and 5 to the consolidated financial statements, the Company operates from facilities in the U.S., Mexico, Poland and Romania to produce various railcars, component parts and perform railcar maintenance services and wheel and axle servicing. Work-in-process inventory includes material, labor and overhead. Finished goods includes completed wheels, component parts and finished railcars in transit or not on lease. The Company held $688.3 million of inventory as of August 31, 2025.
We identified the evaluation of the sufficiency of audit evidence over inventory as a critical audit matter. Determining the locations over which to perform procedures required a high degree of subjective auditor judgment due to the numerous global locations where inventory is held and the number of information technology (IT) systems involved in the inventory processes. Involvement of IT professionals with specialized skills and knowledge was required to assist in the performance of certain procedures.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures performed over inventory, including the selection of locations where procedures were performed. For each location over which procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s inventory processes. For each inventory location over which procedures were performed, we involved IT professionals who assisted in testing general IT controls for certain IT applications and automated controls used by the Company in its inventory processes. In addition, for a sample of recorded inventory items, we assessed the quantities recorded by comparing to quantities physically counted and, for a sample of recorded inventory items, we assessed the cost recorded by comparing to underlying documentation, including purchase invoices. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.
/s/ KPMG LLP
We have served as the Company’s auditor since 2011.
Portland, Oregon
October 28, 2025
Item 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets
As of August 31,
(In millions, except number of shares which are reflected in thousands)
Assets
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Income tax receivable
Inventories
Leased railcars for syndication
Equipment on operating leases, net
Property, plant and equipment, net
Investment in unconsolidated affiliates
Intangibles and other assets, net
Goodwill
Liabilities and Equity
Accounts payable and accrued liabilities
Debt, net
Recourse
Non-recourse
Deferred income taxes
Deferred revenue
Commitments and contingencies (Notes 19 & 20)
Contingently redeemable noncontrolling interest
Equity
Greenbrier
Preferred stock - without par value; 25,000 shares authorized; none outstanding
Common stock - without par value; 50,000 shares authorized; 30,873 and 31,135 outstanding at August 31, 2025 and 2024
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total equity - Greenbrier
Noncontrolling interest
Total equity
The accompanying notes are an integral part of these financial statements.
Consolidated Stat ements of Income
Years ended August 31,
(In millions, except number of shares which are reflected in thousands and per share amounts)
Revenue
Manufacturing
Leasing & Fleet Management
Cost of revenue
Manufacturing
Leasing & Fleet Management
Margin
Selling and administrative
Net gain on disposition of equipment
Asset impairment, disposal, and exit costs, net
Earnings from operations
Interest and foreign exchange
Earnings before income tax and earnings from unconsolidated affiliates
Income tax expense
Earnings before earnings from unconsolidated affiliates
Earnings from unconsolidated affiliates
Net earnings
Net earnings attributable to noncontrolling interest
Net earnings attributable to Greenbrier
Basic earnings per common share
Diluted earnings per common share
Weighted average common shares
Basic
Diluted
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Comprehensive Income
Years ended August 31,
(In millions)
Net earnings
Other comprehensive income (loss)
Translation adjustment
Reclassification of derivative financial instruments recognized in net earnings 1
Unrealized gain on derivative financial instruments 2
Other (net of tax effect)
Comprehensive income
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to Greenbrier
1 Net of tax effect of $ 3.3 million , $ 4.0 million and $ 3.7 million for the years ended August 31, 2025, 2024 and 2023 , respectively.
2 Net of tax effect of $( 1.2 ) million , $( 0.5 ) million and $( 8.8 ) million for the years ended August 31, 2025, 2024 and 2023 , respectively.
The accompanying notes are an integral part of these financial statements.
Consolidated Stat ements of Equity
Attributable to Greenbrier
(In millions)
Common
Stock
Shares
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Equity -
Greenbrier
Noncontrolling
Interest
Total
Equity
Contingently
Redeemable
Noncontrolling
Interest
Balance August 31, 2022
Net earnings
Other comprehensive income, net
Noncontrolling interest adjustments
Joint venture partner distribution declared
Restricted stock awards (net of cancellations)
Unamortized restricted stock
Stock based compensation expense
Repurchase of stock
Cash dividends ($ 1.11 per share)
Balance August 31, 2023
Net earnings
Other comprehensive loss, net
Noncontrolling interest adjustments
Joint venture partner distribution declared
Restricted stock awards (net of cancellations)
Unamortized restricted stock
Stock based compensation expense
Repurchase of stock
Cash dividends ($ 1.20 per share)
Balance August 31, 2024
Net earnings
Other comprehensive income, net
Noncontrolling interest adjustments
Joint venture partner distribution declared
Restricted stock awards (net of cancellations)
Unamortized restricted stock
Stock based compensation expense
Repurchase of stock
Cash dividends ($ 1.24 per share)
Balance August 31, 2025
The accompanying notes are an integral part of these financial statements.
Consolidated Statem ents of Cash Flows
Years ended August 31,
(In millions)
Cash flows from operating activities
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Deferred income taxes
Depreciation and amortization
Net gain on disposition of equipment
Stock based compensation expense
Asset impairment, disposal, and exit costs, net
Noncontrolling interest adjustments
Earnings from unconsolidated affiliates
Other
Decrease (increase) in assets:
Accounts receivable, net
Income tax receivable
Inventories
Leased railcars for syndication
Other assets
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities
Deferred revenue
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sales of assets
Capital expenditures
Other
Net cash used in investing activities
Cash flows from financing activities
Net changes in debt with maturities of 90 days or less
Proceeds from debt with maturities longer than 90 days
Repayments of debt with maturities longer than 90 days
Debt issuance costs
Repurchase of stock, including excise tax
Dividends
Cash distribution to joint venture partner
Tax payments for net share settlement of restricted stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash
Beginning of period
End of period
Balance Sheet Reconciliation
Cash and cash equivalents
Restricted cash
Total cash and cash equivalents and restricted cash as presented above
Cash paid during the period for
Interest
Income taxes, net
Non-cash activity
Transfer from Leased railcars for syndication and Inventories to Equipment on operating leases, net
Capital expenditures accrued in Accounts payable and accrued liabilities
Change in Accounts payable and accrued liabilities associated with dividends declared
Change in Accounts payable and accrued liabilities associated with repurchase of stock
Change in Accounts payable and accrued liabilities associated with cash distributions to joint venture partner
The accompanying notes are an integral part of these financial statements .
Notes to Consolidated Financial Statements
Note 1 — Nature of Operations
The Company operates in two reportable segments: Manufacturing and Leasing & Fleet Management. The segments support the Company's integrated business model. The Manufacturing segment, which currently operates from facilities in the U.S., Mexico, Poland and Romania, produces double-stack intermodal railcars, tank cars, freight railcars, and automotive railcar products. The Manufacturing segment also performs wheel and axle servicing, railcar maintenance services and produces a variety of component parts for the rail industry. The Leasing & Fleet Management segment owns approximately 17,000 railcars as of August 31, 2025 and provides management services for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in North America. Through unconsolidated affiliates the Company produces rail and industrial components and has an ownership stake in a railcar manufacturer in Brazil .
Effective September 1, 2024, the Company combined the former Maintenance Services and Manufacturing segments into a single reportable segment, Manufacturing. The combined Manufacturing reportable segment reflects a comprehensive production operation that allows the Company to streamline production processes and resources to better serve customers. Separately, the Company renamed the former Leasing & Management Services segment to Leasing & Fleet Management. These changes reflect the realignment of the Company’s organizational structure and reporting regularly provided to the Company’s chief operating decision maker (CODM) to assess performance and allocate resources. These changes had no impact on the Company’s consolidated results of operations or financial position. Prior period segment results have been recast to reflect the Company’s new reportable segments. See Note 17 – Segment Information to the Consolidated Financial Statements for additional information on the Company’s reportable segments.
Note 2 — Summary of Significant Accounting Policies
Principles of consolidation - The financial statements include the accounts of the Company and its subsidiaries in which it has a controlling interest. All intercompany transactions and balances are eliminated upon consolidation.
Unclassified balance sheet - The balance sheets of the Company are presented in an unclassified format as a result of significant leasing activities for which the current or non-current distinction is not relevant. In addition, the activities of the Manufacturing and Leasing & Fleet Management segments are so intertwined that in the opinion of management, any attempt to separate the respective balance sheet categories would not be meaningful and may lead to the development of misleading conclusions by the reader.
Foreign currency translation - Certain operations outside the U.S. prepare financial statements in currencies other than the U.S. Dollar. Revenues and expenses are translated at monthly average exchange rates during the year, while assets and liabilities are translated at year-end exchange rates. Translation adjustments are recorded in Other comprehensive income (loss) and accumulated as a separate component of equity.
Cash and cash equivalents - Cash may temporarily be invested primarily in money market funds. All highly-liquid investments with a maturity of three months or less at the date of acquisition are considered cash equivalents.
Restricted cash - Restricted cash relates to amounts held to support a target minimum rate of return on certain agreements, terms of our credit agreement, and a pass through account for activity related to management services provided for certain third-party customers.
Accounts receivable - Accounts receivable consists of receivables from customers and receivables from related parties (see Note 15 - Related Party Transactions to the Consolidated Financial Statements) and is stated net of allowance for credit losses of $ 6.5 million and $ 3.6 million as of August 31, 2025 and 2024, respectively.
Year Ended August 31,
(In millions)
Allowance for credit losses
Balance at beginning of period
Additions, net of reversals
Usage
Currency translation effect
Balance at end of period
Inventories - Inventories are valued at the lower of cost or net realizable value using the first-in first-out method. Work-in-process includes material, labor and overhead. Finished goods includes completed wheels, component parts and finished railcars in transit or not on lease.
Leased railcars for syndication - Leased railcars for syndication consist of newly-built railcars manufactured at one of the Company’s facilities or railcars purchased from third parties, which have been placed on lease to a customer and which the Company intends to sell to an investor with the lease attached. These railcars are generally anticipated to be sold within six months of delivery of the last railcar in a group or six months from when the Company acquires the railcar from a third-party and are typically not depreciated during that period as the Company does not believe any economic value of a railcar is lost in the first six months. In the event the railcars are not sold in the first six months, the railcars are either held in Leased railcars for syndication and are depreciated or are transferred to Equipment on operating leases and are depreciated.
Equipment on operating leases, net - Equipment on operating leases is stated net of accumulated depreciation. Depreciation to estimated salvage value is provided on the straight-line method over the estimated useful lives of up to forty years . Management periodically reviews useful lives and salvage value estimates based on current scrap prices and what the Company expects to receive upon disposal.
Investment in unconsolidated affiliates - Investment in unconsolidated affiliates includes the Company’s interests in certain investees which are accounted for under the equity method of accounting as the Company has determined that the investment provides the Company with the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee of at least 20%. Several factors are considered in determining whether the equity method of accounting is appropriate including the relative ownership interests and governance rights of the joint venture partners.
As of August 31, 2025 , investments in unconsolidated affiliates include the Company’s 60 % interest in Greenbrier-Maxion, 29.5 % interest in Amsted-Maxion Cruzeiro (which owns 40 % of Greenbrier-Maxion) and 41.9 % interest in Axis. The Company does not consolidate Greenbrier-Maxion for financial reporting purposes and accounts for its interest under the equity method of accounting as the entity's governance provisions require that all significant decisions of Greenbrier-Maxion are subject to shared consent of its shareholders.
Property, plant and equipment - Property, plant and equipment is stated at cost, net of accumulated depreciation. Depreciation is provided on the straight-line method over estimated useful lives which primarily are as follows:
Depreciable Life
Buildings and improvements
15 - 25 years
Machinery and equipment
3 - 15 years
Other
3 - 10 years
Intangible and other assets, net - Intangible assets are recorded when a portion of the purchase price of an acquisition is allocated to assets such as customer contracts and relationships and trade names. Intangible assets with finite lives are amortized using the straight line method over their estimated useful lives which are up to 20 years . Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment. Other assets include
operating lease right-of-use (ROU) assets, nonqualified savings plan investments, and revolving note fees which are capitalized and amortized as interest expense over the life of the related borrowings. Under the short term lease recognition exemption, the Company does not recognize ROU assets or lease liabilities for qualifying leases with terms of less than twelve months. The Company does not separate lease and non-lease components.
Impairment of long-lived assets - When changes in circumstances indicate the carrying amount of certain long-lived asset groups may not be recoverable, the assets are evaluated for impairment. If the forecasted undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reduce the carrying value of the assets to estimated realizable value is recognized. The Company recorded $ 24.2 million as impairment of long-lived assets for the year ended August 31, 2023. No impairment of long-lived assets was recorded in the years ended August 31, 2025 and 2024 . See Note 4 - Divestitures to the Consolidated Financial Statements for additional information.
Goodwill - Goodwill is recorded when the purchase price of an acquisition exceeds the fair market value of the net assets acquired. Goodwill is not amortized and is tested for impairment at least annually and more frequently if indicators of impairment arise. The Company reviews goodwill for impairment annually using either a qualitative assessment or a quantitative goodwill impairment test. If the qualitative assessment is selected and the Company determines that the fair value of each reporting unit more likely than not exceeds its carrying value, no further assessment is necessary. For reporting units where the Company performs the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value. An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit. No impairment of goodwill was recorded in the years ended August 31, 2025, 2024, and 2023 . See Note 7 - Goodwill to the Consolidated Financial Statements for additional information.
Warranty accruals - Warranty costs are estimated and charged to operations to cover a defined warranty period. The estimated warranty cost is based on history of warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historical information for similar product types. The warranty accruals, included in Accounts payable and accrued liabilities, are reviewed periodically and updated based on warranty trends.
Income taxes - The asset and liability method is used to account for income taxes. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. The Company recognizes a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities. The Company reevaluates these uncertain tax positions on a quarterly basis. Changes in tax law or court interpretations may result in the recognition of a tax benefit or an additional charge to the tax provision.
Deferred revenue - Cash payments received prior to meeting revenue recognition criteria are recorded in Deferred revenue. Amounts are reclassified out of Deferred revenue once the revenue recognition criteria have been met.
Noncontrolling interest and Contingently redeemable noncontrolling interest - The Company has a joint venture with Grupo Industrial Monclova, S.A. (GIMSA) that manufactures new railroad freight cars for the North American marketplace at GIMSA’s existing manufacturing facility located in Frontera, Mexico. Each party owns a 50 % interest in the joint venture. The financial results of this operation are consolidated for financial reporting purposes as the Company maintains a controlling interest as evidenced by the right to appoint the majority of the Board of Directors, control over accounting, financing, marketing and engineering and approval and design of products. The noncontrolling interest related to the partner’s 50 % interest in the joint venture is included in Noncontrolling interest in the equity section of the Company’s Consolidated Balance Sheet.
Greenbrier-Astra Rail B.V. was formed with Astra Holdings GmbH (Astra) in 2017 to combine the Company’s existing European operations in Poland and Astra's operations in Romania. Greenbrier-Astra Rail B.V. is controlled by the Company with an approximate 75 % interest. Astra received a put option to sell its entire noncontrolling interest to the Company at an exercise price equal to the higher of fair value or a defined earnings before interest, taxes, depreciation and amortization (EBITDA) multiple as measured on the exercise date. During 2022, the option was extended to be exercisable 30 business days prior to and up until June 1, 2026. The Company consolidates Greenbrier-Astra Rail B.V. for financial reporting purposes and includes the noncontrolling interest in the mezzanine section of the Consolidated Balance Sheet in Contingently redeemable noncontrolling interest. The carrying value of the
noncontrolling interest cannot be less than the maximum redemption amount, which is the amount Greenbrier will settle the put option for if exercised.
During 2024, the Company recorded a noncash $ 16.2 million redemption value adjustment to Contingently redeemable noncontrolling interest and Retained earnings to reduce the carrying value to the maximum redemption amount. During 2023, the Company recorded a noncash $ 26.3 million redemption value adjustment to Contingently redeemable noncontrolling interest and Retained earnings to increase the carrying value to the maximum redemption amount. The changes in the maximum redemption amounts in 2023 and 2024 were primarily attributed to industry and entity-specific indicators which impacted the estimated future cash flows of Greenbrier-Astra Rail B.V. There were no redemption value adjustments in 2025.
Net earnings attributable to noncontrolling interest on the Company’s Consolidated Statement of Income represents the Company’s partners’ share of results from operations.
Accumulated other comprehensive loss – Accumulated other comprehensive loss (AOCL), net of tax as appropriate, consisted of the following:
(In millions)
Unrealized Gain (Loss) on Derivative Financial Instruments
Foreign Currency Translation Adjustment
Other
AOCL
Balance, August 31, 2022
Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCL
Balance, August 31, 2023
Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCL
Balance, August 31, 2024
Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCL
Balance, August 31, 2025
Revenue recognition - The Company measures revenue at the amounts that reflect the consideration to which it expects to be entitled in exchange for transferring control of goods and services to customers. The Company recognizes revenue either at the point in time or over the period of time that performance obligations to customers are satisfied. The Company treats shipping costs that occur after control is transferred as fulfillment costs. Payment terms vary by segment and product type and are generally due within normal commercial terms. The Company’s contracts with customers may include multiple performance obligations (e.g. railcars, maintenance, management services, etc.). For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. The Company has disaggregated revenue from contracts with customers into categories which describe the principal activities from which it generates revenues.
Manufacturing
Railcars are manufactured in accordance with contracts with customers. The Company recognizes revenue upon its customers’ acceptance of the completed railcars at a specified delivery point. From time to time, the Company enters into multi-year supply agreements. Each railcar delivery is considered a distinct performance obligation, such that the amounts that are recognized as revenue following railcar delivery are generally not subject to change.
The Company also operates a network of facilities in North America that provide wheel and axle servicing and products, railcar maintenance services and produces a variety of component parts for the rail industry. Wheels revenue is recognized when wheelsets are shipped to the customer. Parts revenue is recognized upon shipment of the
component parts to the customers. Maintenance revenue is typically recognized over time using the cost input method, based on progress toward contract completion measured by actual costs incurred to date in relation to the estimate of total expected costs. This method best depicts the Company’s performance in servicing the railcars for the customer. Maintenance services are typically completed in less than 90 days.
Leasing & Fleet Management
The Company owns a fleet of new and used railcars which are leased to third-party customers. Lease revenue is recognized over the lease-term in the period in which it is earned.
Syndication transactions represent new and used railcars which have been placed on lease to a customer and which the Company sells to an investor with the lease attached. At the time of such sale, revenue and cost of revenue is allocated between the Manufacturing segment and Leasing & Fleet Management segment based on the relative standalone selling price of the product and services provided. The Company utilizes both ASC 842, Leases and ASC 606, Revenue from Contracts with Customers when evaluating retained risk of services and other performance obligations in conjunction with selling railcars with a lease attached as part of the syndication model.
The Company enters into multi-year contracts to provide management and maintenance services to customers for which revenue is generally recognized on a straight-line basis over the contract term as a stand-ready obligation. Costs to fulfill these contracts are recognized as incurred.
Interest and foreign exchange - Interest includes amortization of debt issuance costs and external interest expense. Foreign exchange gains and losses includes the effects of remeasuring monetary assets and liabilities denominated in a currency other than the functional currency of the respective subsidiary.
For the Year Ended August 31,
(In millions)
Interest and foreign exchange:
Interest and other expense, net
Foreign exchange (gain) loss, net
Foreign exchange contracts - Foreign operations give rise to risks from fluctuations in foreign currency exchange rates. Foreign exchange contracts with established financial institutions are used to hedge a portion of such risk. Realized and unrealized gains and losses on effective hedges are deferred in Other comprehensive income (loss) and recognized in earnings concurrent with the hedged transaction or when the occurrence of the hedged transaction is no longer considered probable. Ineffectiveness is measured and any gain or loss is recognized in foreign exchange (gain) loss. Even though foreign exchange contracts are entered into to mitigate the impact of currency fluctuations, certain exposure remains, which may affect operating results. In addition, there is risk for counterparty non-performance.
Interest rate instruments - Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The net cash amounts paid or received under the agreements are recognized as an adjustment to interest expense.
Research and development - Research and development costs are expensed as incurred. Research and development costs incurred for new product development during the years ended August 31, 2025, 2024 and 2023 were $ 5.5 million, $ 5.2 million and $ 4.0 million, respectively, included in Selling and administrative expenses.
Net earnings per share - Basic EPS is calculated using weighted average basic common shares outstanding.
Diluted EPS is calculated using the if-converted method, associated with shares underlying the 2024 and 2028 2.875 % Convertible notes, and the treasury stock method associated with performance based restricted stock units subject to performance criteria.
Stock-based compensation - Stock based compensation expense consists of restricted stock units. Restricted stock units are accounted for as equity based awards (see Note 13 - Equity to the Consolidated Financial Statements). The
value of stock-based compensation awards is amortized as compensation expense from the date of grant through the vesting period. Forfeitures are recognized as they occur.
Management estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.
Reclassifications - Certain immaterial reclassifications have been made to the accompanying prior year Consolidated Financial Statements to conform to the current year presentation.
Recently Adopted Accounting Pronouncements
Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. The Company adopted ASU 2023-07 in 2025 on a retrospective basis. The adoption of ASU 2023-07 did no t have a material impact on the financial statements, but resulted in expanded reportable segment disclosures.
Recently Issued Accounting Pronouncements
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statement disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure of incremental income statement expense information on an annual and interim basis, primarily through enhanced disclosures of specified costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statement disclosures.
Note 3 – Revenue Recognition
Contract balances
Contract assets primarily consist of work completed for railcar maintenance but not billed at the reporting date. Contract liabilities primarily consist of customer prepayments for new railcars and other management-type services, for which the Company has not yet satisfied the related performance obligations.
The opening and closing balances of the Company’s contract balances are as follows:
(In millions)
Balance sheet classification
August 31, 2025
August 31, 2024
$ change
Contract assets
Accounts receivable, net
Contract assets
Inventories
Contract liabilities 1
Deferred revenue
1 Contract liabilities balance includes deferred revenue within the scope of Revenue from Contracts with Customers (Topic 606) .
For the years ended August 31, 2025 and 2024 the Company recognized $ 39.9 million and $ 22.9 million of revenue, respectively, that was included in Contract liabilities as of August 31, 2024 and 2023.
Performance obligations
As of August 31, 2025 , the Company has entered into contracts with customers for which revenue has not yet been recognized. The following table outlines estimated transaction prices related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.
(In millions)
August 31, 2025
Revenue type:
Manufacturing – Railcar sales
Manufacturing – Railcar maintenance
Fleet management
Based on current production and delivery schedules and existing contracts, approximately $ 1.0 billion of the Manufacturing – Railcar sales amount is expected to be recognize d in 2026 while the remaining amount is expected to be recognized in 2027 and beyond. Manufacturing – Railcar maintenance performance obligations are expected to be recognized in 2026. Fleet management includes management and maintenance services contracts of which approximately $ 84.3 million is expected to be recognized through 2030 and the remaining amount through 2037.
The following table presents the Company's revenue disaggregated by category:
For the Year Ended August 31,
(In millions)
Manufacturing:
Railcar sales
Railcar maintenance
Leasing & Fleet Management
Total Revenue
Note 4 – Divestitures
Gunderson
In November 2022, as part of the Company's strategic review of the global business capacity footprint, the Company decided to permanently cease rail production at the Gunderson facility in Portland, Oregon and to explore alternatives to exit marine barge production . Due to the change in future use of the facility, management assessed recoverability of the Gunderson assets in accordance with the Company’s policy on impairment of long-lived assets. Based on an analysis of future undiscounted cash flows associated with these assets, management determined that the carrying value was not recoverable. The carrying amount of the Company’s long-lived assets at the Gunderson facility was $ 44.0 million and the fair value was $ 19.8 million as of the impairment date. The Company concluded that an impairment charge was necessary and $ 24.2 million was recorded within the Manufacturing segment as Asset impairment, disposal and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.
In May 2023, the Company sold its ownership interest in Gunderson Marine and the Gunderson facility assets (which includes the Portland Property) and recognized a $ 14.4 million loss on sale and $ 2.1 million severance, which are recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.
Southwest Steel
In August 2023, the Company sold its ownership interest in Southwest Steel Castings Company, a steel foundry business in Longview, Texas, and recorded a $ 9.7 million loss on sale, which is recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.
Rayvag
In August 2023, Greenbrier-Astra Rail B.V. sold its approximately 68 % ownership interest in Rayvag, a railcar manufacturing company based in Adana, Türkiye. The Company deconsolidated Rayvag and its noncontrolling interest and recorded a $ 3.7 million gain on sale, which is recorded within the Manufacturing segment as Asset impairment, disposal, and exit costs, net on the Consolidated Statements of Income for the year ended August 31, 2023.
Total Asset impairment, disposal, and exit costs, net were $ 46.7 million for the year ended August 31, 2023. There were no Asset impairment, disposal, and exit costs, net for the years ended August 31, 2025 and 2024.
Note 5 — Inventories
As of August 31,
(In millions)
Manufacturing supplies and raw materials
Work-in-process
Finished goods
Excess and obsolete adjustment
For the Year Ended August 31,
(In millions)
Excess and obsolete adjustment
Balance at beginning of period
Charge to cost of revenue
Disposition of inventory
Currency translation effect
Balance at end of period
Note 6 — Property, Plant and Equipment, net
As of August 31,
(In millions)
Land and improvements
Machinery and equipment
Buildings and improvements
Construction in progress
Other
Accumulated depreciation
Depreciation expense was $ 78.3 million, $ 72.4 million and $ 71.5 million for the years ended August 31, 2025, 2024 and 2023 , respectively.
Note 7 — Goodwill
Changes in the carrying value of goodwill are as follows:
(In millions)
Manufacturing
Leasing & Fleet Management
Total
Balance August 31, 2024
Translation and other adjustments
Balance August 31, 2025
(In millions)
Goodwill
Gross goodwill balance before accumulated goodwill impairment losses and other reductions
Accumulated goodwill impairment losses
Accumulated other reductions
Balance August 31, 2025
The Company performed its annual goodwill impairment test during the third quarter of 2025. The Company utilized the qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its respective carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic considerations and industry indicators, financial performance, and cost estimates associated with a particular reporting unit. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Based on the qualitative assessment, the Company determined that it was more likely than not that the fair value of each reporting unit with goodwill exceeded its respective carrying value and a quantitative impairment test was not necessary; therefore, the Company concluded that goodwill was not impaired.
As of August 31, 2025 , the Manufacturing segment includes the North America Manufacturing reporting unit with a goodwill balance of $ 56.3 million, the Wheels & Parts reporting unit with a goodwill balance of $ 42.6 million and the Europe Manufacturing reporting unit with a goodwill balance of $ 31.1 million.
Note 8 — Intangibles and Other Assets, net
The following table summarizes the Company’s identifiable intangible and other assets balance:
As of August 31,
(In millions)
Intangible assets subject to amortization:
Customer and supplier relationships
Accumulated amortization
Other intangible assets
Accumulated amortization
Intangible assets not subject to amortization
Prepaid and other assets
Operating lease ROU assets
Nonqualified savings plan investments
Debt issuance costs, net
Deferred tax assets
Amortization expense for the years ended August 31, 2025, 2024, and 2023 was $ 6.3 million, $ 7.2 million and $ 8.0 milli on, respectively. As of August 31, 2025 , amortizable intangible assets had a weighted-average remaining useful life of 6.5 years. Amortization expense for the years ending August 31, 2026, 2027, 2028, 2029 and 2030 is expected to be $ 6.1 million, $ 5.2 million, $ 4.2 million, $ 2.7 million and $ 1.6 million, respectively.
Note 9 — Accounts Payable and Accrued Liabilities
As of August 31,
(In millions)
Trade payables
Other accrued liabilities
Operating lease liabilities
Accrued payroll and related liabilities
Accrued warranty
Note 10 — Warranty Accrual
For the Year Ended August 31,
(In millions)
Balance at beginning of period
Charged to cost of revenue
Payments
Currency translation effect
Balance at end of period
Note 11 — Debt, net
Recourse debt is debt where the lender may pursue repayment beyond the value of any pledged collateral and is generally secured by general assets of the Company. Non-recourse debt is debt where the lender’s ability to pursue repayment from the Company is limited to the value of the specific assets collateralized by the debt.
The following table summarizes the Company’s recourse and non-recourse debt balances:
As of August 31,
(In millions)
Corporate and other – Recourse:
Revolving credit facilities
North America
Europe
Mexico
Corporate senior term debt
2.875 % Convertible senior notes, due 2028
Other notes payable
Debt discount and issuance costs
Debt, net — Recourse
Lease fleet – Non-recourse:
Leasing warehouse credit facility
Leasing senior term debt
Leasing GBXL I asset-backed term notes
Debt discount and issuance costs
Debt, net — Non-recourse
Total Debt, net
Corporate and other – Recourse
North American revolving credit facility
As of August 31, 2025 , a $ 600.0 million revolving line of credit existed to provide working capital and interim financing of equipment, principally for the Company’s U.S. and Mexican operations. The North American credit facility is secured by substantially all the Company’s U.S. assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities. The North American credit facility had $ 389.5 million available for borrowing as of August 31, 2025 . Available borrowings are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios. Outstanding commitments under the North American credit facility included letters of credit which totaled $ 5.4 million and $ 5.9 million as of August 31, 2025 and 2024 , respectively. Advances bear interest at SOFR plus 1.50 % plus 0.10 % as a SOFR adjustment or Prime plus 0.50 % depending on the type of borrowing. The North America credit facility was renewed in May 2025 , extending the maturity date from August 2026 to May 2030 .
European revolving credit facilities
As of August 31, 2025 , lines of credit totaling $ 98.3 million secured by certain of the Company’s European assets, were available for working capital needs of the Company’s European manufacturing operations. The European credit facilities had $ 20.7 million available for borrowing as of August 31, 2025 . The European lines of credit include $ 35.1 million which is guaranteed by the Company. The European credit facilities have variable rates that range from WIBOR plus 1.10 % to WIBOR plus 1.40 % and EURIBOR plus 1.90 %. European credit facilities are regularly renewed and currently have maturities that range from October 2025 through September 2026 .
Mexican revolving credit facilities
As of August 31, 2025 , the Company’s Mexican railcar manufacturing operations had lines of credit totaling $ 156.0 million for working capital needs, $ 56.0 million of which the Company and its joint venture partner have each guaranteed 50 %. The Mexican credit facilities had $ 86.0 million available for borrowing as of August 31, 2025 . Advances under these facilities bear interest at variable rates that range from SOFR plus 1.96 % to SOFR plus 4.25 %. The Mexican credit facilities have maturities that range fro m June 2026 through March 2027 .
Corporate senior term debt
The Corporate senior term debt bears a floating interest rate of SOFR plus 1.50 % plus 0.10 % as a SOFR adjustment. Interest rate swap agreements cover approximately 75 % of the principal balance to swap the floating interest rate to fixed rates. Principal payments of $ 3.1 million are to be paid quarterly in arrears with a balloon payment of $ 190.6 million due upon maturity. The Corporate senior term debt was amended in May 2025 on similar terms, extending the maturity date from August 2026 to May 2030 .
2.875% Convertible senior notes, due 2028 (2028 Convertible Notes)
The 2028 Convertible Notes bear interest at a fixed rate of 2.875 %, paid semiannually in arrears on April 15 th and October 15 th . Issuance costs are amortized using the effective interest rate method through 2028 and the amortization expense is included in Interest and foreign exchange on the Company's Consolidated Statements of Income. As of August 31, 2025 , the effective interest rate was 5.75 %. The convertible notes mature on April 15, 2028 , unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. The convertible notes are senior unsecured obligations and rank equally with other senior unsecured debt. The notes are convertible into shares of the Company’s common stock, at a conversion rate of 18.1496 shares of common stock per $ 1,000 principal amount which is equivalent to a conversion price of approximately $ 55.10 per share as of August 31, 2025. The conversion rate and the resulting conversion price are subject to adjustment in certain events, such as distributions, dividends or stock splits. Conversion of the par value of the note will be settled in cash, with any premium convertible in cash or shares at the Company’s option. Upon a conversion of the notes, the Company may elect to pay or deliver, as the case may be, cash and, if applicable, shares of the Company’s common stock, as provided in the 2028 Notes Indenture (as defined below). As of August 31, 2025 , the Company has reserved approximately 8.1 million shares for issuance upon conversion of these notes.
The 2028 Convertible Notes are subject to an indenture entered into on April 20, 2021 by the Company and Wells Fargo Bank, National Association, as trustee, as amended and restated by the first supplemental indenture dated June 1, 2021 (2028 Notes Indenture). The 2028 Convertible Notes are convertible at the option of the holders prior to January 15, 2028 , under certain circumstances as described in the 2028 Notes Indenture. Additionally, the Company may elect to call the notes on or after April 15, 2025 and on or before the 40 th trading day prior to April 15, 2028 , at a cash redemption price described in the 2028 Notes Indenture if the stock price exceeds 130 % of the conversion price during certain trading days as defined in the 2028 Notes Indenture. Calling any Convertible Note for redemption will constitute a make-whole fundamental change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.
Lease fleet – Non-recourse
Leasing warehouse credit facility
As of August 31, 2025 , a $ 450.0 million non-recourse warehouse credit facility existed to support the operations of our leasing business in North America. Advances under the warehouse credit facility are secured by a pool of leased railcars and bear interest at SOFR plus 1.70 %. As of August 31, 2025 , interest rate swap agreements cover 91 % of the outstanding balance to swap the floating interest rate to a fixed rate. The warehouse credit facility converts to a term loan in September 2027 and matures in September 2029 .
Leasing senior term debt
The Leasing senior term debt is secured by a pool of leased railcars and is non-recourse to Greenbrier. The Leasing senior term debt bears interest at a rate of SOFR plus 1.625 % plus 0.10 % as a SOFR adjustment, with principal of $ 3.1 million paid quarterly in arrears and a balloon payment of $ 283.7 million due upon maturity in August 2027 . Interest rate swap agreements cover nearly 100 % of the principal balance to swap the floating interest rate to fixed rates.
Leasing GBXL I asset-backed term notes
GBX Leasing 2022-1 LLC (GBXL I or Issue r) was formed as a wholly owned special purpose entity (SPE) of GBX Leasing, LLC to securitize leased railcar assets. GBXL I issued $ 323.3 million of term notes in February 2022 (2022 GBXL Notes) and $ 178.5 million of term notes in Nov ember 2023 (2023 GBXL Notes), which are secured by a portfolio of railcars and associated operating leases and other assets, acquired and owned by GBXL I. Greenbrier Management Services, LLC (GMS) entered into certain agreements relating to the management and servicing of the Issuer’s assets. The Company evaluated the accounting for the transaction and concluded that, based on its equity investment in the Issuer combined with GMS’s capacity as servicer, the Company is the primary beneficiary of the SPE and therefore consolidates the SPE for financial reporting purposes.
Issued debt of GBXL I includes:
GBXL I Series 2022-1 Class A Secured Railcar Equipment Notes (2022 Class A Notes) with a principal balance of $ 262.6 million as of August 31, 2025 and GBXL I Series 2022-1 Class B Secured Railcar Equipment Notes (2022 Class B Notes) with a principal balance of $ 20.7 million as of August 31, 2025, collectively the 2022 GBXL Notes; and
GBXL I Series 2023-1 Class A Secured Railcar Equipment Notes (2023 Class A Notes) with a principal balance of $ 153.7 million as of August 31, 2025 and GBXL I Series 2023-1 Class B Secured Railcar Equipment Notes (2023 Class B Notes) with a principal balance of $ 19.2 million as of August 31, 2025, collectively the 2023 GBXL Notes.
The 2022 GBXL Notes bear interest at fixed rates of 2.87 % and 3.45 % for the Class A Notes and Class B Notes, respectively. The 2022 GBXL Notes are payable monthly , with a contractual maturity date of February 20, 2052 and an anticipated repayment date of January 20, 2029 . While the contractual maturity date is in 2052 , the cash flows generated from the railcar assets will pay down the 2022 GBXL Notes in line with the agreement, which based on expected cash flow payments, would result in repayment in advance of the contractual maturity date.
The 2023 GBXL Notes bear interest at fixed rates of 6.42 % and 7.28 % for the 2023 Class A Notes and 2023 Class B Notes, respectively. The 2023 GBXL Notes are payable monthly, with a contractual maturity date of November 20, 2053 and an anticipated repayment date of November 20, 2030 . While the contractual maturity date is in 2053 , the cash flows generated from the railcar assets will pay down the 2023 GBXL Notes in line with the agreement, which based on expected cash flow payments, would result in repayment in advance of the contractual maturity date.
If the principal amount of the 2023 GBXL Notes and 2022 GBXL Notes has not been repaid in full by the anticipated repayment date, then the Issuer will also be required to pay additional interest to the holders at a rate equal to 4.00 % per annum. The GBXL Notes are obligations of the Issuer only and are non-recourse to Greenbrier. The GBXL Notes are subject to a Master Indenture between the Issuer and U.S. Bank Trust Company, National Association, as trustee, as supplemented by the Series 2022-1 Supplement dated February 9, 2022 and the Series 2023-1 Supplement dated November 20, 2023. The GBXL Notes may be subject to acceleration upon the occurrence of certain events of default.
The following table summarizes the Issuer's net carrying amount of the assets transferred and the related debt.
As of August 31,
(In millions)
Assets
Restricted cash
Equipment on operating leases, net
Liabilities
Debt, net — Non-recourse
As of August 31, 2025, contractual maturities of recourse and non-recourse debt are as follows:
(In millions)
Year ending August 31,
Thereafter
The recourse and non-recourse debt contains certain covenants with respect to the Company and various subsidiaries, the most restrictive of which, among other things, limit the ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into capital leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all the Company’s assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest and rent) coverage.
Note 12 — Derivative Instruments
Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign exchange contracts with established financial institutions are utilized to hedge a portion of that risk. Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The Company’s foreign exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in AOCL.
At August 31, 2025 exchange rates, notional amounts of foreign exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $ 412.0 million. The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when in a loss position, or as Accounts receivable, net when in a gain position. As the contracts mature at various dates through March 2027, any such gain or loss remaining will be recognized in manufacturing revenue or cost of revenue along with the related transactions. In the event that the underlying transaction does not occur or does
not occur in the period designated at the inception of the hedge, the amount classified in AOCL would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence. At August 31, 2025 exchange rates, approximately $ 0.2 million would be credited to revenue in the next year.
At August 31, 2025, interest rate swap agreements maturing from August 2027 through March 2032 ha d notional amounts that aggregated to $ 687.8 million . The fair value of the contracts are included on the Consolidated Balance Sheets in Accounts payable and accrued liabilities when in a loss position, or in Accounts receivable, net when in a gain position. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from AOCL and charged or credited to interest expense. At August 31, 2025 interest rates, approximately $ 6.9 million would be credited to interest expense in the next year.
Fair Values of Derivative Instruments
Asset Derivatives
Liability Derivatives
August 31,
August 31,
(In millions)
Balance sheet caption
Fair Value
Fair Value
Balance sheet caption
Fair Value
Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts
Accounts receivable, net
Accounts payable and accrued liabilities
Interest rate swap contracts
Accounts receivable, net
Accounts payable and accrued liabilities
The Effect of Derivative Instruments on Accumulated Other Comprehensive Loss
Derivatives in cash flow hedging relationships
Gain (loss) recognized in Other comprehensive income (loss)
Year ended August 31,
Location of gain (loss) reclassified from AOCL into income
Gain (loss) reclassified from AOCL into income
Year ended August 31,
(In millions)
Foreign exchange contracts
Revenue
Foreign exchange contracts
Cost of revenue
Interest rate swap contracts
Interest and foreign exchange
The Effect of Derivative Instruments on the Consolidated Statements of Income
Derivatives in cash flow hedging relationships
Location of gain (loss)
Gain (loss) recognized in income on derivatives
Year ended August 31,
(In millions)
Foreign exchange contracts
Interest and foreign exchange
The following table presents the location and amounts in the Consolidated Statements of Income in which the effects of derivatives in cash flow hedging relationships were recorded:
For the Year Ended August 31,
(In millions)
Total Revenue
Gain (loss) on cash flow hedges in Revenue
Foreign exchange contracts:
Gain (loss) reclassified from AOCL
Amount excluded from effectiveness testing
Total Cost of revenue
Gain (loss) on cash flow hedges in Cost of revenue
Foreign exchange contracts:
Gain (loss) reclassified from AOCL
Amount excluded from effectiveness testing
Total Interest and foreign exchange
Gain (loss) on cash flow hedges in Interest and foreign exchange
Interest rate swap contracts:
Gain reclassified from AOCL
Note 13 — Equity
Stock Incentive Plan
The 2021 Stock Incentive Plan was approved by shareholders on January 6, 2021. The plan replaced the 2017 Amended and Restated Stock Incentive Plan. The 2021 Stock Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, restricted shares, restricted stock units and stock appreciation rights. As of August 31, 2025 , 2.2 million shares were authorized under the 2021 Stock Incentive Plan, which includes 0.7 million shares previously reserved under the 2017 Amended and Restated Stock Incentive Plan.
On August 31, 2025 , there were 0.8 million shares available for grant compared to 1.0 million and 1.2 million shares available for grant as of August 31, 2024 and 2023, respectively. There are no stock options, restricted shares, or stock appreciation rights outstanding as of August 31, 2025. The Company currently grants restricted stock units. Shares associated with restricted stock unit awards are not considered legally outstanding shares of common stock until they are issued following vesting. Restricted stock unit awards, including performance based awards, are entitled to participate in dividends.
During the years ended August 31, 2025, 2024, and 2023 , the Company awarded restricted stock unit grants totaling 0.3 million, 0.4 million, and 0.5 million shares, respectively, which include performance based grants and dividend equivalent rights. For performance based awards granted during the years ended August 31, 2025, 2024, and 2023 , the performance metrics included the Company’s total shareholder return relative to a designated peer group (Relative TSR), weighted 20 %, in addition to an EBITDA metric, weighted 60 %, and a return on invested capital (ROIC) metric, weighted 20 %. Performance based award share payouts depend on the extent to which the performance goal has been achieved. The number of shares that a participant receives is equal to the award granted multiplied by a payout factor, which ranges from 0 % to a maximum of 200 %.
The fair value of awards granted, including performance based grants that did not contain a Relative TSR market condition, was determined based on the market closing price of the underlying shares on the date of grant. For the
awards granted with a Relative TSR market condition, the Company estimates the fair value using a Monte-Carlo simulation model utilizing the following key assumptions for such awards:
For the Year Ended August 31,
Expected share price volatility (GBX)
Risk-free rate of return
The fair value of awards granted was $ 17.5 million, $ 17.3 million, and $ 12.4 million for the years ended August 31, 2025, 2024 and 2023 , respectively. The grant date fair value of stock awarded under restricted stock unit grants is amortized as compensation expense over the vesting period of one to three years . Compensation expense recognized related to restricted stock unit grants for the years ended August 31, 2025, 2024 and 2023 was $ 17.5 million, $ 17.1 million, and $ 12.1 million, respectively, and was recorded in Selling and administrative and Cost of revenue on the Consolidated Statements of Income. Unamortized compensation cost related to restricted stock unit grants was $ 18.0 million as of August 31, 2025 , which is expected to be recognized over a weighted average period of approximately two years .
During the year ended August 31, 2025 , a total of 0.4 million restricted stock units vested, including shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. The following table summarizes the activity for the Company’s restricted stock unit grants, including performance based grants, under the 2021 Stock Incentive Plan:
(in thousands, except per unit amounts)
Number of Units
Weighted Average Grant Date Fair Value
Outstanding as of August 31, 2024
Granted 1
Incremental shares earned for performance 2
Vested 3
Forfeited
Outstanding as of August 31, 2025
1 Includes 143 thousand time-based and 169 thousand performance-based restricted stock unit awards.
2 For the 2022-2024 performance period, incremental shares earned includes 55 thousand additional shares awarded to participants based on the EBITDA criteria for which actual performance resulted in a payout above target.
3 Includes 171 thousand time-based and 192 thousand performance-based restricted stock units.
Share Repurchase Program
The Board of Directors has authorized the Company to repurchase in aggregate up to $ 100.0 million of the Company’s common stock. The program may be modified, suspended, or discontinued at any time without prior notice. On January 8, 2025, the Board of Directors authorized the extension of the existing share repurchase program from January 31, 2025 to January 31, 2027 and renewed the amount remaining for repurchase to $ 100.0 million. Under the share repurchase program, shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. The timing and amount of purchases is based upon market conditions, securities law limitations and other factors. The share repurchase program does not obligate the Company to acquire any specific number of shares in any period.
During the year ended August 31, 2025 , the Company purchased a total of 517 thousand shares for $ 22.2 million under the current authorization of the share repurchase program. As of August 31, 2025 , the amount remaining for repurchase under the current authorization of the share repurchase program was $ 77.8 million. During the years ended August 31, 2024 and 2023, the Company purchased 38 thousand shares for $ 1.3 million and 1.9 million shares for $ 56.9 million, respectively. Excise tax on shares repurchased is assessed at one percent of the fair market value of net shares repurchased and does not reduce the remaining share repurchase authorization. For the years ended August 31, 2025 and 2023, the Company recorded excise tax on shares repurchased of $ 0.1 million and $ 0.5 million, respectively, to Additional paid-in capital. No excise tax was recorded on shares repurchased for the year ended August 31, 2024.
Note 14 — Earnings Per Share
The shares used in the computation of the Company’s basic and diluted earnings per common share are reconciled as follows:
Year Ended August 31,
(In thousands)
Weighted average basic common shares outstanding
Dilutive effect of 2.875 % Convertible notes, due 2024 1
Dilutive effect of 2.875 % Convertible notes, due 2028 2
Dilutive effect of restricted stock units 3
Weighted average diluted common shares outstanding
1 The 2.875 % Convertible notes due 2024 were retired on February 1, 2024.
2 The dilutive effect of the 2.875 % Convertible notes, due 2028 was excluded for the years ended August 31, 2025, 2024 and 2023 as the average stock price was less than the applicable conversion price and therefore was considered anti-dilutive. As these notes require cash settlement for the principal, only a premium is potentially dilutive under the "if converted" method as further discussed below.
3 Restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved, are included in weighted average diluted common shares outstanding when the Company is in a net earnings position.
Basic EPS is computed by dividing Net earnings attributable to Greenbrier by weighted average basic common shares outstanding.
For the years ended August 31, 2025, 2024, and 2023 , diluted EPS was calculated using the more dilutive of two methods. The first method includes the dilutive effect, using the treasury stock method, associated with restricted stock units and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved. The second method supplements the first by also including the “if converted” effect of the 2.875 % Convertible notes due 2024, during the periods in which they were outstanding, and shares underlying the 2.875 % Convertible notes due 2028, when there is a conversion premium. Under the “if converted” method, debt issuance and interest costs, both net of tax, associated with the convertible notes due 2024 are added back to net earnings and the share count is increased by the shares underlying the convertible notes.
(In millions, except number of shares which are reflected in
Year Ended August 31,
thousands and per share amounts)
Net earnings attributable to Greenbrier
Weighted average basic common shares outstanding
Basic earnings per share
Net earnings attributable to Greenbrier
Add back:
Interest and debt issuance costs on the 2.875 % convertible notes due 2024, net of tax
Earnings before interest and debt issuance costs on the 2.875 % convertible notes due 2024
Weighted average diluted common shares outstanding
Diluted earnings per share (1)
1 Diluted earnings per share for the year ended August 31, 2024 and 2023 was calculated as follows:
Earnings before interest and debt issuance costs on the 2.875 % convertible notes due 2024
Weighted average diluted common shares outstanding
Note 15 — Related Party Transactions
The Company has a 41.9 % interest in Axis, a joint venture. The Company purchased $ 9.4 million, $ 8.8 million and $ 8.7 million of railcar components from Axis during the years ended August 31, 2025, 2024 and 2023, respectively.
The Company held a 40 % interest in the common equity of an unconsolidated affiliate that bought and sold railcar assets that are leased to third parties. As of August 31, 2023, the Company no longer held an investment in this entity. Upon sale of railcars to this entity from Greenbrier, 60 % of the related revenue and margin was recognized and 40 % was deferred until the railcars were ultimately sold by the entity. The Company recognized $ 15.1 million in Revenue on railcars sold out of the leasing warehouse during the year ended August 31, 2023.
Note 16 — Income Taxes
Components of income tax expense were as follows:
For the Year Ended August 31,
(In millions)
Current
Federal
State
Foreign
Deferred
Federal
State
Foreign
Change in valuation allowance
Income tax expense
Earnings before income tax and earnings from unconsolidated affiliates for the years ended August 31, 2025, 2024 and 2023 were $ 255.3 million, $ 111.4 million and $ 32.2 million, respectively, for our domestic U.S. operations and $ 29.1 million, $ 112.3 million and $ 58.8 million, respectively for our foreign operations.
The reconciliation between effective and statutory tax rates on operations is as follows:
For the Year Ended August 31,
Federal statutory rate
State income taxes, net of federal benefit
Foreign operations
U.S. tax on foreign earnings
U.S. impact of foreign branch
Permanent differences
BEAT and minimum taxes
Change in valuation allowance
Unrecognized tax benefits
Noncontrolling interest in flow-through entity
Credits
Other
Effective tax rate
Due to the enactment of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, the Company filed a Federal claim to carryback fiscal year 2021 tax losses to the fiscal years 2016 through 2018, allowing the recovery of Federal income taxes previously paid at rates of 35.0 % or 25.7 %, rather than the current Federal rate of
21.0 % in effect beginning with the fiscal year 2019. As of August 31, 2025 , income taxes receivable includes a balance of $ 22.9 million related to the carryback of the 2021 loss.
On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA). As a result, we recorded an increase of deferred tax liabilities and decrease of income tax payable related to the provisions for 100 % bonus depreciation on assets placed in service after January 19, 2025. Additionally, our effective tax rate increased due to the impact of non-deductible depreciation in the calculation of our BEAT liability. Many other provisions of the OBBBA will take effect in future tax years, and we are currently assessing their potential impact.
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities were as follows:
As of August 31,
(In millions)
Deferred tax assets:
Accrued payroll and related liabilities
Accrued liabilities
Deferred revenue
Inventories and other
Maintenance and warranty accruals
Lease liability
Interest expense
Net operating losses
Investment, asset tax credits and other
Valuation allowance
Deferred tax liabilities:
Fixed assets
Intangibles
Right-of-use asset
Other
Net deferred tax liability
As of August 31, 2025 , the Company had $ 5.6 million of federal net operating loss carryforwards that do not expire, $ 16.3 million of federal credit carryforwards that will begin to expire in 2028 , $ 40.2 million of state net operating loss carryforwards that do not expire, $ 108.5 million of state net operating loss carryforwards that will begin to expire in 2031 , $ 16.1 million of foreign net operating loss carryforwards that begin to expire in 2027 and $ 27.8 million of foreign net operating loss carryforwards that do not expire. The Company has placed a valuation allowance of $ 13.9 million against the deferred tax assets for which a benefit is not more likely than not to be realized, including those for loss and credit carryforwards unlikely to be used before their expiration dates or where the possibility of utilization is remote. The net decrease in the total valuation allowance was approximately $ 2.0 million for the year ended August 31, 2025.
The Company's cumulative undistributed foreign earnings, if repatriated, would be accompanied by foreign withholdings taxes. However, the Company does not intend to repatriate these foreign earnings and continues to assert that its foreign earnings are indefinitely reinvested. As a result, it has not recorded a liability for foreign withholding taxes associated with undistributed foreign earnings. The determination of the unrecognized deferred tax liability on these earnings is not practicable due to the complexity and variety of assumptions necessary to estimate the tax.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
For the Year Ended August 31,
(In millions)
Unrecognized Tax Benefit – Opening Balance
Gross increases – tax positions in prior period
Lapse of statute of limitations
Unrecognized Tax Benefit – Ending Balance
All unrecognized tax benefits, when recognized, would impact the effective tax rate.
Interest and penalties related to income taxes are classified as a component of Income tax expense. As of August 31, 2025 and 2024 , the total amount of accrued interest was $ 1.2 million and $ 0.8 million, respectively. Income tax expense for the years ended August 31, 2025, 2024 and 2023 included interest expense related to unrecognized tax benefits of $ 0.4 million, $ 0.2 million and $ 0.5 million, respectively.
The Company has not accrued any penalties on the unrecognized tax benefits and anticipates a decrease of approximately $ 1.3 million within the next twelve months relating to settlements with taxing authorities. The Company is subject to taxation in the U.S. and in various states and foreign jurisdictions. The Company is effectively no longer subject to U.S. Federal examination for fiscal years ending before 2022, to state and local examinations before 2021, or to foreign examinations before 2017. The Company currently has ongoing examinations in Poland and Romania.
Note 17 — Segment Information
The Company operates in two reportable segments: Manufacturing and Leasing & Fleet Management. See Note 1 - Nature of Operations to the Consolidated Financial Statements for additional information on the change in the Company’s reportable segments effective September 1, 2024. Prior period segment results have been recast to reflect the Company’s new reportable segments.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company’s CODM is Greenbrier’s President and Chief Executive Officer. Segment earnings from operations is the measure of profit or loss used by the CODM. As part of the Company’s budgeting and forecasting process, the CODM uses Segment earnings from operations to allocate capital and resources to each segment and considers variances from budget, forecasts, and prior period results to assess current period performance for each segment. Segment earnings from operations includes all revenues, expenses, and net gains or losses on asset dispositions that are directly attributable to each segment. Corporate expenses include selling and administrative costs not directly attributable to the reportable segments due to the Company’s integrated business model and therefore are not allocated to Segment earnings from operations. The Company does not allocate Interest and foreign exchange, Earnings from unconsolidated affiliates, or Income tax benefit (expense) for either external or internal reporting purposes. Intersegment sales and transfers are valued as if the sales or transfers were to third parties. Related revenue and margin are eliminated in consolidation and therefore are not included in consolidated results in the Company’s Consolidated Financial Statements.
The information in the following tables is derived directly from the segments’ internal financial reports used for corporate management purposes, which includes the significant expense categories that are regularly reviewed by the CODM.
For the Year Ended August 31, 2025
(In millions)
Manufacturing
Leasing & Fleet Management
Total
Revenue
Revenue from external customers
Intersegment revenue
Elimination of intersegment revenues
Total consolidated revenues
Cost of revenue
Cost of revenue from external customers
Intersegment cost of revenue
Elimination of intersegment margin
Margin
Selling and administrative
Net loss (gain) on disposition of equipment
Segment earnings from operations
For the Year Ended August 31, 2024
(In millions)
Manufacturing
Leasing & Fleet Management
Total
Revenue
Revenue from external customers
Intersegment revenue
Elimination of intersegment revenues
Total consolidated revenues
Cost of revenue
Cost of revenue from external customers
Intersegment cost of revenue
Elimination of intersegment margin
Margin
Selling and administrative
Net loss (gain) on disposition of equipment
Segment earnings from operations
For the Year Ended August 31, 2023
(In millions)
Manufacturing
Leasing & Fleet Management
Total
Revenue
Revenue from external customers
Intersegment revenue
Elimination of intersegment revenues
Total consolidated revenues
Cost of revenue
Cost of revenue from external customers
Intersegment cost of revenue
Elimination of intersegment margin
Margin
Selling and administrative
Net gain on disposition of equipment
Asset impairment, disposal, and exit costs, net
Segment earnings from operations
Reconciliation of Segment earnings from operations to Earnings before income tax and earnings from unconsolidated affiliates:
For the Year Ended August 31,
(In millions)
Segment earnings from operations
Manufacturing
Leasing & Fleet Management
Corporate
Earnings from operations
Interest and foreign exchange
Earnings before income tax and earnings from unconsolidated affiliates
The following table presents selected financial information by segment.
Year Ended August 31,
(In millions)
Assets:
Manufacturing
Leasing & Fleet Management
Unallocated, including cash
Depreciation and amortization:
Manufacturing
Leasing & Fleet Management
Capital expenditures:
Manufacturing
Leasing & Fleet Management
The following table summarizes selected geographic information.
Year Ended August 31,
(In millions)
Revenue 1 :
Foreign
Assets:
Mexico
Europe
1 Revenue is presented on the basis of geographic location of customers.
Note 18 — Customer Concentration
Customer concentration is defined as a single customer that accounts for more than 10% of Consolidated Revenue or Accounts receivable, net. In 2025 , revenue from two customers represented 14 % and 12 % of Consolidated Revenue. In 2024 , revenue from one customer represented 10 % of Consolidated Revenue. In 2023 , revenue from two customers represented 21 % and 10 % of Consolidated Revenue. No other customers accounted for more than 10% of Consolidated Revenue for the years ended August 31, 2025, 2024, or 2023 . No customers had a balance that individually equaled or exceeded 10% of the Consolidated Accounts receivable, net balance at August 31, 2025 . One customer had a balance that individually equaled or exceeded 10% of Accounts receivable, net, representing 14 % of the Consolidated Accounts receivable, net balance at August 31, 2024 .
Note 19 — Lease Commitments
Lessor
Equipment on operating leases is reported net of accumulated depreciation of $ 123.0 million, $ 93.4 million and $ 68.0 million as of August 31, 2025, 2024, and 2023 , respectively. Depreciation expense was $ 36.4 million, $ 36.0 million and $ 26.0 million for the years ended August 31, 2025, 2024, and 2023 respectively. In addition, certain railcar equipment leased-in by the Company on operating leases is subleased to customers under non-cancelable operating leases with lease terms ranging from one to seven years . Operating lease rental revenues included in the Company’s Consolidated Statements of Income for the years ended August 31, 2025, 2024, and 2023 was $ 139.2 million, $ 121.1 million and $ 91.9 million respectively, which included $ 22.3 million, $ 19.9 million, and $ 19.3 million respectively, of revenue as a result of daily, monthly or car hire utilization arrangements.
Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases as of August 31, 2025, will mature as follows:
(In millions)
Thereafter
Lessee
The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements. As of and for the years ended August 31, 2025, 2024, and 2023, finance leases were not a material component of the Company's lease portfolio. The Company’s real estate and equipment leases have remaining lease
terms ranging from less than one year to 73 years , with some including options to extend up to 10 years . T he Company recognizes a lease liability and corresponding ROU asset based on the present value of lease payments. To determine the present value of lease payments, as most of its leases do not provide a readily determinable implicit rate, the Company’s incremental borrowing rate is used to discount the lease payments based on information available at the lease commencement date. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when estimating its incremental borrowing rate.
The components of operating lease costs were as follows:
For the Year Ended August 31,
(In millions)
Operating lease expense
Short-term lease expense
Total
Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms as of August 31, 2025 will mature as follows:
(In millions)
Thereafter
Total lease payments
Less: Imputed interest
Total lease obligations
The table below presents additional information related to the Company’s operating leases:
As of August 31,
(In millions)
Weighted average remaining lease term
10.6 years
10.8 years
Weighted average discount rate
Supplemental cash flow information related to leases were as follows:
For the Year Ended August 31,
(In millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
ROU assets obtained in exchange for lease liabilities:
Operating leases
Note 20 — Commitments and Contingencies
Portland Harbor Superfund Site
The Company’s former Portland, Oregon manufacturing facility (Portland Property) is located adjacent to the Willamette River. In December 2000, the U.S. Environmental Protection Agency (EPA) classified portions of the Willamette River bed and certain riverbanks known as the Portland Harbor, including the portion fronting the Portland Property, as a federal "National Priority List" or "Superfund" site due to sediment contamination (Portland Harbor Superfund Site). The Company and more than 140 other parties have received a "General Notice" of potential liability from the EPA relating to the Portland Harbor Superfund Site. The letter advised the Company that it may be liable for the costs of investigation and remediation (which liability may be joint and several with other potentially responsible parties) as well as for natural resource damages resulting from releases of hazardous substances to the site. Ten private and public entities, including the Company (the Lower Willamette Group or LWG), signed an Administrative Order
on Consent (AOC) to perform a remedial investigation/feasibility study (RI/FS) of the Portland Harbor Superfund Site under EPA oversight, and several additional entities did not sign such consent, but nevertheless contributed financially to the effort. The EPA-mandated RI/FS was produced by the LWG and cost over $ 110 million during a 17-year period. The Company bore a percentage of the total costs incurred by the LWG in connection with the investigation. The Company’s aggregate expenditure during the 17-year period was not material. Some or all of any such outlay may be recoverable from other responsible parties. The EPA issued its Record of Decision (ROD) for the Portland Harbor Superfund Site on January 6, 2017 and accordingly on October 26, 2017, the AOC was terminated.
The EPA's January 6, 2017 ROD identifies a cleanup remedy that the EPA estimates will take 13 years of active remediation, followed by 30 years of monitoring with an estimated undiscounted cost of $ 1.7 billion. The EPA typically expects its cost estimates to be accurate within a range of - 30 % to + 50 %, but this ROD states that changes in costs are likely to occur. The ROD does not address responsibility for the costs of remedial action, nor does it allocate such costs among the potentially responsible parties. The EPA has identified several work areas within the ROD remedial action area. One of the units, currently referred to as the river mile 9 West work area (RM9W) includes river sediments offshore and downstream of the Portland Property. It also includes a large portion of the Portland Property's riverbanks. The ROD does not break down total remediation costs by work area. The EPA requested that potentially responsible parties enter AOCs during 2019 agreeing to conduct remedial design studies. Some parties have signed AOCs, including one party with respect to RM9W. Additionally, at some portions of the Portland Harbor Superfund Site, the EPA is conducting the remedial design work. Remedial action will follow remedial design. The Company has not signed an AOC in connection with remedial design, but is assisting in funding a portion of the RM9W remedial design.
Separate from the process described above, which focused on the type of remediation to be performed at the Portland Harbor Superfund Site and the schedule for such remediation, approximately 100 parties, including the State of Oregon and the federal government, are participating in a non-judicial, mediated allocation process to try to allocate costs associated with remediation of the Portland Harbor Superfund Site. The Company will continue to participate in the allocation process. Approximately 100 additional parties signed tolling agreements related to such allocations. On April 23, 2009, the Company and the other AOC signatories filed suit against 69 other parties due to a possible limitations period for some such claims. Arkema Inc. et al v. A & C Foundry Products, Inc. et al , U.S. District Court for the District of Oregon, Case #3:09-cv-453-PK. All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has been stayed by the court to allow the allocation to proceed, currently through January 14, 2028.
On January 30, 2017, the Confederated Tribes and Bands of the Yakama Nation sued 30 parties, including the Company as well as the federal government and the State of Oregon, for costs it incurred in assessing alleged natural resource damages to the Lower Columbia River and Multnomah Channel from contaminants deposited at the Portland Harbor Superfund Site. Confederated Tribes and Bands of the Yakama Nation v. Air Liquide America Corp., et al., U.S. District Court for the District of Oregon, Portland Division, Case No. 3:17-CV-00164. The complaint does not specify the amount of damages the plaintiff will seek. The Yakama litigation is stayed pending completion of the allocation process under supervision of the Arkema court, currently through January 14, 2028.
On November 20, 2024, the Company, as part of a group of about 60 recipients, received a “Special Notice” letter (SNL) from the EPA. The Company timely responded by the May 30, 2025 response deadline. The EPA routinely sends SNLs when it is ready to formally start negotiations with potentially responsible parties in an effort to reach a settlement to conduct or finance the remedial action. Such letters trigger the start of an enforcement moratorium during which time the EPA agrees not to unilaterally order any potentially responsible parties to conduct the remediation. Under this process, if settlement is reached, the settlement terms will normally be set out in a consent decree that is lodged in federal court. The terms of the SNL that the Company received are settlement confidential. The EPA has publicly stated that it issued the letters now because it wants a seamless transition from the remedial-design phase to the remediation-implementation phase, that more potentially responsible parties may receive such a letter, and that the agency expects the settlement negotiations to take up to two years. Some allocation participants, including the Company, are discussing remedial action consent decree terms with the EPA and the U.S. Department of Justice.
Responsibility for funding and implementing the EPA's selected cleanup remedy will be determined at an unspecified later date as part of the allocation process. Based on the investigation to date, the Company believes that it did not contribute in any material way to contaminants of concern in the river sediments or the damage of natural resources
in the Portland Harbor Superfund Site and that the damage in the area of the Portland Harbor Superfund Site adjacent to the Portland Property precedes the Company’s ownership of the Portland Property. Because these environmental investigations are still underway, sufficient information is currently not available to determine the Company’s liability, if any, for the cost of any required remediation or restoration of the Portland Harbor Superfund Site or to estimate a range of potential loss. Based on the results of the pending investigations and future assessments of natural resource damages, the Company may be required to incur costs associated with additional phases of investigation or remedial action, and may be liable for damages to natural resources.
On June 9, 2025, the natural resources trustees for the Portland Harbor Superfund Site, consisting of the U.S., on behalf of the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce and the U.S. Department of the Interior; the State of Oregon, on behalf of the Oregon Department of Fish and Wildlife; and several tribes moved to enter two consent decrees that were lodged with the Oregon district court on November 1, 2023 to resolve trustees’ natural resources claims in a complaint filed on the same day. United States of America et al. v ACF Industries LLC et al. , U.S. District Court for the District of Oregon, Case #3:23-cv-01603-YY. The Company is not a defendant under the 2023 complaint nor a party to either of the consent decrees. The consent decrees would resolve the defendants’ liability for natural resource damages at the Portland Harbor Superfund Site before the conclusion of the remedial design and allocation processes. On July 28, 2025, the Company, along with several other potentially responsible parties at the Portland Harbor Superfund Site, filed motions to intervene and to the entry of the consent decrees. The court has granted the motions to intervene. Oral was held on September 29, 2025. The court has not yet issued an opinion.
Oregon Department of Environmental Quality (DEQ) Regulation of Portland Property
The Company entered into a Voluntary Cleanup Agreement with the Oregon Department of Environmental Quality (DEQ) in which the Company agreed to conduct an investigation of whether, and to what extent, past or present operations at the Portland Property may have released hazardous substances into the environment. The Company has also signed an Order on Consent with the DEQ to finalize the investigation of potential onsite sources of contamination that may have a release pathway to the Willamette River. The Company’s aggregate expenditure has not been material, however it could incur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties.
Sale of Portland Property
The Company sold the Portland Property in May 2023, but remains potentially liable with respect to the above matters. Any of these matters could adversely affect the Company's business and Consolidated Financial Statements. However, any contamination or exacerbation of contamination that occurs after the sale of the Portland Property will be the liability of the current and future owners and operators of the Portland Property.
Other Litigation, Commitments and Contingencies
From time to time, Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcomes of which cannot be predicted with certainty. While the ultimate outcome of such legal proceedings cannot be determined at this time, the Company believes that the resolution of pending litigation will not have a material adverse effect on the Company's Consolidated Financial Statements.
As of August 31, 2025 , the Company had outstanding letters of credit aggregating to $ 5.4 million associated with performance guarantees, facility leases and workers compensation insurance.
Note 21 – Fair Value Measures
Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring a fair value as follows:
Level 1 - observable inputs such as unadjusted quoted prices in active markets for identical instruments;
Level 2 - inputs, other than the quoted market prices in active markets for similar instruments, which are observable, either directly or indirectly; and
Level 3 - unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.
Assets and liabilities measured at fair value on a recurring basis as of August 31, 2025 are:
(In millions)
Total
Level 1
Level 2 (1)
Level 3
Assets:
Derivative financial instruments
Nonqualified savings plan investments
Cash equivalents
Liabilities:
Derivative financial instruments
Assets and liabilities measured at fair value on a recurring basis as of August 31, 2024 are:
(In millions)
Total
Level 1
Level 2 (1)
Level 3
Assets:
Derivative financial instruments
Nonqualified savings plan investments
Cash equivalents
Liabilities:
Derivative financial instruments
1 Level 2 assets include derivative financial instruments which are valued based on significant observable inputs. See Note 12 - Derivative Instruments to the Consolidated Financial Statements for further discussion.
Note 22 – Fair Value of Financial Instruments
The estimated fair values of financial instruments and the methods and assumptions used to estimate such fair values are as follows:
(In millions)
Carrying
Amount 1
Estimated
Fair Value
(Level 2)
Debt as of August 31, 2025
Debt as of August 31, 2024
1 Carrying amount disclosed in this table excludes credit facility balances, other notes payable, and debt discount and issuance costs.
The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities is a reasonable estimate of fair value of these financial instruments. Estimated rates currently available to the Company for debt with similar terms and remaining maturities and current market data are used to estimate the fair value.
