GREENBRIER COMPANIES INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

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Executive Summary



The financial results for 2021 were representative of the challenges of the
current market conditions. The decrease in operating profits compared to the
prior year was primarily attributable to the cyclical decrease in economic
activity in the freight rail equipment market which began prior to the emergence
of COVID-19 (Cyclical Downturn). The Cyclical Downturn intensified due to the
COVID-19 Events (as defined below).



Some of the challenges that have developed as a result of the cyclical downturn and COVID-19 events include:



  • Temporary decline in demand.




    •   An increase in the price and the shortage of certain materials and
        components.




  • Shipping and transportation delays.




  • Shortage of skilled labor.



We have adhered to disciplined management during this critical time. Our basic strategy since March 2020 has been and continues to be:



  1) Maintain a strong liquidity base and balance sheet.




    2)  Continue efficient operations throughout the COVID-19 and economic crises
        by safely operating our facilities while generating cash.




    3)  Prepare for emerging economic recovery and forward momentum in our
        markets. We are currently operating in this phase. We believe we are
        well-positioned to navigate the immediate challenges of increasing

safe production rate amid emerging COVID variants, while ensuring

        labor and supply chain continuity.




We strengthened our financial position through strategic spending reductions
which included reducing our selling and administrative expense by $12.9 million
during 2021 compared to the prior year.




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Despite a difficult operating environment, we achieved the following achievements in 2021:

• We gradually increased our profits during the year. Growth in

result is due to higher revenues associated with increased deliveries

        (see above) as we navigate the recovery phase and as we executed on the
        tax benefits allowable under the CARES Act.



• Obtaining new orders for wagons of 17,200 units valued at around $ 1.8

        billion.



• Beginning of operations GBX rental execute our rental strategy

develop our portfolio of leased wagons mainly built by Greenbrier

while generating a flow of additional tax-efficient cash annuities

flow and reduce our exposure to re-ordering and delivery of wagons

cycle. Following our rental strategy, we closed a $ 300 million

non-recourse warehouse credit facility sold or contributed $ 197.1

million railway assets at GBX rental bringing our global rental fleet

        portfolios to $609.8 million.



• Debt and credit facilities refinanced in a timely manner on favorable terms

        interest rates and extended maturities to strengthen our liquidity
        position and balance sheet. This included the following:




          o   We refinanced certain debt by issuing $374 million of new
              convertible notes due 2028 and retiring a total of $277

million

              convertible notes due 2024. In connection with the 

refinancing, we

              repurchased $20 million of our common stock outside of our share
              repurchase program.



o We refinanced and extended our $ 600 million domestic turning

              facility and $292 million term loan to 2026 while our Leasing &
              Services' non-recourse $200 million term loan was refinanced and
              extended to 2027.




    •   Increased our backlog compared to the prior year by approximately 2,000
        units and $390 million.
























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Manufacturing Backlog



As seen above, our backlog remains strong at August 31, 2021 with an increase in
backlog value, units and average selling price compared to the prior year. In
addition, our backlog includes railcar deliveries into 2025 and marine
deliveries into 2023. Our railcar backlog was 26,600 units with an estimated
value of $2.81 billion as of August 31, 2021. Backlog units for lease may be
syndicated to third parties or held in our lease fleet depending on a variety of
factors. Multi-year supply agreements are a part of rail industry practice. A
portion of the orders included in backlog reflects an assumed product mix. Under
terms of the orders, the exact mix and pricing will be determined in the future,
which may impact backlog. Approximately 7% of backlog units and 6% of estimated
backlog value as of August 31, 2021 was associated with our Brazilian
manufacturing operations which is accounted for under the equity method. Marine
backlog as of August 31, 2021 was $70 million.

Our backlog of railcar units and marine vessels 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.



COVID-19 and global economic activity



We continue to actively monitor and manage the impacts on our business due to
the COVID-19 coronavirus pandemic, the recovery from the significant decline in
global economic activity and governmental reactions to these historic events
(COVID-19 Events).



The reopening of the economy has presented a mismatch of supply and demand,
interruptions of supply lines, and inefficient or overloaded logistics
platforms, among other factors that are causing the markets for the inputs to
our business to fail to operate effectively or efficiently (including sectoral
price inflation). Competition for, and costs related to recruiting and
retaining, skilled labor are increasing. As described in Part I, Item 1A "Risk
Factors" of this Annual Report on Form 10-K, COVID-19 Events may have a material
negative impact on our business, liquidity, results of operations, and stock
price. Beyond these general observations, we are unable to predict when, how, or
with what magnitude COVID-19 Events will negatively impact our business.


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Financial Overview



Revenue, Cost of revenue, Margin and Earnings from operations (operating profit)
presented below, include amounts from external parties and exclude intersegment
activity that is eliminated in consolidation.



                                                            Years ended August 31,
(In thousands, except per share amounts)                     2021            2020
Revenue:
Manufacturing                                             $ 1,329,987     $ 2,349,971
Wheels, Repair & Parts                                        298,330         324,670
Leasing & Services                                            119,664         117,548
                                                            1,747,981       2,792,189
Cost of revenue:
Manufacturing                                               1,189,246       2,065,169
Wheels, Repair & Parts                                        280,391         302,189
Leasing & Services                                             46,737          71,700
                                                            1,516,374       2,439,058
Margin:
Manufacturing                                                 140,741         284,802
Wheels, Repair & Parts                                         17,939          22,481
Leasing & Services                                             72,927          45,848
                                                              231,607         353,131
Selling and administrative                                    191,813         204,706
Net gain on disposition of equipment                           (1,176 )       (20,004 )
Earnings from operations                                       40,970       

168,429

Interest and foreign exchange                                  43,263       

43,619

Net loss on extinguishment of debt                              6,287       

Profit (loss) before income tax and profit from

  unconsolidated affiliates                                    (8,580 )     

124,810

Income tax benefit (expense)                                   40,223         (40,184 )
Earnings before earnings from unconsolidated affiliates        31,643       

84,626

Earnings from unconsolidated affiliates                         3,491       

2 960

Net earnings                                                   35,134       

87,586

Net earnings attributable to noncontrolling interest           (2,657 )       (38,619 )
Net earnings attributable to Greenbrier                   $    32,477     $ 

48,967

Diluted earnings per common share                         $      0.96     $      1.46





Performance for our segments is evaluated based on operating profit. 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 benefit (expense) for either external or internal
reporting purposes.



                             Years ended August 31,
(In thousands)                 2021            2020
Operating profit (loss):
Manufacturing              $     67,124      $ 197,388
Wheels, Repair & Parts            6,452          9,032
Leasing & Services               50,021         40,927
Corporate                       (82,627 )      (78,918 )
                           $     40,970      $ 168,429





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Consolidated Results



                                     Years ended August 31,               2021 vs 2020
                                                                     Increase           %
(In thousands)                        2021            2020          (Decrease)        Change
Revenue                            $ 1,747,981     $ 2,792,189     $ (1,044,208 )        (37.4 )%
Cost of revenue                    $ 1,516,374     $ 2,439,058     $   (922,684 )        (37.8 )%
Margin (%)                                13.2 %          12.6 %            0.6 %            *
Net earnings attributable to
Greenbrier                         $    32,477     $    48,967     $    (16,490 )        (33.7 )%





* Not meaningful



Through our integrated business model, we offer a wide range of personalized products and services in each of our segments, with average selling prices and varying margins. The demand and mix of products and services provided vary from period to period, resulting in fluctuations in our results of operations.



The 37.4% decrease in revenue for the year ended August 31, 2021 as compared to
the prior year was primarily due to a 43.4% decrease in Manufacturing revenue.
The decrease in Manufacturing revenue was primarily attributed to a 43.2%
decrease in railcar deliveries.



The 37.8% decrease in the cost of sales for the fiscal year ended August 31, 2021 compared with the previous year is mainly due to a 42.4% decrease in the cost of manufacturing operating products. The decrease in the cost of manufacturing operating revenues is primarily attributable to a 43.2% decrease in railcar deliveries.



Margin as a percentage of revenue was 13.2% and 12.6% for years ended August 31,
2021 and 2020, respectively. The overall margin as a percentage of revenue was
positively impacted by an increase in Leasing & Services margin by 21.9%
primarily attributed to the benefit associated with lease modification and
transfer fees on previously syndicated railcars during the year ended August 31,
2021. This was partially offset by a decrease in Manufacturing margin by 1.5%
primarily attributed to operating at lower volumes and increased costs
associated with operating our manufacturing facilities in the COVID-19 pandemic
during the year ended August 31, 2021.



Net earnings attributable to Greenbrier is impacted by our operating activities
and noncontrolling interest primarily associated with our 50% joint ventures at
certain of our Mexican railcar manufacturing facilities and our 75% interest in
Greenbrier-Astra Rail, each of which we consolidate for financial reporting
purposes. The $16.5 million decrease in Net earnings attributable to Greenbrier
for the year ended August 31, 2021 as compared to the prior year was primarily
attributable to a decrease in margin due to a reduction in railcar deliveries.
This was partially offset by the following:



• A tax benefit for the year ended August 31, 2021 mainly attributable to

accelerated depreciation and the impact of the CARES law which allows us

carry tax losses over to years with higher tax rates, which

        a tax benefit.



• Lower profit attributable to non-controlling interests for the year ended

August 31, 2021. The net profit attributable to non-controlling interests is

deducted from net income and mainly 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.




    •   A decrease in Selling and administrative expense primarily due to
        strategic spending reductions.




For discussion related to the results of operations and changes in financial
condition for 2020 compared to 2019 refer to Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
2020 Form 10-K, which was filed with the United States Securities and Exchange
Commission on October 28, 2020.

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Manufacturing Segment



                                       Years ended August 31,              2021 vs 2020
(In thousands, except railcar                                        Increase            %
deliveries)                           2021            2020          (Decrease)         Change
Revenue                            $ 1,329,987     $ 2,349,971     $ (1,019,984 )         (43.4 )%
Cost of revenue                    $ 1,189,246     $ 2,065,169     $   (875,923 )         (42.4 )%
Margin (%)                                10.6 %          12.1 %           (1.5 )%            *
Operating profit ($)               $    67,124     $   197,388     $   (130,264 )         (66.0 )%
Operating profit (%)                       5.0 %           8.4 %           (3.4 )%            *
Deliveries                              11,300          19,900           (8,600 )         (43.2 )%





* Not meaningful


Our Manufacturing segment primarily generates revenue from manufacturing a wide
range of freight railcars through our facilities in North America and Europe. We
also manufacture a broad range of ocean-going and river barges for transporting
merchandise between ports within the United States.

Manufacturing revenue decreased $1.0 billion or 43.4% for the year ended August
31, 2021 compared to the prior year. The decrease in revenue was primarily
attributed to a 43.2% decrease in railcar deliveries. This was partially offset
by the additional revenue associated with an increase in steel and other input
costs during the year ended August 31, 2021, as many of our customer contracts
include price escalation provisions when our manufacturing costs increase.

Manufacturing cost of revenue decreased $875.9 million or 42.4% for the year
ended August 31, 2021 compared to the prior year. The decrease in cost of
revenue was primarily attributed to a 43.2% decrease in the volume of railcar
deliveries. This was partially offset by an increase in steel and other input
costs during the year ended August 31, 2021.

Manufacturing margin as a percentage of revenue decreased 1.5% for the year
ended August 31, 2021 compared to the prior year. The decrease in margin
percentage was primarily attributed to operating at lower volumes and increased
costs associated with operating our manufacturing facilities in the COVID-19
pandemic during the year ended August 31, 2021.

Manufacturing operating profit decreased $130.3 million or 66.0% for the year
ended August 31, 2021 compared to the prior year. The decrease in operating
profit was primarily attributed to a decrease in railcar deliveries and
increased costs associated with operating our manufacturing facilities during
the COVID-19 pandemic during the year ended August 31, 2021. These were
partially offset by a decrease in selling and administrative expense as part of
our strategic cost control initiatives during the year ended August 31, 2021.

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Wheels, Repair and Parts Segment


                         Years ended August 31,              2021 vs 2020
                                                         Increase           %
(In thousands)             2021            2020         (Decrease)       Change
Revenue                $    298,330      $ 324,670     $    (26,340 )       (8.1 )%
Cost of revenue        $    280,391      $ 302,189     $    (21,798 )       (7.2 )%
Margin (%)                      6.0 %          6.9 %           (0.9 )%         *
Operating profit ($)   $      6,452      $   9,032     $     (2,580 )      (28.6 )%
Operating profit (%)            2.2 %          2.8 %           (0.6 )%         *





* Not meaningful


Our Wheels, Repairs and Parts segment primarily generates revenue from the manufacturing and servicing of railcar components and the provision of railcar maintenance services.

Wheels, Repair & Parts revenue decreased $26.3 million or 8.1% for the year
ended August 31, 2021 compared to the prior year. The decrease was primarily
attributed to lower volumes due to lower demand. This was partially offset by
higher revenues associated with an increase in scrap metal pricing as we scrap
wheels and other components.

Turnover cost of wheels, repairs and parts has decreased $ 21.8 million or 7.2% for the year ended August 31, 2021 compared to the previous year. The decrease is mainly attributable to lower costs associated with reduced volumes.

Wheels, Repair & Parts margin as a percentage of revenue decreased 0.9% for the
year ended August 31, 2021 compared to the prior year. The decrease in margin
percentage was primarily attributed to operating at lower volumes and increased
costs associated with operating our facilities during the COVID-19 pandemic
during the year ended August 31, 2021. This was partially offset by an increase
in scrap metal pricing.

Wheels, Repair & Parts operating profit decreased $2.6 million or 28.6% for the
year ended August 31, 2021 compared to the prior year. The decrease in operating
profit was primarily attributed to a reduction in volumes and increased costs
associated with operating our facilities during the COVID-19 pandemic. These
were partially offset by an increase in scrap metal pricing and a decrease in
selling and administrative expense as part of our strategic cost control
initiatives during the year ended August 31, 2021.


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Leasing & Services Segment



                          Years ended August 31,           2021 vs 2020
                                                       Increase          %
(In thousands)            2021           2020         (Decrease)      Change
Revenue                $   119,664     $ 117,548     $      2,116         1.8 %
Cost of revenue        $    46,737     $  71,700     $    (24,963 )     (34.8 )%
Margin (%)                    60.9 %        39.0 %           21.9 %         *
Operating profit ($)   $    50,021     $  40,927     $      9,094        22.2 %
Operating profit (%)          41.8 %        34.8 %            7.0 %         *





* Not meaningful




Our Leasing & Services segment generates revenue from leasing railcars from our
lease fleet, providing various management services, interim rent on leased
railcars for syndication, and the sale of railcars purchased from third parties
with the intent to resell. The gross proceeds from the sale of these railcars
are recorded in revenue and the costs of purchasing these railcars are recorded
in cost of revenue.



In February 2021 we announced a refined leasing strategy to grow our owned
portfolio of leased railcars. This creates an incremental annuity stream of
tax-advantaged cash flows while reducing our exposure to the new railcar order
and delivery cycle. We are currently executing the strategy through GBX Leasing,
a joint venture which we own approximately 95%. GBX Leasing is consolidated for
financial reporting purposes within the Leasing & Services segment. GBX Leasing
is financed with non-recourse debt and levered approximately 3:1 debt to equity.
We intend that GBX Leasing will aggregate leased railcars to obtain term or
capital market financing. Greenbrier Management Services provides management
services to the GBX Leasing fleet.



Leasing & Services revenue increased $2.1 million or 1.8% for the year ended
August 31, 2021 compared to the prior year. The increase was primarily
attributed to revenue in 2021 associated with lease modification and transfer
fees on previously syndicated railcars. This was partially offset by a decrease
in the sale of railcars which we had purchased from third parties with the
intent to resell and lower interim rent on leased railcars for syndication
during 2021 compared to the prior year.



Leasing & Services cost of revenue decreased $25.0 million or 34.8% for the year
ended August 31, 2021 compared to the prior year. The decrease was primarily due
to a decrease in the volume of railcars sold that we purchased from third
parties, lower transportation costs and a decrease in costs from a reduction in
management services volume.



Leasing & Services margin as a percentage of revenue increased 21.9% for the
year ended August 31, 2021 compared to the prior year. The increase in margin
was primarily attributed to the income associated with lease modification and
transfer fees on previously syndicated railcars during the year ended August 31,
2021. Margin as a percentage of revenue for the year ended August 31, 2020 was
negatively impacted by higher sales of railcars that we purchased from third
parties which have lower margin percentages.



Leasing & Services operating profit increased $9.1 million or 22.2% for the year
ended August 31, 2021 compared to the prior year. The increase was primarily
attributed to the income associated with lease modification and transfer fees
during the year ended August 31, 2021. This was partially offset by a reduction
in net gain on disposition of equipment.

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Selling and Administrative



                                Years ended August 31,           2021 vs 2020
                                                             Increase          %
(In thousands)                  2021           2020         (Decrease)      Change
Selling and Administrative   $   191,813     $ 204,706     $    (12,893 )      (6.3 )%




Selling and administrative expense was $191.8 million or 11.0% of revenue for
the year ended August 31, 2021 and $204.7 million or 7.3% of revenue for the
year ended August 31, 2020.



The $12.9 million decrease for the year ended August 31, 2021 compared to the
prior year was primarily attributed to a decrease in controllable spending
categories as part of our strategic cost control and liquidity initiatives and a
decrease in the administrative fees paid to our joint venture partner in Mexico
due to lower levels of activity. This was partially offset by a net increase in
employee related costs due to higher incentive compensation expense in 2021
associated with current year financial performance.

Net profit on the layout of the equipment

Net gain on disposition of equipment was $1.2 million and $20.0 million for the
years ended August 31, 2021 and 2020, respectively. Net gain on disposition of
equipment primarily includes the sale of assets from our lease fleet (Equipment
on operating leases, net) that are periodically sold in the normal course of
business in order to accommodate customer demand and to manage risk and
liquidity and disposition of property, plant and equipment.

Interest and foreign exchange

Interest and foreign exchange charges consisted of the following items:


                                   Years ended August 31,         Increase (decrease)
(In thousands)                       2021             2020           2021 vs 2020
Interest and foreign exchange:
Interest and other expense       $     44,655       $ 42,386     $          

2 269

Foreign exchange (gain) loss           (1,392 )        1,233                    (2,625 )
                                 $     43,263       $ 43,619     $                (356 )





The $0.4 million decrease in interest and foreign exchange expense during the
year ended August 31, 2021 compared to the prior year was primarily attributed
to the change in the Brazilian Real's and Mexican Peso's foreign exchange rate
relative to the U.S. Dollar. This was partially offset by an increase in
interest expense during the year ended August 31, 2021 from increased
borrowings.

Net loss on extinction of debt



Net loss on extinguishment of debt was $6.3 million for the year ended August
31, 2021, which primarily relates to the retirement of $227.3 million of our
2.875% convertible notes due 2024 and $50.0 million of our 2.25% convertible
notes due 2024.


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Income tax

In 2021 our income tax benefit was $40.2 million on $8.6 million of pre-tax
loss. The tax benefit was primarily attributable to accelerated depreciation and
impact of the CARES Act which allows us to carry back tax losses to years when
tax rates were higher, resulting in a tax benefit. The tax benefit is primarily
derived from the U.S. Federal tax rate differential between 2016 - 2017 tax
rates of 35% and the current rate of 21%.

In 2020 our income tax expense was $40.2 million on $124.8 million of pre-tax
earnings for an effective tax rate of 32.2%. The tax rate was primarily derived
from the geographic mix of earnings as well as a net unfavorable discrete item
related to changes in foreign currency exchange rates for our U.S. Dollar
denominated foreign operations.

The effective tax rate can fluctuate year-to-year due to discrete items and
changes in the mix of foreign and domestic pre-tax earnings. It can also
fluctuate with changes in the proportion of pre-tax earnings attributable to our
Mexican railcar manufacturing joint venture. The joint venture is treated as a
partnership for tax purposes and, as a result, the partnership's entire pre-tax
earnings are included in Earnings (loss) before income taxes and earnings (loss)
from unconsolidated affiliates, whereas only our 50% share of the tax is
included in Income tax benefit (expense).

Profits of non-consolidated subsidiaries

Through unconsolidated affiliates, we produce railway and industrial components and hold an interest in a railcar manufacturer at Brazil. We record the after-tax results of these non-consolidated affiliates.

Earnings from unconsolidated affiliates was $3.5 million for the year ended
August 31, 2021 and primarily related to our rail component manufacturing
operations and our railcar manufacturer in Brazil. Earnings from unconsolidated
affiliates was $3.0 million for the year ended August 31, 2020 and primarily
related to our rail component manufacturing operations.

Net income attributable to non-controlling interest

Net earnings attributable to noncontrolling interest was $2.7 million and $38.6
million for the years ended August 31, 2021 and 2020, respectively, which
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.


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Liquidity and capital resources


                                                               Years Ended August 31,
(In thousands)                                                  2021             2020

Net cash provided by (used in) operating activities $ (40,525)

   $  272,261
Net cash provided by (used in) investing activities              (117,760 ) 

27,483

Net cash provided by (used in) financing activities               (22,742 ) 

216,455

Effect of exchange rate changes                                    10,336        (12,599 )
Net increase (decrease) in cash and cash equivalents and
restricted cash                                             $    (170,691 )   $  503,600




We were funded by cash generated from operations and by borrowings. TO
August 31, 2021 cash and cash equivalents and restricted cash were $ 671.4 million, a decrease in $ 170.7 million of $ 842.1 million at the end of the previous year.

Cash flow from operating activities



The change in cash provided by (used in) operating activities for 2021 compared
to 2020 was primarily due to a net change in working capital as we increase
production rates and from higher steel and other input costs. The change in cash
flow from operating activities was also due to a decrease in earnings in 2021
compared to the prior year due to lower volumes of operating activities and an
increase in income tax receivable in 2021 primarily from accelerated
depreciation and the impact of the CARES Act.



Cash flow from investing activities



Cash provided by (used in) investing activities primarily related to capital
expenditures net of proceeds from the sale of assets and investment activity
with our unconsolidated affiliates. The change in cash provided by (used in)
investing activities for 2021 compared to 2020 was primarily attributable to an
increase in capital expenditures and a reduction in proceeds from the sale of
assets. The increase in capital expenditures in 2021 primarily relate to
additions to our lease fleet as part of our leasing strategy.



                                                 Years ended August 31,
(In millions)                                      2021             2020
Capital expenditures:
Leasing & Services                             $     (103.8 )     $   (7.0 )
Manufacturing                                         (26.6 )        (48.2 )
Wheels, Repair & Parts                                 (8.6 )        (11.7 )
Total capital expenditures (gross)             $     (139.0 )     $  (66.9 )
Proceeds from sale of equipment                        15.9           83.5

Total capital expenditure (net of proceeds) $ (123.1) $ 16.6

Capital expenditures relate primarily to additions to our rental fleet and continued investments in the safety and productivity of our facilities. The proceeds from the sale of assets mainly relate to the sale of railcars from our rental fleet within Leasing & Services. The assets of our rental fleet are periodically sold in the normal course of business to meet customer demand and to manage risk and liquidity.

Capital expenditures for 2022 are expected to be approximately $275 million for
Leasing & Services, approximately $55 million for Manufacturing and
approximately $10 million for Wheels, Repair & Parts. Capital expenditures for
2022 primarily relate to continued investments into the safety and productivity
of our facilities and additions to our lease fleet reflecting our enhanced
leasing strategy.



Cash flow from financing activities



The change in cash provided by (used in) financing activities for 2021 compared
to 2020 was primarily attributed to proceeds from the issuance of debt, net of
repayments, the repurchase of common stock and a change in the net activities
with joint venture partners.



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During 2021, we refinanced certain debt by issuing $373.8 million of new
convertible notes due 2028 and retiring a total of $277.3 million of convertible
notes due 2024. We also renewed and extended our $600.0 million domestic
revolving facility and $291.9 million term loan to 2026 and renewed and extended
our Leasing & Services' $200.0 million term loan until August 2027.



GBX Leasing commenced operations in April 2021 and closed on a $300.0 million
non-recourse warehouse credit facility. As of August 31, 2021, there were $147.0
million in outstanding borrowings associated with this facility.

Dividend and share buyback program

A quarterly dividend of $ 0.27 per share was declared on 21 October 2021.

The Board of Directors has authorized our company to repurchase shares of our
common stock. The share repurchase program has an expiration date of January 31,
2023. The amount remaining for repurchase was $100.0 million as of August 31,
2021. Under the share repurchase program, shares of common stock may be
purchased on the open market or through privately negotiated transactions from
time to time. The timing and amount of purchases will be 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. There were no shares repurchased under the share repurchase
program during 2021 or 2020.

Cash flow, loan availability and credit facilities

As of August 31, 2021, we had $646.8 million in Cash and cash equivalents and
$187.9 million in available borrowings. Our significant cash balance is part of
our strategy to maintain strong liquidity as we navigate the uncertainties
around the COVID-19 pandemic and emerging economic recovery.

Senior secured credit facilities, consisting of four components, aggregated to
$1.05 billion as of August 31, 2021. We had an aggregate of $187.9 million
available to draw down under committed credit facilities as of August 31, 2021.
This amount consists of $106.5 million available on the North American credit
facility, $26.4 million on the European credit facilities and $55.0 million on
the Mexican credit facilities.

As of August 31, 2021, a $600.0 million revolving line of credit, maturing
August 2026, secured by substantially all of our U.S. assets not otherwise
pledged as security for term loans or the warehouse credit facility, was
available to provide working capital and interim financing of equipment,
principally for the Company's U.S. and Mexican operations. Advances under this
facility bear interest at LIBOR plus 1.50% or Prime plus 0.50% depending on the
type of borrowing. Available borrowings under the credit facility 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.

As of August 31, 2021, a $300.0 million non-recourse warehouse credit facility
existed to support the operations of GBX Leasing, a joint venture in which we
own approximately 95%. Advances under this facility bear interest at LIBOR plus
2.0%. The warehouse credit facility converts to a term loan in April 2023 which
matures in April 2025. As of August 31, 2021, there were $147.0 million in
outstanding borrowings associated with this facility. We intend that GBX Leasing
will aggregate leased railcars to obtain term or capital market financing.

As of August 31, 2021, lines of credit totaling $76.6 million secured by certain
of our European assets, with variable rates that range from Warsaw Interbank
Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.5% and Euro Interbank Offered
Rate (EURIBOR) plus 1.1%, were available for working capital needs of our
European manufacturing operations. The European lines of credit include $39.0
million which are guaranteed by us. European credit facilities are regularly
renewed. Currently, these European credit facilities have maturities that range
from June 2022 through October 2023.

As of August 31, 2021, our Mexican railcar manufacturing operations had three
lines of credit totaling $70.0 million. The first line of credit provides up to
$30.0 million, of which we and our joint venture partner have each guaranteed
50%. Advances under this facility bear interest at LIBOR plus 3.75% to 4.25%.
The Mexican railcar manufacturing joint venture will be able to draw amounts
available under this facility through June 2024. The second line of credit

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provides up to $35.0 million, of which we and our joint venture partner have
each guaranteed 50%. Advances under this facility bear interest at LIBOR plus
3.70%. The Mexican railcar manufacturing joint venture will be able to draw
amounts available under this facility through June 2023. The third line of
credit provides up to $5.0 million and matures in September 2022. Advances under
this facility bear interest at LIBOR plus 2.95% and are to be used for working
capital needs.

As of August 31, 2021, outstanding commitments under the senior secured credit
facilities consisted of $160.0 million in borrowings and $8.4 million in letters
of credit under the North American credit facility, $50.2 million outstanding
under the European credit facilities and $15.0 million outstanding under the
Mexican credit facilities.

Other Information



The revolving and operating lines of credit, along with notes payable, contain
covenants with respect to us and our various subsidiaries, 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, 2021, 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 repurchased $20.0
million of our company's common stock during 2021. These shares were
repurchased, in privately negotiated transactions, as part of our debt
refinancing in April 2021 and were not associated with our publicly announced
share repurchase program.

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, we enter into foreign currency
forward exchange contracts with established financial institutions to protect
the margin on a portion of foreign currency sales in firm backlog. Given the
strong credit standing of the counterparties, no provision has been made for
credit loss due to counterparty non-performance.

We anticipate that existing funds and cash generated from operations, as well as revenues from financing activities, including borrowings on existing credit facilities and long-term financings, will be sufficient to fund anticipated debt repayments. , working capital requirements, planned capital expenditures, additional investments in our subsidiaries and dividends over the next twelve months.

The following table shows our estimated future contractual cash obligations as
of August 31, 2021:



                                                                 Years Ending August 31,
(In thousands)                  Total          2022          2023         2024         2025         2026         Thereafter
Notes payable                $   915,525     $  18,907     $ 22,147     $ 69,632     $ 21,831     $ 244,258     $    538,750
Interest (1)                     133,961        23,841       22,581       21,450       20,287        19,215           26,587
Railcar & operating leases        48,285         9,643        8,809        7,518        5,070         3,795           13,450
Revolving notes                  372,176       372,176            -            -            -             -                -
                             $ 1,469,947     $ 424,567     $ 53,537     $ 98,600     $ 47,188     $ 267,268     $    578,787




(1) Part of the estimated future cash obligation relates to interest on

    variable rate borrowings.




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Due to uncertainty with respect to the timing of future cash flows associated
with our unrecognized tax benefits at August 31, 2021, we are unable to estimate
the period of cash settlement with the respective taxing authority. Therefore,
approximately $2.0 million in uncertain tax positions, including interest, have
been excluded from the contractual table above. See Note 17 to the Consolidated
Financial Statements for a discussion on income taxes.

Off-balance sheet provisions

We currently have no off-balance sheet arrangements that have or are likely to have a material impact, present or future, on our consolidated financial statements.

Critical accounting conventions and 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.

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 liabilities for uncertain tax positions based on whether evidence
indicates that it is more likely than not that the position will be sustained on
audit.

It is inherently difficult and subjective to estimate whether a valuation
allowance or uncertain tax position is necessary. In making this assessment,
management may analyze future taxable income, reversing temporary differences
and/or ongoing tax planning strategies. Should a change in circumstances lead to
a change in judgment about the realizability of deferred tax assets in future
years, the Company would adjust related valuation allowances in the period that
the change in circumstances occurs, along with a corresponding increase or
charge to income. Changes in tax law or court interpretations may result in the
recognition of a tax benefit or an additional charge to the tax provision. For
further information regarding income taxes, see Note 17 of the Consolidated
Financial Statements.

Warranty accruals - Warranty costs to cover a defined warranty period are
estimated and charged to operations. The estimated warranty cost is based on
historical 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.

These estimates are inherently uncertain as they are based on historical data
for existing products and judgment for new products. If warranty claims are made
in the current period for issues that have not historically been the subject of
warranty claims and were not taken into consideration in establishing the
accrual or if claims for issues already considered in establishing the accrual
exceed expectations, warranty expense may exceed the accrual for that particular
product. Conversely, there is the possibility that claims may be lower than
estimates. The warranty accrual is periodically reviewed and updated based on
warranty trends. However, as we cannot predict future claims, the potential
exists for the difference in any one reporting period to be material. For
further information regarding the warranty accrual, see Note 11 of 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.

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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 understated or overstated. 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 21 of the Consolidated Financial Statements.



Goodwill - In accordance with Accounting Standards Codification (ASC) Topic 350,
Intangibles-Goodwill and Other (ASC 350), the Company evaluates goodwill for
possible impairment annually or more frequently if events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. The Company uses a two-step process to assess the realizability of
goodwill. The first step is a qualitative assessment that analyzes current
economic indicators associated with a particular reporting unit. If the
qualitative assessment indicates a stable or improved fair value, no further
testing is required. If a qualitative assessment indicates it is more likely
than not that the fair value of a reporting unit is less than its carrying
amount, the Company will proceed to the quantitative second step where the fair
value of a reporting unit is calculated based on weighted income and
market-based approaches.



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 performed our annual goodwill impairment test
during the third quarter of 2021 and concluded that goodwill for all reporting
units was not impaired.



Pursuant to the authoritative guidance, we make certain judgments and
assumptions to determine our reporting units, which determines the carrying
values for each reporting unit. Judgments related to qualitative factors include
changes in economic considerations, market and industry trends, business
strategy, cost factors, and financial performance, among others, to determine if
there are indicators of a significant decline in the fair value of a particular
reporting unit.

New Accounting Pronouncements

See Note 2 of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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