Q3 2024 The Greenbrier Companies Inc Earnings Call

Hello, and welcome to the Greenbrier Company's third quarter of fiscal 2024 earnings conference call.

Operator: Following today's presentation, we will conduct a question and answer session. Each analyst should limit themselves to one question with a follow-up, if needed. Until that time, all lines will be in a listen-only mode.

Unknown Executive: Following today's presentation, we will conduct a question-and-answer session. The analyst should limit themselves to one question if the follow-up is needed. Until that time, all lines will be in a listen-only mode.

Following today's presentation, we will conduct a question and answer session. Each analyst should limit themselves to one question with a follow-up if needed.

Operator: At the request of the Greenbrier Companies, this conference call is being recorded for instant replay purposes. At this time, I'd like to turn the floor over to Mr. Justin Roberts, Vice President and Treasurer. Mr. Roberts, you may begin.

Unknown Executive: The request of the Greenbrier Companies, this conference call is being recorded for instantly play purposes.

Until that time, all lines will be in a listen-only mode. At the request of the Greenbrier Companies, this conference call is being recorded for instant replay purposes.

Justin Roberts: At this time, I'd like to turn the floor over to Mr. Justin Roberts, Vice President and Treasurer.

Speaker Change: At this time, I'd like to turn the floor over to Mr. Justin Roberts, Vice President and Treasurer. Mr. Roberts, you may begin.

Unknown Executive: Mr. Roberts, maybe again.

Unknown Executive: Thank you, Jamie.

Lorie Tekorius: Good morning, everyone, and welcome to our third quarter of fiscal 2024 conference call. Today, I am joined by Lorie Tekorius, Greenbrier CEO and President; Brian Comstock, President of the Americas; and Michael Donfress, Senior Vice President, Finance, and soon-to-be CFO. Following our update on Greenbrier's Q3 performance and an update on our outlet for the remainder of fiscal 24, we will open up the call for questions.

Justin M. Roberts: Good morning, everyone, and welcome to our third quarter of fiscal 2024 conference call. Today, I am joined by Lorie Tekorius, Greenbrier's CEO and president; Brian Comstock, President of the Americas; and Michael Donfress, Senior Vice President, Finance, and soon to be CFO.

Justin M. Roberts: Thank you, Jamie.

Justin M. Roberts: Good morning everyone and welcome to our third quarter of Fiscal 2024 conference call. Today I am joined by Lorie Tekorius, Greenbrier's CEO and President, Brian Comstock, President of the Americas, and Michael Donfress, Senior Vice President, Finance and soon to be CFO .

Justin M. Roberts: Following our update on Greenbrier's Q3 performance and an update on our outlook for the remainder of fiscal 24, we will open up the call for questions. In addition to the press release issued this morning, additional financial information and key metrics can be found in a slide presentation posted today on the Investor Relations section of our website. Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Justin M. Roberts: Following our update on Greenbrier's Q3 performance and an update on our outlook for the remainder of fiscal 24, we will open up the call for questions.

Justin Roberts: In addition to the press release issue this morning, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website.

Justin M. Roberts: In addition to the press release issued this morning, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website.

Justin Roberts: Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2024 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. Additionally, we will refer to recurring revenues throughout our comments today. Recurring revenue is defined as leasing and management services revenue, excluding the impact of syndication activity.

Justin M. Roberts: Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Justin M. Roberts: Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2024 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. Additionally, we will refer to recurring revenue throughout our comments today. Recurring revenue is defined as leasing and management services revenue, excluding the impact of syndication activity.

Justin M. Roberts: Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2024 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier.

Justin M. Roberts: Additionally, we will refer to recurring revenue throughout our comments today. Recurring revenue is defined as leasing and management services revenue excluding the impact of syndication activity.

Lorie Tekorius: And with that, I'll hand the call over to Laurie. Thank you, Justin. Good morning, everyone.

Justin M. Roberts: And with that, I'll hand the call over to Lorie.

Lorie L. Tekorius: Thank you, Justin. Good morning, everyone. I hope everyone had a safe and enjoyable Independence Day.

Lorie Tekorius: I hope everyone had a safe and cool Independent stay. Before we launch into our quarterly results, I'd like to introduce Michael Donfress. As we announced in May, Michael's joined us as our new CFO. He brings considerable experience in leading financial operations and implementing strategy at major industrial businesses, including those operating in rail freight and equipment markets. Although Michael is with us here today, he gets a pass on Q3 results. But as he comes up to speed on Greenbrier, you can expect him to be a full participant when we discuss year and results in October.

Lorie L. Tekorius: And with that, I'll hand the call over to Lorie. Thank you, Justin. Good morning, everyone. I hope everyone had a safe and cool Independence Day.

Lorie L. Tekorius: Before we launch into our quarterly results, I'd like to introduce Michael Donson. As we announced in May, Michael joined us as our new CFO. He brings considerable experience in leading financial operations and implementing strategy at major industrial businesses, including those operating in the rail, freight, and equipment markets. Although Michael is with us here today, he gets a pass on the Q3 results. But as he comes up to speed on Greenbrier, you can expect him to be a full participant when we discuss year-end results in October. I'll go ahead and get us started.

Lorie L. Tekorius: Before we launch into our quarterly results, I'd like to introduce Michael Donfriess.

Lorie L. Tekorius: As we announced in May, Michael joins us as our new CFO . He brings considerable experience in leading financial operations and implementing strategy at major industrial businesses, including those operating in rail, freight, and equipment markets.

Lorie L. Tekorius: Although Michael is with us here today, he gets a pass on Q3 results.

Lorie L. Tekorius: But as he comes up to speed on Greenbrier, you can expect him to be a full participant when we discuss year-end results in October .

Lorie Tekorius: I'll go ahead and get us started. I am very pleased to report that positive momentum has continued at Greenbrier. We are progressing with our multi-year Better Together strategy and getting great results. In the third quarter, we generated our highest earnings for share in EBITDA in over four and a half years, reaching level last seen before the pandemic. Our consolidated growth margin remains in the mid teens, with 90 basis points of sequential expansion. Operating efficiencies continue to improve, and we're advancing key initiatives across the organization, such as our Leets Lead Expansion and En sourcing Initiative in Manufacturing.

Lorie L. Tekorius: I am very pleased to report that positive momentum has continued at Greenbrier. We are progressing with our multi-year Better Together strategy and getting great results. In the third quarter, we generated our highest earnings per share in EBITDA for over four and a half years, reaching a level last seen before the pandemic.

Lorie L. Tekorius: I'll go ahead and get us started.

Lorie L. Tekorius: I am very pleased to report that positive momentum has continued at Greenbrier.

Lorie L. Tekorius: We are progressing with our multi-year Better Together strategy and getting great results. In the third quarter, we generated our highest earnings per share in EBITDA in over four and a half years, reaching a level last seen before the pandemic.

Lorie L. Tekorius: Our consolidated growth margin remains in the mid-teens, with 90 basis points of sequential expansion. Operating efficiencies continue to improve, and we're advancing key initiatives across the organization, such as our Lease Fleet Expansion and Insourcing Initiative in Manufacturing. We're ahead of schedule to accomplish some of our strategic goals and on track for the rest. With that said, optimizing our operations is an exercise in continuous improvement, and I want to recognize everyone from the shop floor to the leadership team at Greenbrier for helping achieve early wins in our ambitious Better Together strategy.

Lorie L. Tekorius: Our consolidated growth margin remains in the mid-teens with 90 basis points of sequential expansion.

Lorie L. Tekorius: Operating efficiencies continue to improve and we're advancing key initiatives across the organization such as our lease fleet expansion and insourcing initiative in manufacturing. We're ahead of schedule to accomplish some of our strategic goals and on track for the rest.

Lorie Tekorius: We're ahead of schedule to accomplish some of our strategic goals and on track for the rest.

Lorie Tekorius: With that said, optimizing our operations is an exercise in continuous improvement. And I want to recognize everyone from the shop floor to the leadership team at Greenbrier for helping achieve early wins in our ambitious, Better Together strategy. Turning to our results, we generated over 820 million in revenue during the third quarter. Consolidated gross margin of 15.1% is our third consecutive quarter of margins hitting the mid-teens, driven by product mix, syndication activity, and continuing operating efficiencies. We expect this momentum to continue. And, as you may have seen in our press release, we narrow the range of our revenue and delivery guidance.

Lorie L. Tekorius: With that said, optimizing our operations is an exercise in continuous improvement and I want to recognize everyone from the shop floor to the leadership team at Greenbrier for helping achieve early wins in our ambitious Better Together strategy.

Lorie L. Tekorius: Turning to our results, we generated over $820 million in revenue during the third quarter. Our consolidated gross margin of 15.1% is our third consecutive quarter of margins hitting the mid-teens, driven by product mix, syndication activity, and continuing operating efficiency. We expect this momentum to continue. And, as you may have seen in our press release, we narrowed the range of our revenue and delivery guidance.

Lorie L. Tekorius: Turning to our results, we generated over $820 million in revenue during the third quarter.

Lorie L. Tekorius: Consolidated gross margin of 15.1% is our third consecutive quarter of margins hitting the mid-teens, driven by product mix, syndication activity, and continuing operating efficiencies.

Lorie L. Tekorius: We expect this momentum to continue.

Lorie L. Tekorius: And as you may have seen in our press release, we narrowed the range of our revenue and delivery guidance.

Lorie Tekorius: We expect the mix and cadence of deliveries will increase in the fourth quarter. We also expect consolidated gross margin in the mid-teens to continue. This is one year ahead of the plan we set forth at our Investor Day in April 2023. We believe that the efficiencies we've gained are sustainable. Of course, there will always be work; there will always be work to be done. We continue to evaluate our operational activities and are focused on other actions to optimize our business. Order performance continued in Q3 at steady levels, with Greenbrier receiving a diverse mix of orders by car type across our geographies.

Lorie L. Tekorius: We expect the mix and cadence of deliveries will increase in the fourth quarter. We also expect consolidated gross margin in the mid-teens to continue. This is one year ahead of the plan we set forth at our investor day in April, 2023. We believe that the efficiencies we've gained are sustainable. Of course, there will always be work to be done.

Lorie L. Tekorius: We expect the mix and cadence of deliveries will increase in the fourth quarter. We also expect consolidated gross margin in the mid-teens to continue. This is one year ahead of the plan we set forth at our Investor Day in April 2023.

Lorie L. Tekorius: We believe that the efficiencies we've gained are sustainable. Of course, there will always be work to be done. We continue to evaluate our operational activities and are focused on other actions to optimize our business.

Brian J. Comstock: We continue to evaluate our operational activities and are focused on other actions to optimize our business. Order performance continued in Q3 at steady levels, with Greenbrier receiving a diverse mix of orders by car type across our geography. Our focus on innovation supports our market-leading position. Recently, for example, Greenbrier successfully introduced our ultra-high-strength steel gondola and our new MultiMax Plus design for moving automobiles by rail, which has been well-received by the market. Brian's going to share more on that in a minute, but this is meaningful for Greenbrier since freight rail moves nearly 75% of the new cars and light trucks purchased in the U.S. annually.

Lorie L. Tekorius: Order performance continued in Q3 at steady levels with Greenbrier receiving a diverse mix of orders by car type across our geographies.

Lorie Tekorius: Our focus on innovation supports our market-leading position. Recently, for example, Greenbrier successfully introduced our ultra high-strength steel gondola and our new Multi-Max Plus design for moving automobiles by rail that's been well received by the market. We're going to share more on that in a minute, but this is meaningful for Greenbrier since freight rail moves nearly 75 percent of the new cars and light trucks purchased in the US annually. We are proud to be a key supplier to the North American railway system. With lower carbon emissions, greater fuel efficiency, and superior capacity, it's clear that rail transport is central to developing a more environmentally friendly transportation system.

Lorie L. Tekorius: Our focus on innovation supports our market-leading position. Recently, for example, Greenbrier successfully introduced our ultra-high-strength steel gondola and our new MultiMax Plus design for moving automobiles by rail that's been well-received by the market.

Speaker Change: Brian's going to share more on that in a minute, but this is meaningful for Greenbrier since Great Rail moves nearly 75% of the new cars and light trucks purchased in the U.S. annually.

Brian J. Comstock: We are proud to be a key supplier to the North American Railway System. With lower carbon emissions, greater fuel efficiency, and superior capacity, it's clear that rail transport is central to developing a more environmentally friendly transportation system. In May, Greenbrier was honored by USA Today as one of America's Climate Leaders for 2024 based on our successful carbon reduction efforts from 2020 to 2022. We continue to make progress towards reducing our environmental footprint and are pleased to receive this recognition.

Speaker Change: We are proud to be a key supplier to the North American railway system. With lower carbon emissions, greater fuel efficiency, and superior capacity, it's clear that rail transport is central to developing a more environmentally friendly transportation system.

Lorie Tekorius: In May, Greenbrier was honored by USA Today as one of America's climate leaders for 2024 based on our successful carbon reduction efforts from 2020 to 2022. We continue to make progress towards reducing Greenbrier's environmental footprint and are pleased to receive this recognition. Looking ahead, we see stable but good rail car demand across all our geographies. The current market is less volatile and consequently less prone to booms and busts than those of past decades. We agree with our focus on sustained higher performance across our business and across markets. Our commercial team, with its strong lease origination capabilities, continues to outperform, giving us excellent near-term visibility into manufacturing and steadily building our stream of repeatable lease revenues and cash flow.

Speaker Change: In May, Greenbrier was honored by USA Today as one of America's climate leaders for 2024 based on our successful carbon reduction efforts from 2020 to 2022.

Speaker Change: We continue to make progress towards reducing Greenbrier's environmental footprint and are pleased to receive this recognition.

Brian J. Comstock: Looking ahead, we see stable but good railcar demand across all our geographies. The current market is less volatile and consequently less prone to booms and busts than those of the past decades. We at Greenbrier are focused on sustained higher performance across our business and across markets. Our commercial team, with its strong lease origination capabilities, continues to outperform, giving us excellent near-term visibility into manufacturing and steadily building our stream of repeatable lease revenues and cash flow.

Speaker Change: Looking ahead, we see stable but good railcar demand across all our geographies. The current market is less volatile and consequently less prone to booms and busts than those of past decades.

Speaker Change: We at Greenbrier are focused on sustained higher performance across our business and across markets.

Speaker Change: Our commercial team, with its strong lease origination capabilities, continues to outperform, giving us excellent near-term visibility into manufacturing and steadily building our stream of repeatable lease revenues and cash flow.

Lorie Tekorius: We're confident in the long-term strategy and multi-year targets, and look forward to sharing our progress on future calls.

Brian J. Comstock: We're confident in the long-term strategy of multi-year targets and look forward to sharing our progress on future calls. With that, I'll turn the call over to Brian Comstock, who will discuss our activities for the quarter in greater detail and market conditions.

Speaker Change: We're confident in the long-term strategy and multi-year targets and look forward to sharing our progress on future calls.

Brian Comstock: With that, I'll turn the call over to Brian Comstock. We'll chat about our activities for the quarter in greater detail and market conditions.

Speaker Change: With that, I'll turn the call over to Brian Comstock who will chat about our activities for the quarter in greater detail and market conditions. Thanks, Lorie. Greenbrier secured new railcar orders of 6,300 units worth $830 million in the quarter.

Brian J. Comstock: Thanks, Lorie. Greenbrier secured new rail car orders of 6,300 units worth $830 million in the quarter. Diverse demand continues across most railcar types. Backlog is strong at 29,400 units with an estimated value of $3.7 billion and provides significant revenue visibility. Our commercial performance reflects our leading market position, strong lease origination capabilities, and direct sales experience. Momentum in our international markets continues, with about 25% of orders originating in Europe and Brazil. Our international backlog remains healthy, and our sales pipeline is strong.

Brian Comstock: Thanks, Lori. Greenbrier secured new rail car orders of 6,300 units worth 830 million in the quarter. Diverse demand continues across most rail car types. Backlog is strong at 29,400 units with an estimated value of 3.7 billion and provides significant revenue and availability. Our commercial performance reflects our leading market position, strong lease origination capabilities, and direct sales experience. Momentum in our international markets continues with about 25% of the orders originating in Europe and Brazil. Our international backlog remains healthy, and our sales pipeline is strong. Additionally, volumes to our European leasing channel continue to grow, and I'm pleased to report that we delivered our 1000th leased wagon in Q3.

Brian J. Comstock: Diverse demand continues across most railcar types.

Brian J. Comstock: Backlog is strong at 29,400 units with an estimated value of $3.7 billion and provides significant revenue visibility.

Brian J. Comstock: Our commercial performance reflects our leading market position, strong lease origination capabilities, and direct sales experience.

Brian J. Comstock: Momentum in our international markets continues with about 25% of the orders originating in Europe and Brazil. Our international backlog remains healthy and our sales pipeline is strong.

Brian J. Comstock: Additionally, volumes through our European leasing channel continue to grow, and I'm pleased to report that we delivered our 1,000th leased wagon in Q3. This is quite an achievement since we entered the leasing space just a year ago. Our ability to originate and syndicate leases is vital to the long-term performance of our European manufacturing business, and we see potential for future growth. In Q3, we delivered 5,400 railcars, which is down slightly from the prior quarter. A few production line changeovers impacted production rates, and ongoing border congestion caused about 100 units to be delayed.

Brian J. Comstock: Additionally, volumes through our European leasing channel continue to grow.

Brian J. Comstock: And I'm pleased to report that we delivered our 1,000th leased wagon in Q3. This is quite an achievement since we entered the leasing space just a year ago.

Brian Comstock: This is quite an achievement since we entered the leasing space just a year ago. Our ability to originate and syndicate leases is vital to the long-term performance of our European manufacturing business, and we see potential for future growth. In Q3, we delivered 5,400 rail cars, which is down slightly from the prior quarter. A few production line changeovers impacted production rates, and ongoing border congestion cost about 100 units to be delayed. The delayed units crossed in June, and the changeovers were completed in the quarter, positioning us for a strong Q4 for production and deliveries. Third quarter manufacturing gross margin of 10.9% increased modestly from Q2.

Brian J. Comstock: Our ability to originate and syndicate leases is vital to the long-term performance of our European manufacturing business, and we see potential for future growth.

Brian J. Comstock: In Q3, we delivered 5,400 railcars, which is down slightly from the prior quarter. A few production line changeovers impacted production rates, and ongoing border congestion caused about 100 units to be delayed.

Brian J. Comstock: The delayed units crossed in June, and the changeovers were completed in the quarter, positioning us for a strong Q4 for production and delivery. The third quarter manufacturing gross margin of 10.9% increased modestly from Q2. Several of the efficiency gains we have made over the last 18 months are being sustained, and we continue to work on others. For example, the expansion of in-house fabrication for basic primary parts and subassemblies remains on track. And we expect the full benefit from insourcing to be realized by the spring of fiscal 2025. Leasing and management services had another good quarter and added 600 units to the lease while fleet utilization was stable at 99%.

Brian J. Comstock: The delayed units crossed in June , and the changeovers were completed in the quarter, positioning us for a strong Q4 for production and deliveries.

Brian J. Comstock: Third Quarter Manufacturing Gross Margin of 10.9% increased modestly from Q2.

Brian Comstock: Several of the efficiency gains we have made over the last 18 months are being sustained, and we continue to work on others. The expansion of the in-house fabrication for basic primary parts and sub-assemblies remains on track, and we expect the full benefit from insourcing to be realized by the spring of fiscal 2025. Leasing and management services had another good quarter and added 600 units to the lease fleet, while fleet utilization was stable at 99%. We expect to invest approximately 265 million on a net basis in the fleet this year in support of our multi-year goal of doubling recurring revenue.

Brian J. Comstock: Several of the efficiency gains we have made over the last 18 months are being sustained and we continue to work on others.

Brian J. Comstock: The expansion of in-house fabrication for basic primary parts and sub-assemblies remains on track, and we expect the full benefit from in-sourcing to be realized by the spring of fiscal 2025.

Brian J. Comstock: Leasing and Management Services had another good quarter and added 600 units to the lease fleet.

Brian J. Comstock: We expect to invest approximately $265 million on a net basis in the fleet this year in support of our multi-year goal of doubling recurring revenue. We will continue investing up to $300 million per year on a net basis as long as the additions meet our return criteria.

Brian J. Comstock: while fleet utilization was stable at 99%.

Brian J. Comstock: We expect to invest approximately $265 million on a net basis in the fleet this year in support of our multi-year goal of doubling recurring revenue.

Brian Comstock: We will continue investing up to 300 million per year on a net basis as long as the additions meet our return criterion. Our fleet growth is disciplined, and we are only investing in the right assets with the right lease terms and counterparties. As the fleet has grown, the quality has improved with extended lease terms, newer rail cars, and a good balance of commodities and rail car types. We expect a result will be a large, stable stream of higher margin revenue that reduces the impact of market cyclicality on our results. Lease durations are strategically staggered and create opportunities for favorable renewals.

Brian J. Comstock: We will continue investing up to $300 million per year on a net basis as long as the additions meet our return criteria.

Brian J. Comstock: Our fleet growth is disciplined, and we are only investing in the right assets with the right lease terms and counterparts. As the fleet has grown, the quality has improved with extended lease terms, newer railcars, and a good balance of commodities and railcar types. We expect the result will be a large, stable stream of higher-margin revenue that reduces the impact of market cyclicality on our results. Additionally, lease durations are strategically staggered and create opportunities for favorable renewals. Our lease renewal rates continue to grow at double digits.

Brian J. Comstock: Our fleet growth is disciplined and we are only investing in the right assets with the right lease terms and counterparties.

Brian J. Comstock: As the fleet has grown, the quality has improved with extended lease terms.

Brian J. Comstock: Newer railcars and a good balance of commodities and railcar types.

Brian J. Comstock: We expect the result will be a large, stable stream of higher margin revenue that reduces the impact of market cyclicality on our results.

Brian J. Comstock: Lease durations are strategically staggered and create opportunities for favorable renewals. Our lease renewal rates continue to grow at double digits.

Brian Comstock: Our lease renewal rates continue to grow at double digits. You may recall that we had nearly 23% of leases in the fleet expiring this year after portfolio purchase in 2021. We have successfully renewed or remarketed the majority of these leases and more favorable lease rates, and only have a few hundred waiting renewal or remarketing opportunities. We are confident we will finish the year successfully on this spring. Deb for the fleet is managed conservatively; evaluation of our financing strategies is ongoing and part of our prune approach to growing the leasing business. On average, interest rate is in the mid 4% range, which is significantly lower than current market interest rates.

Brian J. Comstock: You may recall that we had nearly 23% of leases in the fleet expiring this year after a portfolio purchase in 2021. We have successfully renewed or remarketed the majority of these leases at more favorable lease rates and only have a few hundred awaiting renewal or remarketing opportunities. We are confident we will finish the year successfully on this front, while debt for the fleet is managed conservatively. Evaluation of our financing strategies is ongoing and part of our prudent approach to growing the leasing business.

Brian J. Comstock: You may recall that we had nearly 23% of leases in the fleet expiring this year after a portfolio purchase in 2021.

Brian J. Comstock: We have successfully renewed or re-marketed the majority of these leases and more favorable lease rates, and only have a few hundred waiting, renewal, or re-marketing opportunities.

Brian J. Comstock: We are confident we will finish the year successfully on this front.

Brian J. Comstock: Debt for the fleet is managed conservatively.

Brian J. Comstock: Evaluation of our financing strategies is ongoing and part of our prudent approach to growing the leasing business.

Brian J. Comstock: On average, the interest rate is in the mid 4% range, which is significantly lower than current market interest. At the end of Q3, our fleet leverage was 77%, in line with the prior quarter and within our targeted fleet leverage framework.

Brian J. Comstock: On average, interest rate is in the mid-4% range, which is significantly lower than current market interest rates.

Brian Comstock: At the end of Q3, our fleet leverage was 77% in line with the prior quarter and within our targeted fleet leverage framework. In Q3, syndication of 1,700 rail cars with multiple investors generated strong liquidity and margins. We are pleased with the reception of our syndication investors had given to our updated auto rack product, the Multi Max Plus. Successful syndication of this car type helps to drive market acceptance of Greenbrier's innovative design. Overall, our performance in the quarter shows the appetite and liquidity in the syndication market remains solid despite the higher interest rate environment. We continue to advance initiatives to approve maintenance service efficiencies by optimizing car flow, material planning, and cycle times at all facilities.

Brian J. Comstock: At the end of Q3, our fleet leverage was 77%, in line with the prior quarter and within our targeted fleet leverage framework.

Brian J. Comstock: In Q3, syndication of 1,700 railcars with multiple investors generated strong liquidity in March. We are pleased with the reception our syndication investors have given to our updated Auto Rec product, the Multimax Plus. The successful syndication of this car type helps to drive market acceptance of Greenbrier's innovative design. Overall, our performance in the quarter shows the appetite and liquidity in the syndication market remains solid despite the higher interest rate environment. We continue to advance initiatives to improve maintenance service efficiencies by optimizing carbon, material planning, and cycle times at all facilities.

Brian J. Comstock: In Q3, syndication of 1,700 railcars with multiple investors generated strong liquidity and margins.

Brian J. Comstock: We are pleased with the reception of our syndication investors have given to our updated Auto Rec product, the Multimax Plus.

Brian J. Comstock: Successful syndication of this car type helps to drive market acceptance of Greenbrier's innovative design.

Brian J. Comstock: Overall, our performance in the quarter shows the appetite and liquidity in the syndication market remains solid despite the higher interest rate environment.

Brian J. Comstock: We continue to advance initiatives to improve maintenance service efficiencies by optimizing car flow.

Brian Comstock: I was pleased to visit repair locations in the network recently and especially appreciate the dedication of our hardworking employees. The North American rail car market remains stable through economic and geopolitical uncertainty. Industry forecasts for deliveries in 2024 and 2025 are projected to be below the 40,000 unit replacement threshold. We view these forecasts as conservative, and it's worth noting that forecasts for both years were recently revised upward. Our robust backlog, including our international activity, provides revenue visibility and stability. Rail cars in storage are close to the cycle's trough and primarily including rail cars that are not in demand like Frexand and cold rail cars, as well as outdated tank cars.

Brian J. Comstock: I was pleased to visit repair locations on the network recently and especially appreciate the dedication of our hardworking employees. The North American railcar market remains stable through economic and geopolitical uncertainty. Industry forecasts for deliveries in 2024 and 2025 are projected to be below the 40,000 unit replacement threshold.

Brian J. Comstock: material planning and cycle times at all facilities. I was pleased to visit repair locations in the network recently and especially appreciate the dedication of our hard-working employees.

Brian J. Comstock: The North American rail car market remains stable through economic and geopolitical uncertainty.

Brian J. Comstock: Industry forecasts for deliveries in 2024 and 2025 are projected to be below the 40,000 unit replacement threshold. We view these forecasts as conservative and it's worth noting that forecasts for both years were recently revised upward.

Brian J. Comstock: We view these forecasts as conservative, and it's worth noting that forecasts for both years were recently revised upwards. Our robust backlog, including our international activity, provides revenue visibility and stability. Railcars in storage are close to the cycle's trough and primarily include railcars that are not in demand, like frack sand and cold railcars as well as outdated tanks. The lack of supply of available railcars is leading to higher utilization rates and supporting higher lease rates along with longer lease terms.

Brian J. Comstock: Our robust backlog, including our international activity, provides revenue, visibility, and stability.

Brian J. Comstock: Railcars in storage are close to the cycle's trough, and primarily including railcars that are not in demand like frack, sand, and coal railcars, as well as outdated tank cars.

Brian Comstock: The lack of supply of available rail cars is leading to higher utilization rates and supporting higher lease rates, along with longer lease terms. Greenberg's management team is experienced in agile. We are confident we have the right strategy in place to successfully execute our plan.

Brian J. Comstock: The lack of supply of available railcars is leading to higher utilization rates and supporting higher lease rates along with longer lease terms.

Justin M. Roberts: Greenbrier's management team is experienced and agile. We are confident we have the right strategy in place to successfully execute our plan. Now, I'll hand the call over to Justin, who will speak to the financial highlights for the quarter. Thank you, Brian.

Brian J. Comstock: Greenbrier's management team is experienced and agile. We are confident we have the right strategy in place to successfully execute our plan. Now I'll hand the call over to Justin, who will speak to the financial highlights for the quarter. Thank you, Brian . Good morning, everyone.

Justin Roberts: Now I'll hand the call to Justin, who will speak to the financial highlights for the court. Thank you, Brian, and good morning, everyone. Today I'll be covering the financial highlights of the quarter and providing an update to our fiscal 2024 guidance.

Justin M. Roberts: Thank you, Brian, and good morning, everyone. Today, I'll be covering the financial highlights of the quarter and providing an update on our fiscal 2024 guidance. But before moving into the highlights, I would like to remind everyone again that quarterly financial information is available in the press release and the supplemental slides on our website. We are pleased with Greenbrier's Q3 performance and expect to finish the year on a strong note. Our operational leverage continues to improve, and we expect to drive incremental profitability in the fourth quarter and into the next fiscal year. Now onto the quarter. With the new railcar order and the delivery activity that Brian spoke of, this resulted in a book-to-bill of 1.2 times.

Justin M. Roberts: Today I'll be covering the financial highlights of the quarter and providing an update to our fiscal 2024 guidance.

Justin Roberts: But before moving into the highlights, I would like to remind everyone again that quarterly financial information is available on the press release and the supplemental slides on our website. We are pleased with Greenberg's Q3 performance and expect to finish the year on a strong note. Our operational leverage continues to improve, and we expect the drive incremental profitability in the fourth quarter and into the next fiscal year. Now onto the quarter. With the new rail car order and the delivery activity that Brian spoke to, this resulted in a book to build of 1.2 times. We generated consolidate revenue of 820 million and gross margin per cent at 15%.

Justin M. Roberts: But, before moving into the highlights, I would like to remind everyone again that quarterly financial information is available in the press release and the supplemental slides on our website.

Speaker Change: We are pleased with Greenbrier's Q3 performance and expect to finish the year on a strong note. Our operational leverage continues to improve and we expect to drive incremental profitability in the fourth quarter and into the next fiscal year. Now, on to the quarter.

Brian J. Comstock: With the new railcar order and the delivery activity that Brian spoke to, this resulted in a book-to-bill of 1.2 times.

Justin M. Roberts: We generated consolidated revenue of $820 million and a gross margin percent of 15%. This was our third consecutive quarter of a mid-team gross margin and reflects ongoing improvements in operating performance. Selling and administrative expense was $59 million and decreased from the prior quarter due to lower employee-related costs.

Brian J. Comstock: We generated consolidated revenue of $820 million and gross margin percent of 15%. This was our third consecutive quarter of a mid-team gross margin and reflects ongoing improvements in operating performance.

Justin Roberts: This was our third consecutive quarter of a mid-teen gross margin and reflects ongoing improvements in operating performance. Selling and administrative expense was $59 million and decreased from the prior quarter due to lower employee-related costs. Net earnings attributable to non-controlling interest, which, as a reminder, represents our J.V. partner's share of earnings was about $7 million million in the quarter and was higher than Q2's sequentially. This change reflects stronger performance primarily in our northern Mexico manufacturing joint venture. Net earnings attributable to Greenbrier were $34 million and generated diluted EPS of $1.6 per share. And finally, EBITDA was $104 million, or 13 percent of revenue.

Brian J. Comstock: Selling and administrative expense was $59 million and decreased from the prior quarter due to lower employee related costs.

Justin M. Roberts: Net earnings attributable to non-controlling interest, which, as a reminder, represents our JV Partners share of earnings, was about $7 million in the quarter and was higher than Q2 sequentially. This change reflects stronger performance primarily in our Northern Mexico manufacturing joint venture. Net earnings attributable to Greenbrier were $34 million and generated diluted EPS of $1.06 per share. And finally, EBITDA was $104 million, or 13% of revenue. As Lorie mentioned, EPS and EBITDA reached the highest level in over four and a half years. But I want to be clear on this; this is not as good as it gets, and we are not satisfied yet.

Brian J. Comstock: Net earnings attributable to non-controlling interest, which, as a reminder, represents our JV Partners share of earnings, was about $7 million in the quarter and was higher than Q2 sequentially.

Brian J. Comstock: This change reflects stronger performance primarily in our Northern Mexico manufacturing joint venture.

Brian J. Comstock: Net earnings attributable to Greenbrier were $34 million and generated diluted EPS of $1.06 per share. And finally EBITDA was $104 million or 13% of revenue.

Justin Roberts: As Lorie mentioned, EPS and EBITDA reached the highest level in over four and a half years.

Speaker Change: As Lorie mentioned, EPS and EBITDA reached the highest level in over four and a half years. But I want to be clear on this, this is not as good as it gets and we are not satisfied yet.

Justin Roberts: But I want to be clear on this: this is not as good as it gets, and we are not satisfied yet. Shifting focus from our income statement to liquidity, Greenbrier generated operating cash flow of $84 million and a year-to-date total of $138 million. Liquidity in the third quarter improved to $605 million, consisting of $270 million of cash and available borrowings of approximately $335 million. Strong earnings and improved working capital activity drove operating cash flow and liquidity in the quarter. In Q3, we returned over $9 million to shareholders through a quarterly dividend of $0.30 per share.

Justin M. Roberts: Shifting focus from our income statement to liquidity, Greenbrier generated operating cash flow of $84 million and a year-to-date total of $138 million. Liquidity in the third quarter improved to $605 million, consisting of $270 million of cash and available borrowings of approximately $335 million. Strong earnings and improved working capital activity drove operating cash flow and liquidity in the quarter. In Q3, we returned over $9 million to shareholders through our quarterly dividend of $0.30 per share.

Speaker Change: Shifting focus from our income statement to liquidity, Greenbrier generated operating cash flow of $84 million and a year-to-date total of $138 million.

Speaker Change: Liquidity in the third quarter improved to $605 million, consisting of $270 million of cash and available borrowings of approximately $335 million.

Speaker Change: Strong earnings and improved working capital activity drove operating cash flow and liquidity in the quarter.

Speaker Change: In Q3, we returned over $9 million to shareholders through our quarterly dividend of $0.30 per share.

Justin Roberts: Over the last 10 years, we have returned nearly $520 million of capital to shareholders through dividends and share repurchases. Continuing our commitment of returning capital to shareholders, Greenbrier's Board of Directors declared a quarterly dividend of $0.30 per share, which is our 41st consecutive quarterly dividend. Based on the closing price on July 5th, our annual dividend represents a yield of approximately 2.5 percent. This is a great way to create long-term shareholder value, and we will periodically evaluate increases to the dividend as we continue to opportunistically repurchase shares.

Justin M. Roberts: Over the last 10 years, we have returned nearly $520 million of capital to shareholders through dividends and share repurchases. Continuing our commitment to returning capital to shareholders, Greenbrier's Board of Directors declared a quarterly dividend of $0.30 per share, which is our 41st consecutive quarterly dividend. Based on the closing price on July 5th, our annual dividend represents a yield of approximately 2.5%. This is a great way to create long-term shareholder value, and we will periodically evaluate increases to the dividend as we continue to opportunistically repurchase shares.

Speaker Change: Over the last 10 years, we have returned nearly $520 million of capital to shareholders through dividends and share repurchases.

Speaker Change: Continuing our commitment of returning capital to shareholders, Greenbrier's Board of Directors declared a quarterly dividend of $0.30 per share, which is our 41st consecutive quarterly dividend.

Speaker Change: Based on the closing price on July 5th, our annual dividend represents a yield of approximately 2.5%.

Speaker Change: This is a great way to create long-term shareholder value, and we will periodically evaluate increases to the dividend as we continue to opportunistically repurchase shares.

Justin Roberts: Finally, shifting over to our balance sheet, Greenbrier has no significant near-term debt maturities. As of May 31st, approximately 85 percent of our debt is fixed, with a weighted average rate of about 4 percent. Additionally, and I want to make sure it's important to emphasize this point, we remain focused on reducing and retiring our recourse debt as cash flows improve. Recourse debt decreased $11 million compared to the second quarter and has decreased $65 million over the last two quarters. Non-recourse debt will continue to trend with our leasing fleet investments.

Justin M. Roberts: Finally, shifting over to our balance sheet, Greenbrier has no significant near-term debt maturity. As of May 31st, approximately 85% of our debt is fixed, with a weighted average rate of about 4%. Additionally, and I want to make sure this point is important, we remain focused on reducing and retiring our recourse debt as cash flows improve. Recourse debt decreased $11 million compared to the second quarter and has decreased $65 million over the last two quarters.

Speaker Change: Finally, shifting over to our balance sheet, Greenbrier has no significant near-term debt maturities.

Speaker Change: As of May 31st, approximately 85% of our debt is fixed, with a weighted average rate of about 4%.

Speaker Change: Additionally, and I want to make sure

Speaker Change: It's important to emphasize this point, we remain focused on reducing and retiring our recourse debt as cash flows improve. Recourse debt decreased $11 million compared to the second quarter and has decreased $65 million over the last two quarters.

Justin M. Roberts: Non-recourse debt will continue to trend with our leasing fleet investor. Greenbrier remains committed to creating shareholder value, optimizing our capital structure while returning capital to shareholders. And now on to our guidance update. Based on current trends and production schedules, we are narrowing our delivery guidance to 23,500 to 24,000 units, which includes 1,400 units from our Brazil operation. To answer the question proactively, yes, this implies a significant increase in our Q4 activity.

Speaker Change: Non-recourse debt will continue to trend with our leasing fleet investments.

Justin Roberts: Greenbrier remains committed to creating shareholder value, optimizing our capital structure, while returning capital to shareholders. And now onto our guidance update. Based on current trends and production schedules, we are narrowing our delivery guidance to 23,500 to 24,000 units, which includes 1,400 units from our Brazil operation. To answer the question proactively, yes, this implies that a significant increase in our Q4 activity. This reflects the combination of timing of syndications, increased production rates on a few lines, and more direct sales activity versus Q3. We are also narrowing our revenue range to $3.5 to $3.6 billion. Consolidated gross margin percent for the full year is increased to the midteens, which we consider to be between 14 to 16%.

Speaker Change: Greenbrier remains committed to creating shareholder value, optimizing our capital structure, while returning capital to shareholders.

Justin M. Roberts: This reflects the combination of timing of syndications, increased production rates on a few lines, and more direct sales activity versus Q3. We are also narrowing our revenue range to between $3.5 and $3.6 billion. Consolidated gross margin percent for the full year is increased to the mid-teens, which we consider to be between 14 to 16 percent. Selling and administrative expense is expected to be approximately $235 to $240 million. Capital expenditures have been modestly updated, with manufacturing investing about $150 million.

Speaker Change: And now on to our guidance update.

Speaker Change: Based on current trends and production schedules, we are narrowing our delivery guidance to 23,500 to 24,000 units, which includes 1,400 units from our Brazil operation.

Speaker Change: To answer the question proactively, yes, this implies a significant increase in our Q4 activity. This reflects the combination of timing of syndications, increased production rates on a few lines, and more direct sales activity versus Q3.

Speaker Change: We are also narrowing our revenue range to $3.5 to $3.6 billion.

Speaker Change: Consolidated gross margin percent for the full year is increased to the mid-teens, which we consider to be between 14 to 16 percent.

Justin Roberts: Belly and administrative expense is expected to be approximately $235 to $240 million. Capital expenditures have been modestly updated with manufacturing, investing about $150 million. Maintenance services will invest $15 million, and we will invest about $340 million in our leasing and management services on a gross basis. This includes current year capex, as well as transfers of rail cards that were produced in 2023. That activity was primarily completing the first half of the year. Proceeds of equipment sales are unchanged at $75 million.

Speaker Change: Selling and administrative expense is expected to be approximately $235 to $240 million.

Speaker Change: Capital expenditures have been modestly updated, with manufacturing investing about $150 million, maintenance services will invest $15 million, and we will invest about $340 million in our leasing and management services on a gross basis.

Justin M. Roberts: Maintenance services will invest $15 million, and we will invest about $340 million in our leasing and management services on a gross basis. This includes current year CapEx, as well as transfers of railcars that were produced in 2023. That activity was primarily completed in the first half of the year. Proceeds of equipment sales are unchanged at $75 million.

Speaker Change: This includes current year CapEx as well as transfers of railcars that were produced in 2023. That activity was primarily completed in the first half of the year.

Speaker Change: Proceeds of equipment sales are unchanged at $75 million.

Justin Roberts: In closing, I will echo the comments Lorie and Brian made. We are pleased with the quarter as positive momentum continues to drive increased profitability. Progress on our strategic initiatives is resulting in improving operating efficiencies. Our robust backlog provides revenue visibility and stability, while liquidity and balance sheet strength allows for opportunistic gross. We have the right strategy and a plan to execute it. Green Briar is well positioned, and we remain optimistic about the future.

Michael Donson: In closing, I will echo the comments Lorie and Brian made. We are pleased with the quarter as positive momentum continues to drive increased profitability. Progress on our strategic initiatives is resulting in improving operating efficiencies. Our robust backlog provides revenue visibility and stability, while liquidity and balance sheet strength allow for opportunistic growth. We have the right strategy and a plan to execute it. Greenbrier is well positioned, and we remain optimistic about the future.

Speaker Change: In closing, I will echo the comments Lorie and Brian made. We are pleased with the quarter as positive momentum continues to drive increased profitability.

Speaker Change: Progress on our strategic initiatives is resulting in improving operating efficiencies. Our robust backlog provides revenue visibility and stability, while liquidity and balance sheet strength allows for opportunistic growth.

Speaker Change: We have the right strategy and a plan to execute it.

Michael Donson: As Lorie mentioned in her opening remarks, since Michael started just a few short weeks ago, we are giving him some time to get up to speed on Greenbrier. We are excited to have him as part of the Greenbrier family and know he will provide a lot of value to this organization. With that, I'll hand it over to Michael. Thank you, Justin.

Justin Roberts: As Lorie mentioned in her opening remarks, since Michael started just a few short weeks ago, we are giving him some time to get up to speed on Green Briar. We are excited to have him as part of the Green Briar family and know he will provide a lot of value to this organization.

Speaker Change: Greenbrier is well positioned and we remain optimistic about the future. As Lorie mentioned in her opening remarks,

Speaker Change: Since Michael started just a few short weeks ago, we are giving him some time to get up to speed on Greenbrier. We are excited to have him as part of the Greenbrier family and know he will provide a lot of value to this organization. With that, I'll hand it over to Michael.

Michael Donfress: With that, I'll hand it over to Michael. Thank you, Justin.

Operator: Since this is my first earnings call with Greenbrier, I thought it would be nice to say a few words. First and foremost, I'm excited to be here and have been impressed with the team members I've met and how well the company does. I believe Greenbrier is well-positioned in the industry for continued growth and success, and I'm thrilled to have the opportunity to contribute to the achievement of our strategy, Better Together. I believe our best days are ahead. I look forward to speaking with all of you on future calls. And now we'll open it up for questions. Ladies and gentlemen,

Michael Donfress: Since this is my first earnings call with Green Briar, I thought it would be nice to say a few words. First and foremost, I'm excited to be here and have been impressed with the team members I've met and how well the company operates. I believe Green Briar is well positioned in the industry for continued growth and success, and I'm thrilled to have the opportunity to contribute to the achievement of our strategy better together and believe our best days are ahead.

Michael: Thank you, Justin. Since this is my first earnings call with Greenbrier, I thought it'd be nice to say a few words.

Michael: First and foremost, I'm excited to be here and have been impressed with the team members I've met and how well the company operates.

Michael: I believe Greenbrier is well-positioned in the industry for continued growth and success, and I'm thrilled to have the opportunity to contribute to the achievement of our strategy, Better Together, and believe our best days are ahead. I look forward to speaking with all of you on future calls.

Michael Donfress: I look forward to speaking with all of you on future calls.

Unknown Executive: And now, we'll open it up for questions. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. If you would like to ask a question, please press star and then one. Using a touch-tone telephone to withdraw your questions, you may press star and two.

Michael: And now, we'll open it up for questions.

Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. If you would like to ask a question, please press star and then 1 on a touch-tone telephone. To withdraw your questions, you may press star and 2. Once again, we do ask that each analyst please limit themselves to one question and a single follow-up, if needed. Once again, that is one star and then one to join the question. Pause momentarily to assemble the roster. And our first question today comes from Steve Barger from KeyBank Capital Markets. Please go ahead with your question.

Speaker Change: Ladies and gentlemen, at this time we'll begin the question and answer session.

Speaker Change: If you would like to ask a question, please press star and then 1 using a touch-tone telephone. To withdraw your questions, you may press star and 2.

Unknown Executive: Once again, we do ask that each analyst please limit themselves to one question, and a single follow-up is needed. Once again, that is star and then one to join the question queue. We'll put pos momentarily to assemble the roster.

Speaker Change: Once again, we do ask that each analyst please limit themselves to one question and a single follow-up if needed.

Speaker Change: Once again, that is star and then one to join the question queue.

Speaker Change: We'll pause momentarily to assemble the roster.

Jacob Moore: And our first question today comes from Steve Barger from KeyBank Capital Markets. Please go ahead with your question. Hi, good morning.

Speaker Change: And our first question today comes from Steve Barger from KeyBank Capital Markets. Please go ahead with your question.

Jacob Moore: Hi, good morning. This is Jacob Moore. I'm here for Steve Barger this morning.

Brian Comstock: This is Jacob Moore on for Steve Barger this morning. Thanks for taking the questions. First, I wanted to ask on the manufacturing side of our order rates over the past few quarters versus the industry data. Your book to build numbers seems to be holding in notably better than the overall numbers. So I'm hoping you can speak to anything Green Briar specific that may be going on there and how you expect the differences in those trends to move going forward.

Speaker Change: Hi, good morning. This is Jacob Moore. I'm for Steve Barger this morning. Thanks for taking the questions.

Jacob Moore: Thanks for taking the question. First, I wanted to ask on the manufacturing side about your order rates over the past few quarters versus the industry data. Your book-to-bill numbers seem to be holding in notably better than the overall numbers, so I'm hoping you can speak to anything Greenbrier-specific that may be going on there and how you expect the differences in those trends to move going forward.

Speaker Change: First, I wanted to ask on the manufacturing side about your order rates over the past few quarters versus the industry data. Your book-to-bill numbers seem to be holding in notably better than the overall numbers. So, I'm hoping you can speak to anything Greenbrier-specific that may be going on there and how you expect the differences in those trends to move going forward.

Lorie Tekorius: Yeah, Jacob, it's Brian. I think I take that and, Lorie, you can chime in as required. You know, I think the reason we're able to hold such a strong market share is really the mix of production that we have. As compared to what the industry is building, we continue to build on a very diverse plane, and that gives us a lot of ability to address customers' delivery needs and the car types that are required. From a pricing perspective, the cadence is still strong. Pricing, discipline is still good in the market, and we're seeing really no fall-off or change, Lorie.

Brian J. Comstock: Yeah, Jacob, it's Brian. I think I'll take that, and Lori, you can chime in as required. You know, I think the reason we're able to hold such a strong market share is really the mix of production that we have. As compared to what the industry is building, we continue to build on a very diverse plane, and that gives us a lot of ability to address customers' delivery needs and the car types that are required.

Brian J. Comstock: Yeah, Jacob, it's Brian . I think I take that and Lorie, you can chime in as required. You know, I think the reason we're able to hold such a strong market share is really the mix of production that we have.

Brian J. Comstock: As compared to what the industry is building, we continue to build on a very diverse plane and that gives us a lot of ability to address customers' delivery needs and the car types that are required.

Brian J. Comstock: From a pricing perspective, the cadence is still strong. Pricing discipline is still good in the market, and we're seeing really no falloff or change. Lorie, any comments? I would also just add that I think our lease origination capabilities give us a great way to meet our customers where they are; whether they want to buy cars or lease them, we can put that together with our strong product. And I would say finally, Jacob, to ground out the question is we see the cadence of orders continuing into Q4 very similar to what we've seen over the past three quarters. So we don't really see any change in the cadence as well.

Jacob Moore: I understand. Thanks, Brian and Lorie.

Brian J. Comstock: From a pricing perspective, the cadence is still strong. Pricing discipline is still good in the market, and we're seeing really no fall off or change.

Brian Comstock: I would just add that I think our lease origination capabilities gives us a great way to meet our customers where they are, whether they want to buy cars or lease them. We can put that together with our strong product mix. And I would say finally, Jacob, you know, to ground out the question, we see the cadence of orders continuing into Q4 very similar to what we've seen over the past three quarters, so we don't really see any change in cadence as well. Understood. Thanks, Brian, Lorie. That's helpful.

Brian J. Comstock: And also just add that I think our lease origination capabilities gives us a great way to meet our customers where they are, whether they want to buy cars or lease them, we can put that together with our strong product mix.

Speaker Change: And I would say finally, Jacob, you know, to ground out the question is we see the cadence of orders continuing into Q4 very similar to what we've seen over the past three quarters. So we don't really see any change in the cadence as well.

Jacob Moore: That's helpful. And then, as a follow-up on the leasing side, I saw your notes on the lower leasing segment margin as a result of externally sourced railcars with an intent to syndicate. My question here is, is this going to become a common thread as you continue to grow the lease fleet? And how much external sourcing do you expect to do compared to internal over the next few years?

Jacob Moore: And then, as a follow-up on the leasing side, I saw your notes on the lower leasing segment margin as a result of externally sourced rail cars with an intent to syndicate. My question here is, is this going to become a common thread as you continue to grow the lease fleet, and how much external sourcing do you expect to do compared to internal over the next few years? That's a great question, Jacob. So this is something that we have done intermittently over the last probably five to seven years. It is many times very opportunistic, and part of this is providing our syndication partners additional assets that may be a little older than new rail cars, maybe have different credit qualities or different commodity concentrations.

Speaker Change: Understood. Thanks Brian and Lorie, that's helpful. And then as a follow-up on the leasing side, I saw your notes on the lower leasing segment margin as a result of externally sourced railcars with an intent to syndicate. My question here is, is this going to become a common thread as you continue to grow the lease fleet, and how much external sourcing do you expect to do compared to internal over the next few years?

Brian J. Comstock: That's a great question, Jacob. So this is something that we have done intermittently over the last probably five to seven years. It is often very opportunistic, and part of this is providing our syndication partners with additional assets that may be a little older than new rail cars, maybe have different credit qualities, or different commodity concentrations. And so it's something that's very hard to predict, but we do see it probably occurring a little more often as we move forward.

Brian J. Comstock: That's a great question, Jacob. So this is something that we have done intermittently over the last

Speaker Change: probably five to seven years. It is many times very opportunistic.

Speaker Change: and part of this is providing our syndication partners

Speaker Change: Additional assets that may be a little older than new rail cars, maybe have different credit qualities or different commodity concentrations and so it's something that's very hard to predict

Brian J. Comstock: And it's really going to be very, very hard to provide any quantitative guidance because it's deal by deal, transaction by transaction. But it is something that we are seeing as a little more activity in that market.

Brian Comstock: And so it's something that's very hard to predict, but we do see it probably occurring a little more often as we move forward. And it's really going to be very, very hard to provide any quantitative guidance because it's deal-by-deal, transaction-by-transaction, but it is something that we are seeing as a little more activity in that market.

Speaker Change: But we do see it probably occurring a little more often as we move forward. And it's really going to be very, very hard to provide any quantitative guidance because it's...

Speaker Change: Deal-by-deal, transaction-by-transaction, but it is something that we are seeing as a little more activity in that market.

Brian J. Comstock: And Jacob, this is Brian. I'll chime in that, as we look at secondary market transactions specifically, it really also focuses on number one, the returns, as we said, you know, we're really a high quality, high credit-focused organization, and the mix of what is being offered so that we can look at our concentration of our portfolios and how that fits, not only internally, but externally with our syndication partners.

Brian Comstock: And Jacob, this is Brian. I'll chime in if we look at secondary market transactions specifically. It really also focuses on A, number one, returns. We said we're really a high-quality, high-credit focused organization. And the mix of what is being offered so that we can look at our concentration of our portfolios and how that fits not only internally, but externally with our syndication partners. So we probably take a harder, more disciplined look than the market in general for that reason. But keep in mind, we also have the new car production as well that kind of helps us balance all of this out.

Brian J. Comstock: And Jacob, this is Brian . I'll chime in.

Speaker Change: You know, as we look at secondary market transactions specifically, it really also focuses on A, number one, the returns, as we said, you know, we're really

Speaker Change: High Quality, High Credit focused organization and the mix of what is being offered so that we can look at our concentration of our portfolios and how that fits.

Brian J. Comstock: So we probably take a harder, more disciplined look than the market in general for that reason. But keep in mind, we also have new car production as well, which kind of helps us balance all of this out.

Speaker Change: not only internally but externally with our syndication partners. So we probably take a harder, more disciplined look than the market in general for that reason, but keep in mind we also have the new car production as well that kind of helps us balance all of this out.

Jacob Moore: Got it.

Jacob Moore: Got it. Thank you very much.

Unknown Executive: Thank you very much.

Unknown Executive: Definitely.

Speaker Change: Got it, thank you very much.

Bascome Majors: Our next question, Costa. I'm Basque, major, from Susquehanna. Please go with your question. Yeah, good morning. I was hoping on the order question if we could revisit that and talk specifically about the North American order flow. How do you feel demand has evolved? There have been the last two to three quarters. And ultimately, you know, whether you think there's enough demand there to support a recent production rate in the 2025 in North America. Thank you.

Bascome Majors: Our next question comes from Bascome Majors from Susquehanna. Please go ahead with your question.

Speaker Change: Definitely.

Bascome Majors: Okay, good morning. I was hoping on the order question that we could revisit that and talk specifically about the North American order flow, how you feel demand has evolved over the last two to three quarters, and ultimately, you know, whether you think there's enough demand there to support a recent production rate in 2025 in North America. Thank you. Yeah, it's Brian.

Speaker Change: Our next question comes from Bascome Majors from Susquehanna. Please go ahead with your question.

Bascome Majors: Okay, good morning.

Bascome Majors: I was hoping on the order question, if we could revisit that and talk specifically about the North American order flow, how you feel demand has evolved over the last two to three quarters and

Bascome Majors: Ultimately, whether you think there's enough demand there to support a recent production rate in the 2025 in North America. Thank you.

Brian Comstock: Yeah, it's Brian.

Brian J. Comstock: Yeah, it's Brian. I'll take I'll take the first part again, and Lorie, Justin, feel free. The North American side of it is really what I'm focused on as well when I talk about my comments on the cadence. The cadence is very strong.

Brian Comstock: I'll take the first part again and Lorie, Justin Philfrey. North American side of it is really what I'm focused on as well. When I talk about my comments on the cadence, the cadence is very strong. It's very diverse at this point. We still see quite a bit of tankar demand, covered hopper car demand, auto demand, and then kind of coming up one of the bright spots that we see in 2025 that didn't exist in 2024 is box cars. We're seeing that box car cliff is creating shortages in the marketplace. Some of the large buyers are back in the market for some fairly large interest at this point.

Brian J. Comstock: Yeah, it's Brian . I'll take the first part again, and Lorie, Justin, feel free. North American side of it is...

Brian J. Comstock: It's very diverse at this point. We still see quite a bit of tank car demand, covered hopper car demand, and auto demand. And then kind of coming up, one of the bright spots that we see in 2025 that didn't exist in 2024 is boxcars. We're seeing that the boxcar cliff is creating shortages in the marketplace. Some of the large buyers are back in the market with some fairly large interests. At this point, we think those will materialize into orders.

Speaker Change: Really what I'm focused on as well when I talk about my comments on the cadence. The cadence is very strong. It's very

Speaker Change: Unknown Speaker We still see quite a bit of tank car.

Speaker Change: Unknown Demand, Hubbard Hopper Car Demand, Auto Demand, and then kind of coming up one of the bright spots that we see in 2025 that didn't exist in 2024.

Speaker Change: is boxcars. We're seeing that boxcar cliff.

Speaker Change: is creating shortages in the marketplace. Some of the large buyers are back in the market for some fairly large.

Brian Comstock: We think those will materialize into orders. And then there's always intermodal, while the demand is international demand is still strong. The fleet, if you look at the fleet of international intermodal wells, it's over 90% utilized at this point, which is a very, very high percentage of 40-foot units in place. So there could be some tailwinds from intermodal as well. But currently, the cadence in North America is very consistent.

Brian J. Comstock: And then there's always intermodal while the international demand is still strong. The fleet, if you look at the fleet of international intermodal wells, it's over 90% utilized at this point, which is a very, very high percentage of 40 foot units in place. So there could be some tailwinds from intermodal as well. But currently, the cadence in North America is very slow.

Speaker Change: Interests, at this point we think those will materialize into orders.

Speaker Change: And then there's always intermodal while the demand is, international demand is still strong.

Speaker Change: If you look at the fleet of international intermodal wells, it's over 90% utilized at this point, which is a very, very high percentage of 40-foot units in place. So there could be some...

Speaker Change: Some tailwinds from Intermodal as well, but currently the cadence in North America is very consistent.

Unknown Executive: Thank you for that.

Bascome Majors: And if we could shift a little bit to the margin front, I mean, you mentioned in the prepared remarks, the piece of your insourcing initiative is really starting to hit, and in full force next spring. You know, some of the timing of some of the manufacturing cost savings you talked about at Investor Day a couple years ago also really were aligned, I believe, in 2025. Can you just walk us through, you know, the mid and long term cost out initiatives in your manufacturing process?

Unknown Executive: And if you could shift a little bit to the margin front. I mean, you mentioned in the prepared remarks, the piece of your insourcing initiatives really starting to hit and in full force next spring. Some of the timing of some of the manufacturing cost savings you talked about the investor day a couple of years ago also really were aligned. I believe in 2025.

Speaker Change: Thank you for that. And if we could shift a little bit to the margin front, I mean you mentioned in the prepared remarks the piece of your insourcing initiatives really starting to hit.

Bascome Majors: You know, what you expect to hit next year and any quantification of that you want to remind us of? And, you know, finally, any offsets that look like they might be bad guys to face off against what feels like a pretty good story on manufacturing margin improvement in the next year. Thank you.

Speaker Change: in full force next spring.

Speaker Change: You know some of the timing of some of the manufacturing cost savings you talked about the investor day a couple years ago also

Justin Roberts: Can you just walk us through the mid and long term, cost out initiatives in your manufacturing process, what you expect to hit next year, and any quantification that you want to remind us of, and you're finding any offsets that look like they might be bad guys to face off against what feels like a pretty good story of manufacturing margin improvement the next year. Thank you. Yeah, that's good.

Speaker Change: Really, we're aligned, I believe, in 2025. Can you just walk us through...

Speaker Change: You know, the mid and long-term cost-out initiatives in your manufacturing process.

Speaker Change: What you expect to hit next year, and any quantification of that you want to remind us of. And finally, any offsets that look like they might be bad guys to face off against, what feels like a pretty good story of manufacturing margin improvement the next year. Thank you.

Justin M. Roberts: Yeah, Bascome, I'll take a shot at it. And then Brian and Lorie can chime in as needed. So just to set the stage at our Investor Day, we spoke to two specific initiatives. One was a capacity rationalization, primarily focused initially in North America, that was going to generate about $20 million a year of cost savings. And we accomplished that actually last year.

Justin Roberts: I'll take a shot at it, and then Brian and Laurie can chime in as needed. So just the level set at our investor day, we spoke to two specific initiatives. One was a capacity rationalization, primarily focused initially in North America. That was going to generate about $20 million a year of cost savings, and we accomplished that actually last year. So we, with the sales of a few different facilities, feel like we've taken out, or we have taken out, about $20 million annually on a run rate basis. And then on the in-sourcing initiative, we spoke to savings of up to $50 million through the make versus buy and the internal fabrication activity, which, along with some other management activities, is going to generate a run rate of about $50 million of savings.

Speaker Change: Yeah, Bascome, I'll take a shot at it and then Brian and Lorie can chime in as needed. So just to level set at our investor day, we spoke to two

Speaker Change: specific initiatives. One was a capacity rationalization.

Speaker Change: primarily focused initially in North America, that was going to generate about $20 million a year of cost savings. And we accomplished that actually last year. So we, with the sales of a few different facilities, we feel like we've taken out or we have taken out about

Justin M. Roberts: So we, with the sale of a few different facilities, feel like we've taken out or have taken out about $20 million annually on a run rate basis. And then on the insourcing initiative, we spoke to savings of up to $50 million through the make versus buy and the internal fabrication activity, which, along with some other management activities, is going to generate a run rate of about $50 million in savings.

Speaker Change: $20 million annually on a run rate basis.

Speaker Change: And then on the insourcing initiative, we spoke to savings of up to $50 million through

Speaker Change: The Make Vs. Buy and the internal fabrication activity which, along with some other management activities, was going to generate a run rate of about $50 million.

Justin M. Roberts: And we believe we are on track for that with the majority of that, as we said, as we're finishing the internal fabrication, a lot of that will come online in the Spring of 2025. And the thing that the puts and takes really come down to is the volume of cars and production rates. And so if you think about it, we have an assumed kind of product mix that we predicted based on our backlog and other things when we put this all together about a year, a year and a half ago.

Justin Roberts: And we believe we are on track for that, with the majority of that, as we said, as we're finishing the internal fabrication. A lot of that will come online in spring of 2025, and the thing that the puts in takes really it comes down to is volume of cars and in production rates. And so if you think about, we have an assumed product mix that we predicted based on our backlog and other things when we put this all together about a year, a year and a half ago. And as that shifts, that's going to be the driver of any changes to those savings.

Speaker Change: of Savings. And we believe we are on track for that with the majority of that, as we said, as we're finishing the internal fabrication, a lot of that will come online and

Speaker Change: Spring of 2025. And the thing that the puts and takes really, it comes down to is volume of cars and in production rates. And so if you think about

Speaker Change: You know, we have an assumed kind of product mix that we, you know, predicted based on our backlog and other things.

Justin M. Roberts: And as that shifts, that's going to be the driver of any changes to those savings. But at this point, we don't see a significant shift. We do expect to achieve it, and it really is just going to be a matter of the timing and our production rates at the time. Please let us know if that doesn't quite answer the question you're asking or if there's something else.

Speaker Change: When we put this all together about a year, year and a half ago, and as that shifts, that's going to be the driver of any changes to those savings.

Justin Roberts: At this point, we don't see a significant shift. We do expect to achieve it. And it really is just going to be a matter of the timing and our production rates at the time.

Speaker Change: At this point, we don't see a significant shift. We do expect to achieve it. And it really is just going to be a matter of kind of the timing and our production rates at the time.

Justin Roberts: Please let us know that doesn't quite answer the question you were asking. You know, if there's something else on, I would just say I think that in addition to broader efficiencies, the end sourcing, we're starting to see some of those benefits in the margin, which has provided us the ability to have, you know, third quarter in a row of mid-teens consolidated margin. So it is a factor in that. And we haven't seen all that it will do yet.

Lorie L. Tekorius: Well, and I would just say, I think that in addition to broader efficiencies, the insourcing, we're starting to see some of those benefits in the margin, which has provided us with the ability to have, you know, third quarter in a row of mid-teens consolidated margin. So it is a factor in that, and we haven't seen all that it will do yet.

Speaker Change: Please let us know if that doesn't quite answer the question you were asking or if there's something else. Well, I would just say I think that in addition to broader efficiencies, the insourcing, we're starting to see some of those benefits in the margin, which has provided us the ability to have

Speaker Change: You know, third quarter in a row of mid-teens consolidated margins. So it is a factor in that, and we haven't seen all that it will do yet.

Bascome Majors: And thank you both, and it may be to connect with my first question and second as a follow-up here. You know, ultimately, you're Brian talked about a fairly steady demand picture in North America. You talked about, I guess, the risk to margins being more about units in volume than necessarily anything internal supply chain or pricing related. Do you feel pretty good about a steady production cadence, at least into the first half next year, or could there be some adjustments based on the last three quarters' borders?

Bascome Majors: And thank you both. And maybe I can connect with my first question and second, as a follow up here. You know, ultimately, Brian talked about a fairly steady demand picture in North America. You talked about, I guess, the risk to margins being more about units and volume than necessarily anything internal, supply chain, or pricing related. You know, do you feel pretty good about a steady production cadence at least into the first half of next year, or could there be some adjustments based on the last two or three quarters of orders? Thank you. Yeah, this is Brian. Maybe I'll jump in, Lorie, please.

Speaker Change: And thank you both. And maybe to connect with my first question and second as a follow-up here.

Speaker Change: Ultimately, Brian talked about a fairly steady demand picture in North America.

Speaker Change: You talked about, I guess, the risk to margins being more about units and volume than necessarily.

Speaker Change: Anything Internal, Supply Chain or Pricing related.

Speaker Change: Do you feel pretty good about a steady production cadence at least into the first half of next year or could there be some adjustments based on the last two or three quarters of orders? Thank you.

Unknown Executive: Thank you.

Brian J. Comstock: Yeah, this is Brian. Maybe I'll jump in and Lorie, please, you know, feel free, but right now, we have strong visibility on order cadence through the first two quarters into the third quarter, and I would say it's very consistent with what we're seeing today.

Brian Comstock: Yeah, this is Brian. Maybe I'll jump in. Lori, please, you know, fill in. But right now we have strong visibility on order cadence through the first two quarters into the third quarter. And I would say it's very consistent with what we're seeing today. So. Thank you all.

Brian: Yeah, this is Brian . Maybe I'll jump in Lorie. Please, you know, feel in, but right now we have strong visibility on order cadence through the first two quarters into the third quarter and I would say it's very consistent with what we're seeing today.

Brian: [inaudible]

Unknown Executive: Thank you, Baskin.

Unknown Executive: Once again, if you would like to ask a question, please press star and then one.

Speaker Change: Thank you all.

Kenneth Scott Hoexter: Once again, if you would like to ask a question, please press star and then one. Our next question comes from Ken Hoexter from Bank of America. Please go ahead with your question.

Speaker Change: Thank you, Bascome.

Speaker Change: Once again, if you would like to ask a question, please press star and then 1.

Ken Hoexter: Our next question comes from Ken.

Brian Comstock: Oh, third from Bank of America, please go with your question. Great. So, Lori or Justin, I guess, or Brian, I guess looking at the ramp to the 7,000 plus cars in the next quarter. Third quarter production was down slightly. But I think you only mentioned 100 were caught in the line chain shift. Can you talk about the impacts into third quarter production? And I guess maybe an early read into next year, are you looking at then same 2325? Is that the max production level? Is it scalable from here? I guess trying to understand kind of your thoughts on production.

Speaker Change: Our next question comes from Ken Hoexter from Bank of America. Please go ahead with your question.

Kenneth Scott Hoexter: Great. So Lorie or Justin, I guess, or Brian, I guess looking at the ramp to the 7,000 plus cars in the next quarter, third quarter production was down slightly, but I think you only mentioned 100 were caught in the line change shift. Can you talk about the impacts on third quarter production and, I guess, maybe an early read into next year? Are you looking at the same 2325? Is that the max production level? Is it scalable from here? I guess I'm trying to understand kind of your thoughts on production.

Speaker Change: Great.

Kenneth Scott Hoexter: So Lorie or Brian , looking at the ramp to the 7,000 plus cars in the next quarter, third quarter production was down slightly, but I think you only mentioned 100 were caught in the line change shift.

Speaker Change: Can you talk about the impacts into third quarter production and, I guess, maybe an early read into next year? Are you looking at then same 23-25? Is that the max production level? Is it scalable from here? I guess trying to understand kind of your thoughts on production.

Justin Roberts: Well, I'll start at the end and then work my way backwards. Yes, you've seen. Can you been following this industry for so long? You know how scalable we can be. But that's what's nice about having some nice steady demand right now. The one of the things that impacted in Q3 was we did have a few changeovers, which those are now complete in our North American facilities. So that would have been one of the impacts on Justin. Yeah, I was going to say the 100 cars mentioned were actually caught in congestion at the border. So those were just it was just the time and shift from May into June, but the changeovers caused a lower production rate, which were ramped up now.

Lorie L. Tekorius: Well, I'll start at the end and then work my way backwards. Yes, you've seen, Ken, you've been following this industry for so long, you know how scalable we can be. But that's what's nice about having some nice steady demand right now. One of the things that affected us in Q3 was we did have a few changeovers, but those are now complete in our North American facilities. So that would have been one of the impacts. Justin?

Speaker Change: Well, I'll start at the end and then work my way backwards. Yes, you've seen, Ken, you've been following this industry for...

Speaker Change: So long you know how scalable we can be.

Speaker Change: But that's what's nice about having some nice steady demand right now. One of the things that impacted in Q3 was we did have a few changeovers which those are now complete in our North American facilities. So that would have been one of the impacts.

Justin M. Roberts: Yeah, I was going to say the 100 cars mentioned were actually caught in congestion at the border. So it was just a timing shift from May into June. But the changeovers caused a lower production rate, which we're ramping up now. And that's part of what is going to cause the Q4 deliveries to be higher, along with strong syndication activity as assets come off the balance sheet.

Speaker Change: Yeah, I was going to say the 100 cars mentioned were actually caught in congestion at the border.

Speaker Change: Those were just, it was just a timing shift from May into June , but...

Lorie Tekorius: And that's part of what is going to cause the Q4 deliveries to be higher, along with strong syndication activities as assets come off the balance sheet. Okay, so to wrap that up, right? So 4Q, you get up to the 7,000 plus because you had some line changeovers. The 100 was only the border. I get that now.

Speaker Change: The changeover has caused a lower production rate, which we're ramped up now, and that's part of what is going to cause the Q4 deliveries to be higher, along with strong syndication activity as assets come off the balance sheet.

Kenneth Scott Hoexter: Okay, so to wrap that up, right, so for Q, you get up to the 7000 plus, because you had some line changeovers, the 100 was only the border. I understand that now. And then Lorie, I guess, maybe clarify that outlook for next year, just given your backlog, do you feel like you'll get above this 23, 24,000? Or is that kind of the run rate based on your production capacity?

Speaker Change: Okay, so to wrap that up, right, so 4Q you get up to the 7,000 plus because you had some line changeovers, the 100 was only the border, I get that now, and then Lorie, I guess maybe clarify that outlook for next year, just given your backlog, do you feel like you get above this 23, 24,000 or is that kind of the run rate based on your production capacity?

Lorie Tekorius: And then, Lorie, I guess maybe clarify that outlook for next year, just given your backlog. Do you feel like you get above this 23, 4,000, or is that kind of the run rate based on your production capacity? I would say it's not our run rate based on capacity. I think that we've got significant capacity. We are focused on maintaining stable production, consistent with what our customers need.

Lorie L. Tekorius: I would say it's not our run rate based on capacity. I think that we've got significant capacity. We are focused on maintaining stable production consistent with what our customers need. As I look into 2025, and we're not ready to give guidance yet, Justin's really trying to kick me under the table right now, but we think that we see, you know, in the neighborhood of where we are in 2024 is what we expect to see in 2025, depending on, you know, where orders come in for the second half of the year. Perfect.

Lorie L. Tekorius: I would say it's not our run rate based on capacity. I think that we've got significant capacity. We are focused on maintaining stable production, consistent with what our customers need. As I look into 2025, and we're not ready to give guidance yet, Justin's really trying to kick me under the table right now. But we think that we see

Lorie Tekorius: As I look into 2025, and we're not ready to give guidance yet, Justin's really trying to kick me under the table right now. But we think that we see, you know, in the neighborhood of where we are in 2024, is what we expect to see in 2025, depending on, you know, where orders come in for the second half of the year. Perfect.

Lorie L. Tekorius: You know, in the neighborhood of where we are in 2024 is what we expect to see in 2025, depending on, you know, where orders come in for the second half of the year.

Kenneth Scott Hoexter: Perfect. And then, for a follow-up, I guess, switching subjects to leasing, you know, you've ramped up the revenue. You talked about kind of the ability to keep scaling the revenue side. Maybe you could talk about how we should think about the level of revenues you anticipate and how we should see that develop over the near term.

Justin Roberts: And then for follow-up, I guess, switching subjects to leasing, you know, you've ramped up the revenue. You talked about kind of the ability to keep scaling the revenue side. Maybe you could talk about how we should think about the level of revenues you anticipate and how we should see that develop over the near term. So we actually just expect to, especially on the leasing piece, continue to focus on building the recurring revenue. It's just been a very stable, steady build over the last 18 months. I think it's up about $25 million since April 2023, when we first announced this initiative.

Lorie L. Tekorius: Perfect.

Speaker Change: And then for follow-up, I guess, switching subjects to leasing, you know, you've ramped up the revenue. You talked about kind of the ability to keep scaling the revenue side. Maybe you could talk about how we should think about the level of revenues you anticipate and how we should see that develop over the near term.

Justin M. Roberts: So we actually just expect to, especially on the leasing piece, continue to focus on building recurring revenue. It's just been a very stable, steady build over the last 18 months. I think it's up about $25 million since April 2023, when we first announced this initiative, and I would say Brian can correct me or, obviously, disagree. But this is steady as she goes. We're investing about 50 to 60 to $70 million in assets into the fleet every quarter.

Speaker Change: So, we actually just expect to, especially on the leasing piece,

Speaker Change: Continue to focus on building the recurring revenue. It's just been a very stable, steady build over the last 18 months.

Speaker Change: I think it's up about $25 million since April 2023 when we first announced this initiative.

Brian Comstock: And I would say Brian can correct me or obviously disagree, but this is a steady issue goes. We're investing about 50 to 60 to $70 million per quarter of assets into the fleet. That is just continuing to build on top of each other. And then, as we're going to our normal renewal process, we do expect to continue to make ground as old leases are repriced to the current market raise. Yeah, I agree. Just in the complexity in it is because we are very disciplined and we're very focused on the mix, and the credit quality is it's not a steady cadence.

Speaker Change: I would say Brian can correct me or obviously disagree, but this is a steady as she goes. We're investing about

Speaker Change: $50 to $60 to $70 million per quarter of assets into the fleet that is just continuing to build on top of each other. And then as we're going through our normal renewal process, we do expect to continue to make ground as old leases are repriced to the current market rates.

Justin M. Roberts: That is just continuing to build on top of each other. And then, as we're going through our normal renewal process, we do expect to continue to make ground as old leases are repriced to the current market rates.

Brian J. Comstock: Yeah, I agree, Justin. The complexity in it is that we are very disciplined and we're very focused on the mix, and the credit quality is it's not a steady cadence. So it's not as easy, while we may be generating leases during the quarter, you know, we have to then decide which ones are going to go on the balance sheet and which ones are going to be offered to the syndication market. So, you know, that was the only correction I'd make is that we do have this consistent build of originations each quarter, but it does still stay a little lumpy because of the decision process and how we manage Great. Thanks, Brian.

Speaker Change: Yeah, I agree, Justin. The complexity in it is because we are very disciplined and we're very focused on the mix and the credit quality.

Brian Comstock: So it's not as easy while we may be generating leases during the quarter. We have to then decide which ones are going to go on the balance sheet and which ones are going to be offered to the syndication market. So that was the only correct I'd make is we do have this consistent build of originations each quarter, but it does still stay a little lumpy because of the decision process and how we manage the fleet, our syndication side of the equation.

Speaker Change: is it's not a steady cadence. So it's not as easy while we may be generating leases during the quarter.

Speaker Change: We have to then decide which ones are going to go on the ballot sheet and which ones are going to be offered to the syndication market.

Speaker Change: So, you know, that was the only correction I'd make is we do have this consistent build of originations each quarter, but it does still stay a little lumpy because of the decision process and how we manage that fleet and our syndication side of the equation.

Ken Hoexter: Great. Thanks, Brian, Justin, Laurian, and welcome, Michael. Thanks, Ken.

Brian J. Comstock: Great. Thanks, Brian, Justin, Lorie, and

Speaker Change: Great. Thanks, Brian , Justin, Lorie, and welcome, Michael.

Unknown Executive: With that, I think we will go ahead and end the call today.

Lorie L. Tekorius: And with that, I think we will I was going to say, with that, I think we will go ahead and end the call today. Thank you very much for your time and attention. If you have any other follow-up questions, please reach out to myself or InvestorRelations at GBRX.com. Thank you, and have a good day.

Speaker Change: And with that, I think we will...

Unknown Executive: Thank you very much for your time and attention.

Speaker Change: I was going to say with that, I think we will go ahead and end the call today. Thank you very much for your time and attention. If you have any other follow-up questions, please reach out to myself or InvestorRelations at GBRX.com. Thank you and have a good day.

Unknown Executive: If you have any other follow-up questions, please reach out to myself or Investor Relations at gbrx.com. Thank you, and have a good day.

Unknown Executive: And ladies and gentlemen, with that, we'll be concluding today's conference call and webcast. We do thank you for joining. You may now disconnect your line.

Operator: And ladies and gentlemen, with that, we'll be concluding today's conference call and webcast. We do thank you for joining us. You may now disconnect your lines.

Speaker Change: And ladies and gentlemen, with that, we'll be concluding today's conference call and webcast. We do thank you for joining. You may now disconnect your lines.