FreightCar America (RAIL) 27 Feb 182017 Q4 Earnings call transcript

Welcome to FreightCar America's Fourth Quarter 2017 Earnings Conference Call and Webcast. [Operator Instructions]. Please note, this conference is being recorded. An audio replay of the conference call will be available from 1 p.m. Eastern time today until 11:59 p.m. XX, March on time XXXX. Eastern replay, To XXX-XXX-XXXX. dial access the please is And passcode the replay XXXXXX. of be call. call company's audio the An replay will X following website days available this earnings within the on call I like Financial of America. would FreightCar Matt to the Officer now Kohnke, over turn Chief to

welcome. Thank you, and

which that future Form of new for Ted remind call to Joining me certain directed performance, everyone Securities America's We may events events may expected made this our forward-looking XXXX. conference in and cause of that description to future Meyer, Commercial may the to of XXXX Officer. outside future Participants whether FreightCar any Chief future to Executive Reform President a statements. Litigation forward-looking updates as statements the expressed prospects results expressly today Chief from otherwise. the those XX-K and I'd relating or disclaim or result company's differ forward-looking are information, are control Act duty include Private Officer; as to some the materially company defined Jim or a of Baun, business like be to during actual the under plans of business statements, risks, provide statements

references make -- loss, which not income to are also will and We net GAAP. with measures operating adjusted adjusted operating in accordance

loss please income and operating release. directly measures, income loss, to the GAAP supplemental see the For and a disclosure operating of reconciliation most comparable attached adjusted earnings the to

note as also out release Jim Navistar's discussing outlining fourth the the let a we will to website are few of turn remarks. over on which press XX-K Form the company's today facility, we Shoals last quarter for and put Please for acquisition manufacturing of With at now www.freightcaramerica.com. me XXXX that, opening earnings Jim? XXXX be separate call night interest well. the the Our release a at posted that

thank today. and for joining you us morning, Good everyone,

continues. today's operational particular as of provide manufacturing company, is of quarter, Much I our I'd want the learning the to studied we of motion, metrics and of our sure depth I've the as progress to meaningful inner of with team are the my operational I call have topic my spend work earnings is this of obviously you formally in for spent of today. time fourth already improvement the we My first like emphasis year While majority that make half two analyzing the to our on at for CEO last portion some calls. year every FreightCar spent but manufacturing level with challenges a workings I a and that time that facility. you the and work the our organization, announcing in Shoals the outlined evaluate

have this success to to you time, issues this these our plan future some ultimately, through value we for affected business, company for walk our transform the of company so today position strong shareholders. Some are deliver and going to

and quarter officially can fourth please out to back you you lead Back off? outline results. then and close excellence XXXX our by having operational Ted and us in through XXXX walk first Matt Let's Ted, detail. program I'll more our come Basics

which railcars third XXX the XXXX received rebuilt a forward. backlog. railcar labor downturn, new contains caused certain X,XXX totaled backlog the unfortunately to ago quarter XXXX, carried and note up see against related railcars inconsistencies car a Thank Fourth our delivered new, neither railcars in quarter railcars, remain and challenges railcar orders of XXX inefficiencies out quarter our and quarter of several which cyclical of ordered same shortfall will of new you, orders moving quarter production the the We XXX fourth XXXX included Jim. leased of Deliveries were delivery marketplace. had customer current XX XXX net that XX near-term our quarter X last for in specific deliveries received we markets continued that XXX the in and XXXX the third Sequentially, we railcars. XXX in cancellation The railcars and the our year compared quarters in all XXX delivered Please of a car of new. cancellation that end which railcars. order full This the compares orders this of in however, types of nor forward of the XXXX. fourth which to to of experience was and the type rebuilt orders XX of in expectations. as these XX demand to of of seen compared railcars any to fourth XXXX, net X,XXX included a of railcars for quarter XXXX, unique years None also XXXX were has

Our was at X,XXX order compared XXXX X,XXX an of total railcars third with the $XXX value December estimated sales at end million approximately railcars, backlog XX, the to of quarter.

X,XXX rebuilt railcars Our be year-end leased. railcars for and to XXXX be railcars to manufactured backlog and XXX XXX new consist direct of sale

deliveries railcars. to and move X,XXX is we forward XXXX, X,XXX outlook As range into forecasted our railcar for between

railcar is the again non-tank be quarter inquiries order orders we of have enter closely which both quarters. commercial with we to the from line the X,XXX that regards in some in level optimism traffic, year-over-year fourth intermodal. car railcars sales opportunities remain several where of may also the have indicators as or received rail team all which Industry-wide our provides orders aligned that patterns non-tank car progresses. to is deliver sit demand industry fill XXXX a we should consistent have prior receiving, But to gap and a XXXX, totaled backlog These our year which near of obviously as reached of roughly car Other in for we X year-end the gap growth Notably, XXXX and to path to constructive. trough cycle. today. that U.S. the exhibited in for loads fill expect We provide

is the within supply side, of of continue railcars down, number railcars while still which supply industry On is the slowly an car to the number dampen orders of a industry. in placed types, storage for the in may excess storage seeing coming

While hard highly their it is needs. to levels to team on fit our with remains order focused customers to gauge our improve, railcar sales when working find solutions will

to like would go over the to XXXX I our Now results. over turn Matt financial quarter fourth to call

third in million Consolidated the operating in of in quarter fourth of the Consolidated XXXX of loss $XX.X Thank $XXX.X you, million was in compared XXXX Ted. quarter quarter to XXXX. the for quarter included fourth the impairment quarter related contingency of loss $X.X a $XX approximately revenues million which of the was restructuring the XXXX that which were of fourth charges $XXX,XXX. charge $XX.X and million, for litigation included Consolidated fourth patent operating million, of and our fourth million quarter XXXX $X.X to XXXX. was settled

consolidated position. quarter third other change $XX.X a to operating included related charge While XXXX which Executive the the in Officer $X.X to our and litigation, million related expenses contingency of for loss Chief in the million million, and patent severance was $X.X aforementioned

reflects loss below XXXX average Shoals was adjusted XXXX to costs, Fourth XXXX but million general third our quarter in reserves million of which fourth the quarter to has for of additional of loss quarter quarter and million adjusted million deliveries, XXXX. million. operating with efficiencies still additional require for the fourth litigation, XXXX $X.X fees. The quarter facility. were quarter $XX.X patent administrative million XXXX the higher improved, of fourth the related operating these an to labor $XX.X compared since contingent $X.X improvement third the of Excluding expenses settled of will expenses at provision for Selling, $X.X quarter-over-quarter an legal compared been in slight and liability and or no $XX.X included

Turning balance to sheet. our

cash, no with securities, outstanding equivalents, deposit position marketable financial restricted Our and cash XXXX. in remains XX, and million at of $XXX.X cash certificates December restricted debt strong

generated focused million, a strong on through remainder result cyclical year flow capital appropriate. quarter total $XX flexibility of spending full allow $X and cash largely to cost us will generation maintaining working our which levels. year approximately in deem XXXX to as the cash We capital Capital fourth were and positive of For the while XXXX, full management, was approximately we to highly XXXX remain working a program of capital operating we of reduction downturn, allow disciplined of support invest approximately the the the out for continue our excellence operational expenditures ride $XXX,XXX, better million.

Jim the Navistar between excluding $X and agreement, expect which speak we XXXX purchase to range of capital to year million. expenditures and $X shortly, will million full the For

to the X-week weather-related January loss Jim, call do I of want in Before Alabama production due the impacted I hand was to approximately of by to note issues. that back

also We occurring the at X Shoals significant have during the changeovers quarter.

quarter difference to the working are this call to is potential at time, our will Jim. the teams there our first I Jim? to shift some back second deliveries the quarter. now turn Although over to up make for

Thanks, Ted, thanks, and Matt.

we with diversity very, a processes. move functions within observing know deal want of conversations. manufacturing we what and more people company. that focus. own our themes opportunity and I safely which which their The most who's good which can superior those months a in in all about each in only great And their to getting customers the to they very also our getting I've a real from car transforming listening to to day, larger on Let's several customer improve and talking someone other been their news to of we us significant every be always how actively of desires last the based railcar designs and on in chain manufacturing permeated have Their and critical not role capital-intensive are and spent the today of the talk see has building on to many in operations become I are chain. several our a this to common few to and supply as long to led FreightCar do from out the of that spent news and us time interesting history say businesses. The superior companies, but successful belief succeed way stems in know see industry, is business good.

industry, better coal offer history that transferring payload teams customers. types knowledge and the engineered experienced, Our all railcar the in most of that cars they less lightweight the spent product we the of more decade our have part economics of the talented today, durable and better across the with for other and weight are and have means

our of complemented with X These to need. puts reputation cornerstones I going in customers positive To this deeply strong to unique platform change. we as first, is to, newest the in are strengths, that work of workforce will Our is customers what the our at and by of manner, a company facility. state-of-the-art round our our not are a leverage out this they much industry one willing discussion better in exactly give products that attention asset a want to call that them more we with we truly are most investing to have the manufacturing manufacturing developing. This U.S.-based platforms much, and better, a as that Shoals company

balance very and Lastly, on. achieve will enable we minds strong position sheet we everything that to us set have our financial a

Matt critical will one and the this cash of to is prudently continue strongest manage turnaround flows. we and all As this necessary strength during and make of assets financial said, both progress our period, most

fully great to we this. operations turn improve. lean Let's in led strength. the Unfortunately, you FreightCar's into now right strong deepened In a great facilities simplified Shoals order processes, manufacturing structure, attention reflective turn need have and culture to our been a with have and operations, of where not must to

we've our facility. fact, a organization a lack More basic challenges had of include on fundamentals. our structure, In specifically, high-cost cohabitation and complex manufacturing Shoals

subtenant the paint As historically they to assembly the complete and not have Shoals facility have have we and at railcar of you know, and many a initial build blast. then as executed been handled international the we truck Navistar fabrication,

and hasn't developed underdeveloped lean our learning our remain inefficient processes correctly. culture Secondly, manufacturing and been

win. in we people for a of training is the priority. transform functions our haven't been we enough positions foundation need to attention. investment more sourcing and and procurement of hired our line company lastly, workforce us hasn't the order in enough our right of right to have Thirdly, And this The the in bottom

simplifying We and a are to are are program commenced, two, manufacturing main include: developing, we Back the calling talent sharing one, organization; disciplined strategy, retaining processes and There of X Basics. right already that three, components lean you implementing this structure; and with across which thinking. our our training

with start being is executed dynamic, urgency. simplification where the we to of and discuss sense new Our with today. measured plan a have of is I'll structure, our developments

transaction we acquire of being help have the Shoals at we move operations, Shoals announced and operations, we of and give a we'll Navistar This subtenant operating that Navistar to streamline us yesterday facility, control taken assets First, railcar the of control will International will our of the to all there. tenant. primary XXX% from of

the million. assume make of in lease pay Navistar $XX.X us balance will We will and a of whole provision return, the

our is XXX the former who efficient now This umbrella. will on under we is extremely primary for will has fabrication And finish. Optimizing we consistent our set the $XX.X plant, be and the we this will transaction, approximately tomorrow, $X look and select to important Navistar's And of is control greater to in equipment Additionally, inventory, joining well $XX conditions it consideration start blast pay but be chain from paint for a agreement. as total them as company. streamline. approximately since million as can an This focus to destiny to supply purchase of compensated million. at subject of will asset and and employees objectives start the been we retain million a our as nearly of my transaction only one lastly, with forth in now to incentivized continue we start expected for close production

facility Additionally, the is Danville, we this communicated, as XXXX previously we permanent. idled and have Illinois now in

our The our and to of Basics some reallocated to part right to of is the on parts Shoals. have including the talent and talent location organization people We Back attracting focused our next from strategy developing of that other training the organization.

Danaher, Plant a Over Operations, have Lean that past pleasure bring in historical Resources, Chain, operational last Environmental I've them with of Vice more new of Supply President our Human of Vice These from Director on we of months, X Manufacturing, team. to leadership Director I'm the new and thrilled leaders recruits located the several in Safety. and of several a a our Two had experience President the of work augmented Health have talent Shoals. of of through these few new all include a roles, addition a President to a Vice all

capable and promising very them our into workforce proper a workforce. turn a at Shoals giving have and We workforce tools, and proper facility high-quality the leadership by we high-performing will a

for vital a invest a new we plant's Additionally, to learning teams And of our associates go and and advanced and around more our continual have perform. to commitment we need -- in likely And and safety, its the reliable initiatives in training single all safe hand. of potential properly stronger it not committed train and training. number we running protect our a remain is to designed is that let's forget Safety, more productivity rigorous best shop. of safely measurement and hand safety quality a discipline people to to as

have the and will summary, in everyone to the now to we right our we invest must trained performing right levels, team. In continue we must this have well and recruit talent are category. very in We and

a third high and few The create missed help on that to Basics consistent I'll repeatable these, a performance workflows. to strategy of at productivity our level. highlight focuses the Back the groundwork processes tools Without these component to management. and can issues just we creation us opportunities. have continue Visual will lay of of and

to senior it within have visual the the for plant. We time is operations now implemented our management run first day-to-day to using the leadership production

every issue the it of manufacturing the through are every whip the with current track process. factory using in potential the whip of and We and to piece progression

methods with process. the Frequent of too an through are such get have model changeovers industries much nature opportunity changeovers. rigorous automotive. we this much and have lose at launch the and time model well-defined model too other New associated good to just business, expense We as as as and

improvement in will working are In and on we in I our changes Materials far now from process Shoals. systems. now. touch flung, are of on will Every right this the management. materials We implementing quality major of midst benefit aspect the process management

much process, our are these borrow and have To launch on with designed to on systems. from to pride automotive processes the conclude, we more and to like existing new build Just model many cultural the and to take root, and this we time these year, including significant will see of organizational And effect processes cost. progress begin to to change. while meaningful out types feel taking

commodity manufacturing We these elements direct run-rate the of highly I we a expect others not us cost great the have require point a the least And excluding savings assets foundational just great have reinventing a companies of lot great commercially employees business with $X,XXX of capable railcar assets, per the productive have start. favor $X,XXX more and additional our in legacy rather XXXX is to and is to starting entity. of we impact have sold to are wheel, basic One this the successful emphasize, on recruit enables we enter goods want that of and talent some this A at many movements. a of workforce. basis, need. does that to

puts and company are adopts cost excellence, great of the issues and in This us further disciplines, business our out questions. production beyond. As to and now ends address we behind and will take comments, these your we prepared ready our develops evolve XXXX operational more

[Operator Instructions].

Elkott Our with Cowen. first question will Matt come from

operating your line cost see profitability us becoming operating going the where both profit does the on of I forward? a on also pretty wanted envision the the on quick and on gross profit on you close the from do that you even you and assets the to sold color some perspective you savings profitable, to ask, Can goods of acquisition I from provide breakeven acquisition to just cost yourself if cost what gets here front. when some gross math the

Matt It's Kohnke. Matt.

not before, about to provide guidance forward, going things. but we're talked going couple just talk let's through a we've As of

fourth look was cost loss. $X,XXX And at high-end talked of cost units more you reductions, of of yes, of If direct it cost in to in there in the the fixed like get lot those gives additional certainly, we and areas the And labor if on there's about at the -- through, the we closer a absorb that level margin material just that dynamics delivered, we hit about, pricing. the more range quarter, gross happening terms marketplace us and Obviously, volume breakeven. cost. we as

helps positive us move that direction. to in So a also

the of deal, it the a structured such of that terms whole we the is that we'll incur economics costs by being payment In in make at that upfront closing. we'll receive additional way covered basically

economics on a basis the be neutral. cash certainly should So

helpful from, it. railcar. Got $XX,XXX that $XX,XXX I that declined something Matt. in also delivered a change coming That's you or in different industry? in the or on quarter? backlog Or per that in of and the of guys Was the fourth a a function color, to a it is ASP, the -- a noticed I subject, more the mix -- more think, deliveries of pricing function orders of aggressive

of Hey, function low The QX. in of Matt. taken orders the Baun. ASP It's Ted

it. Got

Okay. equipment? guys market guess, extreme to noncompliant trucks. And least All to for uptick past an right. rail. up And and for on citations I you the in the slightly conversion front, This start utilization been tied like see -- intermodal issuing inquiries may to to my final in then going starting the April, be, in picking we have Are the question, few on the months. the intermodal they're has tightness truckload looks at intermodal for over

for coming about ever been again. one the spots, bright since Hey, probably of the Ted those Intermodal Matt, years, out it's X last of has recession.

to we that continue. So expect

up. keep the truck out spending we Consumer eye has of pointed capacity, been that's tightening on. an the You something

bodes intermodal. All well of that for

see in So we to strength that expect continued market.

Colley go we to Stephens. next will of And Brian

the the now the evaluate So all? Jim, had or ask, to opportunity at just about that improvement more changed timeline operations the structure, savings wanted and you've cost time your to for opinion is cost

take as mean have no. our a we the car out the announced a We by one feel tremendous. night through a that year. ability opportunity end the to that is And about with dialed and outlined forward. we I was, complex respects, per for consider this this business costs. in product the Step make-buy $X,XXX transaction big our to very we last We've already We to in just by Well, getting some $X,XXX worked how essentially decision. good overview fundamentals be us and of Navistar. Which step was

now we gain through and so will And transaction. that efficiencies savings

We have identified other already many projects in pipeline. the

is reduction are going Operational way for a of way and to become And for so of a excellence us. become life going efficiencies greater us. to cost life

very what Shoals. as as full in excited have yesterday. of what we we're excited see And of about we going about announced control So we units excited the to we're build get We're our here. opportunity

And thinking then like just those opportunity that appreciate total you that I that curious, reductions compared what this the there. seek. targeting I'm you're to about unit color looks just year, cost the

on Just of curious opportunity? mostly still of SG&A amount savings what it meaningful goods represents And of the reductions, a there's total just if side? or it's costs if curious cost sold room also, the cost for

opportunity as for X announcement $X,XXX to achieved get we is most have the our significant be biggest some be be lever our across labor. identify going The Shoals get we've $X,XXX at cost COGS. COGS, for And The are And step is the we all now this continue opportunity. more cost. direct to take the Navistar. and night a the P&L, cost we where item That the ultimately have us biggest we're where and $X,XXX undoubtedly, to line time. in we company, It's first with overhead and sure we're And shift going one But out. We, will goes, as right again, and last go is it's targeting that focus entire us costs let's it $X,XXX step the opportunities. to it the a predominantly SG&A mix first this this for cost, moment. announced the in cost step on material more for around

appreciate should ask modeling thinking there. be year? the improvement. lastly, of color then just deliveries about rate? are how And margin the possible, for I you this And just to cadence about we what guys the wanted cadence also expecting one, if the right. of tax I All quick

it's Matt. So

on be for to So our expect we XXXX. about the rate, rate effective tax XX% tax

your delivery somewhat part In cadence, again the question of terms of smooth second And was... course year. the throughout of the

cadence Just of on margin improvement. the

We're Yes. not to margin this going comment going expectations gross on time. at forward

come And our will next Matt question at Research. Brooklier Buckingham from

I you're did think I phone bit, may permanently a indicate my missed, out you cut Danville. have closing little but

Yes. We did.

keeping Roanoke you're But open?

capacity continuously on that our we our cars do very control And good us. time all Yes, Roanoke has be a last will going total things an I time. the of the had and at around part step just is, dialed a in good again, one continue day it. rail think amount about. evaluate underlying of work, $X,XXX the a what Shoals. to they're all pleasure building going spend at your cars job Back is take and team Roanoke. them for getting with to at And we the and for focus up and the wonderful to to now, businesses us expectation platform very, on and for is to cost now doing go We and talked a manufacturing week. are now gained well our $X,XXX We're as more Shoals make we're question is But I to performing all what To of structure. capacity, evaluating out to running Basics we rigging Shoals absolutely

process, go also to facility, this now look at, at could future, the I you at at some building Okay. the cars guess, point coal at know Shoals? you facility? as Is the potential, but in that cars I And right be through it's non-coal look look there

we at down car the type footprint not The able to we the each there that is types that build. in only that to want be build but railcar ought the large platform and to into to design we any today. one We're enough certainly today essentially flexibility of having any number the Yes. is Shoals the footprint flexibility always have to an But not having advantage. Roanoke of between within build Shoals optionality there,

with to So becoming and Back flexible. becoming as becoming proceed is -- of efficient efficient part we Basics

point, And helpful. in terms That's this perspective? of type a equipment very then at backlog in what's railcars your from left

Matt, it's Ted.

number not spectrum. and different it's open-top of backlog to to across suffice rebuilds. of into going it Our types consists specifics, We're hoppers, but gondolas car the a of some the get say,

quarter-to-date inquiries, orders. on commentary any And

peers If current -- end at of to activity you've things your from if ticked maybe of heard and here? the into you have guys I'm and hear that some for other just commentary order December Jan inquiry up curious have Feb.

Yes, improvement slight with showing a over seeing quarters. levels We're us. inquiry similar prior

those the ticking think I of quality also inquiries are up.

As we about XXXX, business progress into we prospects. the feel encouraged

And Michael will to Gallo with go CL next we King.

more double-digit think of kind historical more I that? somewhat number or question in Number margin -- to about saw If this of two range? about $X,XXX car at Or we I margins think And opportunity? that higher saving, the two, should single-digit on per we gross levels that about kind may, structurally in questions that the low business you've talked the just a which how on as we as $X,XXX high mid-teens think longer-term the the perhaps range reduction. one, does should include sourcing potential

biggest approaches taking many from the improvements take many, standardized labor the is both to ways, are followed and about cost. close take time. getting things little piece labor COGS And me a talk in methods, first it. Matt The of these come and that Let on. to are or piece productivity over started out cost material There COGS. second by the material, just a we're in piece the then our bit more, the likely will of very And particular, second of let's savings

longer, suppliers be takes nearly it negotiations quickly. of parts having move parts Some down take suppliers relatively or you and or productive as start existing changing and commercial around can existing it for long-term with both, agreement longer. long. supply some of changing doesn't Sitting very it When can take

doing country a a from going domestic long maybe to it as from it doesn't another take you're low-cost region. a domestic, If to domestic as

So it all depends.

time, X first. which quantities. we've of things, XX opportunity, that All timing, have plans out the priorities. bit. terms similar that stuff stretch that, the parts is sourced And get these plenty to the screen a between Obviously, to or that's and out that be further short-term design down going chain well Another right we consolidations. and to have X as at start as of X, where at it we're part of to the being We're here. is on In are sense to able be But activities there's radar in little some the productivity and very part at food off good it's biggest the for first. and we further and now, development rationalized engineering pretty into got sourcing more rolled easiest the get fairly to you straightforward the down greater work the piece where ought come we going biggest a gains going as starts could

Michael, it's And Matt.

control. On of some a variables don't some which the there's of later which control question, we obviously, lot impact that we of margin, and

numbers that should whatever some you had So more if single X% numbers the at new the look doing or referenced, referenced, high is you we're you additive what mentioned. importantly, be of back you to that and that today digits,

and do the this have costs to again, past. where our to control should better, in a is And different additive So source we be format. it

Securities. at And Seaport question Global from comes our Willard next Milby

on wanted ask Just Navistar the a question facility. to

or a maybe more I the little there all, bit now. square spent you believe, think of X/X footage I

think where could think square With that from get all efficiency opened do additional of kind point see going X right more do what you what Kind do you line of are a can lines now. footage, there? you or lines running having you maybe X view? down and I you of, the

the question. Yes. Thanks for

the also paint place. the all we So responsible let's it Navistar. a that's percentage itself. the by truck just that's were say And place, at what of where footprint fabrication XX utilized by exactly I'm Navistar the not the consumes work assembly versus that's the pretty or XX-XX. undercarriage moment. takes And facilities where was is big reside, and sure Navistar work takes blast where for But which majority The

square the accounted fully or footprint today. is the facility, footage for the So

know floor facility, efficient the that on we take As But imagine might control lean might We easy great become possible. will capacity. additional going don't comment of create for we're to think get be first will But sure look we and It's not through we we open like. we total if work, what and supplier, possible. the Navistar, and deal the space, create importance a is The certainly to deal so what the is, until the The and is foremost, this night middle, was blast by fabrication assembly case the very manufacturing of will. control full that last it the the we a led was it of our us by Navistar, large of of piece which running manufacturing front-end And was department. led process back-end you of supplier, a gives a in paint. in factory and were of announced operation. more

get will efficiently. have that that will about -- excited have over time have facility, here. we we very get next over we'll And running thing of the the be to will entire more or able process, So period we what done we're now entire much control the

Is pricing guess, question of volume sounds you are right. quarter. just, I on from another per inquiries the ASPs, It that, view. all levels you during point All can that $XX,XXX levels you thinking Are better $XX,XXX of a to And and return that could the orders like something unit the pricing are now? environment car to or of environment help to this right pricing per in in achieve range? above we maybe, those $XXX,XXX $XX,XXX

Willard. It's Hey, Ted.

to I expect are. ASPs they the forward think, look where the would near future, as to remain we I

after have a a as mix We it's potentials well see think that the we as forward. will just bring down ASP that rebuild value to that going that are probably fairly outlook. general tendency several ASP We going stable

And now we go Stifel. to Cox from Brady

maintenance I I maybe what we impact going just on clear during in that going any can around when expense to facility be the earlier. neutral be with ask relatively the it helpful. year, through is on costs, the detail through us just impact facility, want that lease the that were I or operating from you walk because or wasn't would other expenses understand Navistar changes to cash upfront. again, just be to But is going

Yes.

were. off accretive longer we've into not that of a detail any Matt. investment So the structured transaction, the economics it over additive on knowing we will great time think level deal be just And we We're the than to worse Brady, for it's getting that of the be not and term.

So we of feel as good the it structure with laid in out transaction. the

potential per in changes of totally or $X,XXX $X,XXX the to outside change that included that of is facility? in of improvements, efficiency, course? savings of efficiency separate to the related that any of car associated of any Outside And cost was Okay. with structures

the and we time about going As belts control come going that assumed transaction. that control now fact we'll take small Again, entire demonstrate work, $X,XXX, roadmap expect. have the consistency. $X,XXX to excellence a we under to the at first very But our portion get we're that's from to Significant the our got come see or to operation we've more efficiencies, manufacturing go efficiencies of we to of Navistar from look and that. for in is to

so assuming initial we've And in we're not this all $X,XXX that outlined. to $X,XXX at much

strategy? And bunch just it, Are change, a fleet fleet, lease any just you of the is an with can there bigger now of to overarching or cars what a then the to this the is in the for build slotted you that about in lease sort Okay. be hoping out quarter? talk backlog happened

to leasing. there leasing in to great respond and of respect deal with interest We a request Ted. customers It's our been Brady. has Hey,

to intent So remains we're our same, which the going look as relates to a those third-party. to sell the it opportunities, to transactions near-term is

anything I XXXX last is now? how if one backlog in it under current consideration, your the Just question just now, maybe outlook right what's on of with but right filled production maybe that plan? difference to markets and what you production between most might of do what's your will be the beyond up have difference XXXX. or opportunities, And up make expect the for make lot likely that a said And earlier, you helpful. what taking missed backlog you commercial That's much you the Okay. said

guidance to year X,XXX So of we XXXX. for the X,XXX cars full gave

of Our was XX/XX, backlog units. as XXXX

that lies to So have fill. we therein go gap the

active to hopper seeing equipment. hoppers inquiries covered Your how and space, in addresses gap some we're intermodal car are some that the second question we going and gondolas, fill

that Okay. of units that of built beyond one will just point is all X,XXX XXXX is And clarification backlog that for on or of of be any for cars though, that backlog, XXXX production?

All is for of that XXXX.

time, other And there are no questions queue. at in this

This all is Thank for you Jim joining. again.

our We issues. are embark address broad to and excited this plan aggressive to on legacy

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