The Greenbrier Companies, Inc. (GBX) 9 Jul 212021 Q3 Earnings call transcript

Hello and welcome to The Greenbrier Companies' Third Quarter of Fiscal 2021 Earnings Conference Call.

Following today's presentation, we will conduct a question-and-answer session. Each analyst should limit themselves to only two questions. 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. would turn I to conference time, Mr. this like the to over At

President Roberts, Treasurer. Roberts, and Justin Vice Mr. you begin. may

of Greenbrier's Ailie. Greenbrier's by you, Bill our On Good everyone, call, fiscal quarter today's and call. XXXX President am Chairman Lorie and President Commercial performance an Thank I and Adrian Officer; conference Tekorius, welcome morning, Operating Brian Executive Comstock, Leasing priorities. provide near-term Officer; Furman; our will third Vice Senior and and and joined to and Vice Chief update They on President and CEO, Chief CFO. Downes,

Following up the introductory call we our will remarks, for open questions.

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

matters results beyond that Greenbrier. discussed of And could forward-looking Reform over or Litigation include will of behalf describe Greenbrier's expressed the today to on Private statements I'll within some made XXXX turn any those discussion we forward-looking Act from actual to the now, of the it today, in a cause of As factors materially by differ in Bill. and reminder, meaning Securities XXXX. our Throughout statements important

the U.S. very Homeland safe U.S. critical and a under Department strong year, disciplined supply Thank articulated continuing as a we strategy you, in XX, Transportation. Department underway. operation throughout year calendar good pandemic Policy of Security in second company is The half this followed facilities our everyone. on the forecast as Last of number recovery U.S. Justin, and morning, markets Presidential of strategy the well result, a our for we our is Greenbrier and now position. of centered infrastructure

reduced and all spending, to We sustaining worst our demand. scenarios, position our case strong eliminating withstand labor reducing fixed non-essential force right-sizing pandemic a also liquidity cost, to building emphasized

manufacturing strategy recovery. challenges new presents safely base to It This and not capacity. designs. we flexible business phase issues line market operational as in important. or manufacturing, new are many changeovers, particularly manufacturing large Greenbrier's of actions plan must large add in employee I upturn number Our these Greenbrier those our additions furloughed emphasize strong flexible the the cost steel and only V-shaped were safety involving new is manufacturing a regarding our risk to with and downturn, and equally a outlook and safely numbers and central related purposeful economic and and the novel but production lines, Along employees. improving of has in Simultaneously, we strategy. product of integrate manufacturing response a

and is operating Fortunately, our dynamics. experienced team management managing seasoned these at

We in are our execute. confident ability to

Plant X continues in Mexico and to have rates Europe eighth colleague another is to early member are the worked He to in in because otherwise Jorge our addressing. his recently very in as we Greenbrier four Despite proactive, we cases be measures, good facility over at Sahagun, in Tellez] the department [Jorge of XXs Greenbrier Greenbrier Jorge known COVID-XX. Mexico. worked family COVID-XX. for in was we the years. paint to he Brazil lost see. issue Reduced are an our U.S., COVID-XX our course, contagion we remain relatively lost Of workforce these Brazilian a colleagues among low. are remains and But among hotspot.

We are difficult time. his family this supporting through

the that more essential a available is become to contagious COVID-XX around and it increasingly widely world, disease. is As dangerous vaccines remember

vaccinated. all get call. and our employees We urge the this listening you on consider incenting I to of thing who are doing same to urging maybe

performance. for our stakeholders continued I that to Adrian the defend strong the employees we am and will remain in will financial results very our later real solid call. and our results Greenbrier's detailed pleased globally, As new cover and COVID variants this Lorie see quarter threat. against demonstrate appear attentive

solidly moves half, and will earnings and I is [indiscernible] that strong pleased. for the fourth into outlook very XXXX months first say now, the are QX we For simply for XXXX. the quarter a weak nine fiscal after Greenbrier very through

underway. remains our extended cycle cheap. to Importantly, quarter, We add we borrowing interest remembering quarters. debt available then, third refinancing, a that At strong. debt notes is the level also on reasonably working that being are so favorable increased money facilities. pleased executed capital through requires we where years are cash our we liquidity, despite navigate. navigate a four and particularly is XXXX, rates do liquidity other will and chains important that cycle, time, another to Liquidity advantage liquidity on had In to some and additional end so pandemic tax Greenbrier that supply during recovery rates. this almost maturities position our the are of of announced also $X little everyone in billion XXX-year taking with convertible royal. of this have available interest a cycle, steep we has working third we and Future refunds deal And markets this of quarter to the a V-shaped opportunity a the of these capital of and achieved including is target to initiatives of strategic the Since continues challenging maintain the part

efficient ensuring of balancing chain, and working continuity. We production capital and protecting are supply labor management our

may three-year as Greenbrier or our with quarters results. quarter scale and – business a three along about is markets. years. markets a base. XXX producing as manage reflect in both backlog as challenging ability the recovery third most the some our in in over our company's Results COVID over and speak three to fact, the in are steady strategy answers, the our international of of history in in third now the Our solid achieving to well the in grown in of Greenbrier's last through substantially last years questions has And strategy Lorie, the separate

achieve prepare steps I for the prepare plan of as is Greenbrier's three-year calls, in During Greenbrier many and and our reduced boost our during greater financial structure scale a momentum the to our and be navigates we efficiency. pandemic momentum. taking A This achieved business recovery and was our last greatly leaner to we unit markets. economic positive momentum should cost also and as reinforced two discussed efficiency

bit joined here important is guest, our Brian is Officer. side We by share President are our more commercial Leasing business. Vice today a Executive of about an Comstock. and Commercial Brian? outlook He Greenbrier's on and Chief the to little Brian

recovery American latest reflect U.S. the and North In growth Through points to continuing with growing auto. up rail. GDP the economic led data Bill, good positive consensus was there increases intermodal be Across and that Loadings America, optimism traffic indicators economy, indicators May, are Thanks, by in rail morning, and XX.X%. a everyone. up. were sustained North indicate grain, forecast revised in

see gondolas. hoppers system for into types XXX,XXX equipment, grain knows, hour continue. fleets environmentally utilization of per active approximately set the Since number units. and and rail railcar of new, friendly covered have construction These for intermodal a for as of deployed is records. more June has peak cars nearly robust Total fully demand velocity year, should trend XXX,XXX X declining both X. volume Slowing including We remain pricing XX% monthly the been over near-term North in intermodal boxcars expect and of miles are demand XXXX. scrap highly continue units American segments almost storage and to over as railcars to Certain taken with last Overall, slowed well America, everyone approximately proposed to efficient units, railcars. storage continued supply, utilization. These segments bringing to cars to due new of increases North rail in cars the XX% decreases tight are railcar recovery. we storage and higher With tax and velocity benefits storage and expect freight as out

the price. the We has the XXXX gross price railcar to are activity in indexing our to than higher conversion and August order. protect pass-throughs continues The commodity captured more attention. market than is in seeing with important prices also every almost tank car dollars. price escalation Xx sector Greenbrier for conversion The X,XXX across increase margin current recent material utilize steel robust

be the growth the in fleets is the Europe, cadence to travel era drive well climate in of countries was strong time are at and third economic as broad congested are modal EU steel rail the Europe in longer-term higher backlog an shift come. of cars replacement. railcar the This to years replacement already demand in aging end Greenbrier’s scale in many the demand from shift with efficient in for reforms past road for quarter. will address elevated service. growth order the addition a change In can headwind, modal potential robust. to prices ushering speed polluting remains to Although freight, This

to ramping with fiscal production meet up focus market XXXX. the into turned now well has output Our already to demand several booked manufacturing lines

Finally, is in Brazil, economy the improving.

reflected visibility good, I units want in Our $X.X quarter, to are and inquiries conversion railcar billion. automotive, Subsequent third of to intermodal, experiencing momentum totaling Greenbrier’s and fiscal spoke at team strong orders. of our carry $XXX the backlog. for this I will market. covered commercial backlog XX team XXXX. we fiscal the quarter Overall, is continues nearly hoppers gondolas. in the X,XXX since our backlog entered the new commercial new levels orders earlier the see valued a railcar is Greenbrier or additional optimistic – pipelines booked to I’m railcars XX,XXX as million and global has and highest for end, activity strengthening to we are was not X,XXX quarter and In into orders won fiscal May emphasize orders

operating more Lorie to over for Now QX performance. our about

Thank results our Today, to are call. XXXX. and of for better than earnings the results we first reporting Good that you, operations morning, half welcome everyone. the from our are significantly fiscal Brian,

as an is as early employees our resiliency we’ve challenging efficiently environment. Our six too X,XXX the units in are COVID flexibility We And in quarter XX first the settings. responding quickly and including pandemic One model months. a over Brazil. demand to and last while delivered safely the a to quarter, XXX months learned after well flexible ever emerge, operating variants in improving is great units evolving it’s vital declare the victory, produced especially thing as

XX% increased second deliveries quarter. QX Our the from

QX. supply backdrop performance raw This will against the pricing Our performance in in which the higher global significant adding the strong mentioned is shows this employees. material X,XXX the volatility Brian rates, that of almost increase of continue manufacturing and chain. a leverage operating production in quarter

need we production, is to So with work highlight I’d our job group sourcing the that that with components and is facilities group the This our collaborating to times, suppliers that certain materials uninterrupted continue our doing. ensuring we to make have have their and for customers. material the means outstanding at like to purchasing our even suppliers

in The the remainder XXXX. management the traffic and to manufacturing our and unit. experienced into the and high in safety, the momentum key achieved around benefit XXXX the margins Over quality, repair and highest our wheels stronger since to sequential our comprise began recovery gain third is prepared refine footprint maintaining quarter. by evaluate railcars and a continues margin far so focus business optimistic for reintegration a double we’ve of and operations business for focused in seen are the with Each business safety. Increased this The team parts on I’m growth team to business levels is cautiously building being car continue demand repair employee digit on that provider revenue efficiency will of GRS our the business customers. quality GRS to service XXXX, rail QX units The our fiscal of improvement. GRS and activity strong our while loadings also that

strong joint Our the services contributed levered had and quarter. from was venture. activity X-to-X, was XXX and team Leasing the the leasing initial million $XXX was railcar XXX million was This of million credit busy GBX facility. XX% and or portfolio warehouse a formed funded quite about so to non-recourse

the become strong to to radar. several From a our distribution business and available into complement standpoint, And they model a strategy Leasing have in commercial opportunities we continue Leasing our is GBX also attributable syndication and the on consolidated GBX QX to integrated growth partners, We that statements segment to direct beyond. a enhances assets as our our fund will with industrial stream of annuity lessors, earnings Leasing earnings partner’s financial is tax-advantaged and shippers, share in cash the flows. Leasing deducted line. creating new of also Services interest of in GBX while our operating non-controlling customers, net

Additional is and lease information Leasing provided the release. segment earnings the fleet and debt for Services in

and quarter leasing and also capital in valuable yielded units Our XXX part services of team syndicated operating market the leverage.

Our syndication augment tools and generate to revenue several model provides margin.

business deployed to Some asset an are others In of available our generated transaction terms, sale we increased be are favorable of completed which opportunistically. on revenue QX, margin. part course and and normal

to meaningfully activity syndication fourth in the expect increase We quarter.

also Our Management a customer and services Services helps major leasing is strategic value. Group in

We in this Greenbrier about American services of end of through base, expansion fleet. continue customers, fleets, combination XXX,XXX managed existing XX% XXXX. was momentum fleet. GBX we providing to building as drive business total customer services new and railcars QX, the fiscal of growth on North onboarding or growth At of within a of Positive customer the the Leasing operating is the enter management including

leaner months, to the and is recovery. to and and year positioned QX, Given further from the into strong organization emerging teens over gross last Greenbrier exit taken XX continuing QX the we expect benefit and a actions well performance in margins in decisive stronger the in is with the economic

our will provide the on financial Adrian quarter. performance in commentary Now

Lorie, available challenging few and highlights you, financial Greenbrier’s our Quarterly information six the months the XXXX, Thank QX first fiscal improved press good in website. slides from of much supplemental morning, everyone. on and after quarter. results a a is were release

period quarter resolution Each which of and is quarter. $XXX increased Our over deliveries that coming was second long-standing the exceeded recognized nearly lower warranty Book-to-bill of America of in up orders we achieved XX% increased units. XX.X%. out In momentum gross although contingencies This X,XXX the levels production of operating units, North after of which included largest contract. units production X,XXX the new the expiration increased aggregate sequentially, We from Xx, consecutive across the made warranty fiscal month-over-month our international XXX QX. the revenues and of units and X.Xx second book-to-bill of driver. the quarter, margin benefit Brazil from million from final and Europe of of

Act, administrative benefits Adjusted million revenue. primarily this sequentially, carried earlier been EBITDA GBX debt be benefit $XX.X tax margin received These employee-related rate capital million from under of per in benefit to in the million or of lease GBX The of in costs expense depreciation per manufacturing This deductions high $X.XX million formation tax activity, was the associated with have resulting and Excluding and or will effective the the CARES $XX costs. accelerated or in a XX%. Greenbrier extinguishment of of higher a would low net investments and the in tax increased quarter tax reflects our $X.XX fleet, primarily double losses, tax startup earnings of years of fiscal in from Leasing XX.X% back excludes be the digits. Selling $X.X cash attributable $XX share to share quarter XXXX. refunds to Leasing. reflecting

plus retired from remains the $XXX $XXX due the of convertible limitations million negotiated notes convertible long-term time-to-time strong initiatives $XXX X.XXX% continue $XXX a applicable Greenbrier we been at the well gross senior $XXX COVID-XX of and process. for notes safety. million that is related healthy Concurrently, to due expect positioned privately debt million, million the notes we XXXX. XXXX million $X.X the recognized also million but sheet In facility emerging, of the over costs, We recovery its the in to of with capacity XXXX, to including transactions to costs employee securities These Greenbrier in began and and million employees. another $XXX have continues specifically of extending and liquidity of issuance ensure future in safety of spending Greenbrier's down, trending quarter, maturities foreseeable within have cash of balance maybe are in regulations. of borrowing our additional we for of senior retire

is notes the issuance As the balance yield of The flexibility the convertible process, or interest in million paid part stock. of for expense to cash will either $XX our of we cash half cost note convertible high over the notes. the cash be with settlement of cash repurchased amounts of choose notes The settled principal common of outstanding share par. new any about

and spend is fleet, I to $XX parts for expenditures capital to maintenance. required to $XXX and earlier. are the year, to focused in and GBX services the capital will million repair expected spending increasing than safety spoke still higher investments we business levels. on our be be million and Manufacturing quarters the the wheels about with at XXXX, few approximately in reflecting prior Spending production in maximize spending, Leasing expected benefits continued lease support as to primarily leasing activity into QX Turning and tax

to it capital of share, debt our we of Today, the extended of of rest Directors continue Greenbrier's opportunistically for Greenbrier's XXth our dividend a structure, portion is a as the sense maturities debt. $X.XX which extend have dividend. we announced will While consecutive per maturities long-term makes of Board

Looking to performance expects strongest quarter of fourth ahead, Greenbrier the be the the year.

activity increased open full of a questions. rates addition, And will quarter it we for increased In and creates up momentum into XXXX. production now, fiscal positive business

begin from now question question-and-answer Instructions] comes Long Our [Operator session. the Stephens. will today We first with Justin

morning, Good quarter. the and Thanks. on congrats

you. Thank

and flow by Maybe of on quarter the quarter could you you mentioned that and in you Brazil? order break start and America that geography to coming how that just from X,XXX saw both orders subsequent understand the North much us is help the that out and versus to Europe

I that the both for in and of would quarter say majority it the the subsequent. order America is North

to those other But both did that's have of say not we geographies. orders in

So…

Correct.

leverage any of the look manufacturing had? you've gross excluding amount you contingency have from maybe quarter gross would impact. in and success low-double That's impact dollar of the warranty that the the that as margins and a recent can helpful. margins manufacturing been that beyond some digits Okay. in you know was then into said or And thoughts what terms I get on impact, precise next But on we more and bit the XXXX little EPS payments,

So start out. – I'll

satisfied detail situation. was a We to a margins operate quarter contract. our and that been And said a that some said, earnings have That the to in you on aren't going was as new other That extended that it in had precise and in to we low-double it, get provisions digits. manufacturing into were allowed release, for new as well the us us customer. Without that warranty release would geography reserve. as

because with we which being go quarter not manufacturing are at across exit to improve of good have margins those the expect new of safety training still to rates. doesn't continue you say improve we and were running focus bringing go gotten efficient at very improved margins year. back a employees, effort to at these go as expect higher amount refreshed We very we fourth as and tremendous we've year this prior because continue but of but production this a we through this rates that to to lot to That's some would employees, next and protocols, into require

you're margins XX.X to improvement of reported? just improvement or double-digit saying And that clarify the that of manufacturing that Lorie, off you low

Thanks I'm conservative for clarifying Justin. [indiscernible].

off yes, improvement the say double-digit margins. of would low So I

I'll leave that. at it Okay. Great. the I really appreciate time.

add the backlog The visibility us a Justin. quarter gives the I solid that in solid gives just modernized like flow. into Hey, operating momentum view as matter XXXX. and that. really We into to a the visibility to particular us

little optimistic positive. than cadence Lorie, I about might very, but case we a and sometimes. see be be margins So the that's more very expect continue always to this

with Matt Cowen. from comes Elkott question next Our

you. Thank morning. Good

You million that quarter? an of should and EBITDA strongest fiscal higher expect fourth EPS that also guys at fourth increase. meaning fiscal quarter obviously EPS, apply are $X.XX margins $XX higher to does and But we year than gross should to expected and EBITDA be the mentioned the than the

about the just assumption based higher on think and we our what all good a I that across deliveries, efficiencies with that's margins of we're having talked operations.

Yes, a my to And Got be. might question. gauge How then risks try about activity manufacturing risk economy the to to that industry of I key what Wouldn’t the an is second more you thoughts on it. question affecting cycle before be broader translation which – want seen the in concerned guys are into ease? scenario demand freight pose to Any of we've negatively a the would to orders? starts this prices strong appreciated. the inquiry moderate steel industry

how Just into ease concerns be orders? gauge guys freight economic might and trying you and before a to prices translation moderation affect on steel the potential

economically this. Hey. there a in out driven lot is don’t concern talk demand. there We expect know about I lot a of of and moderation

overblown think the I it's the a that we've had of V-shaped bring stimulus plus amount the momentum going is recovery in lot by and spending economy itself. to of this

that to and this, look of at on effects I supply the more chain think demand we'd inflation. assess we if were the

Great. Okay. Thank very you much, Bill.

comes Fargo. question next Wells Our with from Poliniak Allison

good Hi, morning.

mentioned, But growth the isn't that at like any costs least great think starting bad is pull-through margin. something sort know you temper So it that there side had on we the which you're And could in on Bill, or color I sounded as near-term? of manufacturing ramp-up the sort thing. of ramping, operating to production a that about

No.

all leasing bad for hedge pushes assets with they're lease – a XXX-year going It's the there's businesses the is the a then event. steep that steep have And more valuable. we I because rates we normalized. them them, in is think keeping if a it's The is mixed a blocking that such we're and think coming them a these no not some pandemic training blips, in it's today of surge more safe, just all inflation. moderates XXXX, a V-shaped and those back, down we are that recovery in that I'd curve there's of used it'll type And more variety the railcar makes things far things then, and curve people, way of more tackling having risks up in obvious. as makes and say up leasing Hiring But of bringing just [indiscernible] execution the traditional company risk with. are pricing It as be seeing last manageable. pricing them to the things as course, cope concerned, thing benefits at advertise a rest. against

on Got you're and see the lot sense, of sort bigger based just a driven which last pushed that in the picture, a a there of the more starting through? pent-up high the demand way. replacement cars this I pull in is thoughts would just like of viewing, commodity-based around? to sort the it. orders just mean, cycle of Is any Does or by on it was time of And cycle you know coming having. level out replacement just feel how then you're I I guys conversations say that the energy, that color

Yes. question. Thanks, most order Comstock. all a market Allison. segments. seeing Brian really the in a single is in of commodity. This is one It's is, in There XX-plus good today backlogs witnessed It the What industry. diverse really I've we're is isn't probably my the years that

you drives some something, seeing it. need quite guys across very in frankly We're that recoveries, all which seeing impetus a not usually very, know is typical very and there's broad-based We're encouraging. all that. As businesses, sectors

Great.

and of and – renewal the capacity of cars aspects the fleet. this the of types just aspect, environmental the about Talk there's a

example… For

there There's of a that trading built ago. is. hit of We Yes, finally blocks big lot cars were cars those that some today. many are years out of

a shortages you're ramp America. seeing during all to time in more at then organic a of at replacement growth. that, you're And And trucking drivers continued crisis. is of of least or seeing also rail implemented you're of the a the driver early rail. people So seeing attempts The convert a Inventories in to conversion tailwind are COVID the lot so result, And expansion companies that that is – of but North you're and PMI also of across up as to retirement kind index seeing territory. to experienced all lows. lot kind

a really it's So story. good

the Great. color. for Thanks

Okay.

add That's early I very few were for America but effects could those detail, that of before just And U.S. little down sustainability on net-zero, the us a along days. that, ahead other is North one ripple years road any a much a is all bit and anything This Europe kind lines. if of Allison. from drive

aspect. And efficient by are more some being customers But it’s emphasizing already cars, of optimistic so higher of years. capacity, going policy on. next is that we're that very the in Allison, in much the we A fuel going very to are about very and the cars, driven this, that several interested environmental be are that lot efficient things current administration seeing

the already – encourage energy moving shippers example, For that making Congress affect would through that and efficient these the bigger. is would tax cars bill energy

Brian to say. I think is fair

are. Yes, are ways driven. And it's we at railcars, do a can The is it that. capacity shippers larger they high demanding environmentally more of that lot looking – –

So the to all play. of market come you're kind of seeing aspects

was That color. great Thanks. Understood.

Hoexter of Our next with question comes from Bank Ken America.

Hey. Great. and morning, the Good solid on job cost side.

on of week or what's back? business first of about not just benefits, that we to You of expect you Thanks. XXXX. acceleration costs alternatively, the the traditional quarter, kind the half? kind to great that? the going through I in about, or in we the work growth as still see does your seasonality? improvement the you only that comes production Should inflection. of or relative through Bill, and talk of the Or Lorie, thoughts scaling return think margins kind can Just rebound see guess maybe mentioned fourth but into How your should

drop see to expectation would production that significant me say I in makes up pace would a question. opposed love looking I huge just we and expect side new a do Great our off. that a or huge what anything – see a perspective don't The at blip in we're maintaining of the a steady as downs. car the steady step and of ups then we what to market is see from

a that our been working bringing very teams And we are consistent closely manufacturing production team commercial so then have certain maintaining that our to and that pace I modest level. and know back make in

So again, forward into big we I drop-off, as don't move Ken, any, XXXX. or spikes see

in of one some widest cost, there's pricing in more but mean, more next the on up, of of limited, in players should railcars steel that with several We're and of already the pricing having the Ken, cost mix course, much very of focused the larger margin, car capacity give market. going activities things quarters. I leverage that the affects the we're pricing designs the with seeing

nationally industrial So back should in but plateau and the and toward include it's lease rise we input to so should degree moving sustained upturn come and in steel strength a the and other rapid that goes The costs pricing things. to a is trough. a pricing also going different buyer, reach like to move, balance

Great.

to Just you're traditional XXXX. seasonal that clarify be Lorie, Is not expecting answer down it's you're maybe into suggesting? what first the them in Lorie's half, to there. large going that tick more balanced

We're not giving year, what yet happens get we based I worn this of as happen. everyone's expecting Right. all I'm people just think guidance not just to close kind is not out sometimes explicit out and – our that – we're is on

I and everyone I steady raring to maintain expect to think pace. that is go,

or Thanks Are would you to that your North in clarification. those Bill, maybe – costs you of one the of my or operating up plants return the other just and to gave are orders ramp the back facility kind startup every now And to of Great. there you for be and still I second then facilities guess before, Justin's need car on seeing is engage running, of that accelerate like of kind you talked answer seeing about stabilize any the America? you regions. get what's in are

stimulus being European very And energy Brian There's mentioned market some cars a that customer that Let it’s a think the or approved. there, is over push toward market. visits billion, package billion €X from it's I returned more just and as to sizable are billion. – €X really big has by that me been driven €X talk efficient. I

is in Europe. order we strong demand that and see very good So visibility

that good so much down orders market the extraordinarily I the and a potential Brazil months there trailing. and economy got improves, we've year that XX an had last with is has over as think

we a overall, Middle see the in So East opportunities strong in sphere there's and international demand in the GCC. still the

costs on so startup they up go are thoughts your And or to So you're the good there? and running, all there plan?

worked on lag, not not but our a really operating as have European much normalized bringing it's a sluggishness we Well, startup there's costs just our of think I capacity. there's in of facilities back – way that so well those have And properties lot it's tailwind the have working… been out as really at to we're [indiscernible]

the guys. and Appreciate time Great. thoughts. Thanks

you. Thank

question Steve Markets. comes KeyBanc Barger today Capital final with from Our

Hey. Good morning.

morning. Good

Can of it the what's of help about think year, XQ, magnitude strongest you production of expect the in you've talked deliveries quarter sequentially? but the us about the being see you range to

I'm question. think how Great trying to to it phrase appropriately. about

that would see in QX is a think that up somewhere I see step but a would probably we maybe neighborhood XX% what from quite pretty say not increase, we we sequentially. strong

I to – to is to situation. are a be certain again, And procurement able our cars. materials emphasize can't in raw deliver has there mean, we've enough fluid done team I these very things these got make what place – it's that the

against one it's – execute that's thing it. another to put So thing It's to a plan. together

place, how again, getting So our the getting material variants impact and might mindful place in and very our COVID in of they being employees the operations.

month sometimes another… also the to syndications, of from And one natural timing push could which

Correct.

a on more a and making basis, but sequentially Either revenue. monthly in general stronger out, a statement. stronger We've or had

going a to and a move the year. the it's be in seeing trend activities. topline-driven – into We're of positive coming go trend as we other fiscal revenues of very into – all So positive

great people can Pacific got it. they for had as a we it. there handle As we Union the we handle handle Sure, it. to this. I far And that And our but are handle, things downside, years. can believe loved slogan operating can

Yes.

you step So like first don't prior in expect year, And that down suggests Lorie, fair? is production that back X,XXX a question, the to minus. going maybe next sounds of big plus that or it half in

That statement. fair a very is

model thinking all tax rate the you about got benefit forward first, as tax year. just the relates to in it And SG&A,

right? in And stretch that does that XQ, get XXXX? into You'll

get into for there continue our next – benefit be some be a will not into rate. same beneficial rate we'll to we'll CARES get seen So you've continue QX tax year. will year, but the benefits that not earlier the us And in the to that at still will

continue will depreciation we not take So back accelerated the cash ability incremental this something, get losses this and just benefits to be but to… will to

by quarter our year. of tax Act, I mean CARES next define we have next believe… what will In benefits from let's and XXXX, [Indiscernible] year, the some first we

But cash of fiscal No. accelerated we get with the year. will to end It benefits will continue depreciation. our

the of When does was year. Act the CARES might end the at mistaken. – That I in expire? calendar be

year. It's our based on tax

Good. Yes. Okay.

we I've And number back statement reasonable Is next so you're think purposes, going for year? for the to on that – should XX%. modeling got income rates just a tax

For next year, yes.

Okay. year? And were next spending also year think for you favorable this certainly necessary. dollars should we SG&A about SG&A had due cost to which How in actions,

all customers. able meetings the from more up all of important. on to so do much, have but incurring that would visit a face-to-face utilize our I then those think discipline thing employee teams would our see around not that an of those other we've think to of is that. to just some some being increase guidance you're cost, read customers teams I our ready will and on aware as create see are give I have but perspective. would those about very don't of level as some shortage. so to focused that dollar offices bundling are with that their expect there I say to more are continue very And meetings, of we're heard travel more SG&A is traveling to and dollars technology the We opened that I as maintaining we those

of that that our mindful very retain value we're to So base employees making workforce and have. we certain our adequately are compensating we the

G&A and because be to with to come a better and normalized percentage that than revenue we a reforms really percentage has however, we've all working will this cost a in be the ended – it return really up operationally this parts. expect, business we the of at revenue were and more other even we plateau this more has at of general, with look in containment really could a and taken driven of cycle. at inefficiency We will recovery. there though V-shaped much should In It's has falling terms Lorie of of lot that really been effective

revenue takeaway line come and better bottom So historically. the of percentage – of be down perhaps than the G&A it'd is

anti-competitive last, news a could But you Potential as builders as view the or challenging ask Appreciate that. on early it And is practices today, equipment me is question what since executive do Biden big or for in come Bill you and your today for positive is order picture I net think one I'm guess. what this let whoever. means? that

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people key in current to their of have on couple their views influential Northwest our and a the passed on and Pacific have and the Congress friends. railroad views positions they We passed very

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Thanks. Understood.

And Thank today. time out any Have please you. you you to us directly. very have attention Friday. and follow-up for a Thank your questions, much, reach great if everyone

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

now disconnect. may You