GREENBRIER COMPANIES INC (GBX)

CIK: 0000923120. SIC: 3743 Railroad Equipment. Latest 10-K as of: 2025-10-28.

SIC breadcrumb: Manufacturing > Transportation Equipment > SIC 3743 Railroad Equipment

SEC company page: https://www.sec.gov/edgar/browse/?CIK=923120. Latest filing source: 0001193125-25-253612.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-10-28. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000923120.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000923120.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-145619.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-07. Report date: 2026-02-28.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

We operate in two reportable segments: Manufacturing and Leasing & Fleet Management. Our segments are operationally integrated. The Manufacturing segment designs, builds and markets freight railcars and component parts in North America and Europe. We also perform sustainable conversions and railcar maintenance, which includes wheel and axle services. The Leasing & Fleet Management segment owns and leases approximately 16,800 railcars as of February 28, 2026. We offer railcar management, regulatory compliance services and leasing services to railroads and other railcar owners in North America.

We continue to operate in an environment characterized by ongoing macroeconomic uncertainty, including inflationary pressures, potential impacts from global trade tensions and tariffs, volatility in foreign exchange and interest rates and geopolitical instability. We believe that a sustained economic slowdown or continued supply chain disruption could significantly affect our operations and financial performance. Such developments could impact our business both directly and indirectly. Direct impacts may include higher costs for raw materials, labor and manufacturing inputs. Indirectly, a weaker macroeconomic environment could reduce demand for new railcar orders and leasing activity.

Despite these potential headwinds, we believe we are well-positioned to continue to execute on our multi-year strategy. In addition, we believe our integrated business model provides flexibility across economic cycles. We maintain a diversified customer base and disciplined approach to managing working capital and operating costs.

We continue to execute on our strategic plan of increasing recurring revenue, expanding aggregate gross margin and raising return on invested capital. Recurring revenue is defined as Leasing & Fleet Management revenue excluding the impact of syndication transactions. With a global footprint, supply chain and customer base, we are focused on navigating the impact of changing trade policies, such as tariffs, as well as general geopolitical and macroeconomic uncertainty.

Backlog

Our railcar backlog was 15,200 units with an estimated value of $2.1 billion as of February 28, 2026, with deliveries extending into 2027 and beyond. Our backlog includes approximately $650 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Approximately 13% of backlog units and 12% of estimated backlog value as of February 28, 2026 was associated with our Brazilian manufacturing operations which is accounted for under the equity method.

Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.

Segment Information

Effective September 1, 2025, we changed our measurement basis for allocating revenue and expenses associated with syndication activity between our Manufacturing and Leasing & Fleet Management reportable segments. This change reflects the information currently provided to our CODM to assess performance and allocate resources and had no impact on our consolidated results of operations or financial position. Prior period segment results have been recast to conform to the current period presentation. See Note 11 - Segment Information to the Condensed Consolidated Financial Statements for additional information for additional information on our reportable segments.

Risks, uncertainties and other important factors described in Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025 may have a material negative impact on our business, liquidity, results of operations and stock price. Beyond these general observations, we are unable to predict when, how, or with what magnitude these items will impact our business.

26

Three Months Ended February 28, 2026 Compared to the Three Months Ended February 28, 2025

Overview

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

Three months ended

February 28,

(in millions, except per share amounts)

2026

2025

Revenue

Manufacturing

$

541.5

$

712.9

Leasing & Fleet Management

46.0

49.2

587.5

762.1

Cost of revenue

Manufacturing

500.4

606.2

Leasing & Fleet Management

17.6

17.3

518.0

623.5

Margin

Manufacturing

41.1

106.7

Leasing & Fleet Management

28.4

31.9

69.5

138.6

Selling and administrative expense

57.4

64.6

Net gain on disposition of equipment

(13.0

)

(9.6

)

Earnings from operations

25.1

83.6

Interest and foreign exchange

13.7

21.7

Earnings before income tax and earnings from unconsolidated affiliates

11.4

61.9

Income tax expense

(1.7

)

(20.0

)

Earnings before earnings from unconsolidated affiliates

9.7

41.9

Earnings from unconsolidated affiliates

4.2

4.3

Net earnings

13.9

46.2

Net loss attributable to noncontrolling interest

1.1

5.7

Net earnings attributable to Greenbrier

$

15.0

$

51.9

Diluted earnings per common share

$

0.47

$

1.56

Performance for our segments is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

Three months ended

February 28,

(in millions)

2026

2025

Earnings (loss) from operations:

Manufacturing

$

20.7

$

80.8

Leasing & Fleet Management

35.5

34.6

Corporate

(31.1

)

(31.8

)

$

25.1

$

83.6

27

Consolidated Results

Three months ended

February 28,

(in millions)

2026

2025

Increase

(Decrease)

%

Change

Revenue

$

587.5

$

762.1

$

(174.6

)

(22.9

%)

Cost of revenue

$

518.0

$

623.5

$

(105.5

)

(16.9

%)

Margin (%)

11.8

%

18.2

%

(6.4

%)

*

Net earnings attributable to Greenbrier

$

15.0

$

51.9

$

(36.9

)

(71.1

%)

* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.

Revenue decreased $174.6 million or 22.9% for the three months ended February 28, 2026 as compared to the three months ended February 28, 2025 primarily due to a 32.0% decrease in deliveries and a change in railcar manufacturing product mix.

Cost of revenue decreased $105.5 million or 16.9% for the three months ended February 28, 2026 as compared to the three months ended February 28, 2025 primarily due to a 32.0% decrease in deliveries and a change in railcar manufacturing product mix.

Margin percentage decreased 6.4% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025 primarily due to an unfavorable change in railcar manufacturing product mix and operating at lower volumes during the three months ended February 28, 2026.

Net earnings attributable to Greenbrier decreased $36.9 million for the three months ended February 28, 2026 as compared to the three months ended February 28, 2025 primarily due to:

•
$69.1 million decrease in Margin attributable to a 32.0% decrease in deliveries and a change in railcar manufacturing product mix.

This was partially offset by the following:

•
$18.3 million change in Income tax expense due to lower pre-tax earnings and net favorable discrete items related to foreign currency exchange rates at our U.S. Dollar denominated foreign operations.

•
$8.0 million decrease in Interest and foreign exchange expense resulting from the change in the Mexican Peso's and Brazilian Real's foreign exchange rates relative to the U.S. Dollar and higher interest income.

•
$7.2 million decrease in Selling and administrative expense primarily attributed to lower employee-related costs.

28

Manufacturing Segment

Three months ended

February 28,

(In millions, except railcar deliveries)

2026

2025

Increase

(Decrease)

%

Change

Revenue

$

541.5

$

712.9

$

(171.4

)

(24.0

%)

Cost of revenue

$

500.4

$

606.2

$

(105.8

)

(17.5

%)

Margin (%)

7.6

%

15.0

%

(7.4

%)

*

Earnings from operations ($)

$

20.7

$

80.8

$

(60.1

)

(74.4

%)

Earnings from operations (%)

3.8

%

11.3

%

(7.5

%)

*

Deliveries

3,400

5,000

(1,600

)

(32.0

%)

* Not meaningful

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of railcar products and components, syndication activity associated with leases attached to new railcar sales and performing sustainable conversion services. Manufacturing also generates revenue by providing railcar maintenance services.

Manufacturing Revenue decreased $171.4 million or 24.0% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025 primarily due to a 32.0% decrease in deliveries and a change in railcar manufacturing product mix.

Manufacturing Cost of revenue decreased $105.8 million or 17.5% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025. The decrease was primarily attributed to a 32.0% decline in deliveries and a change in railcar manufacturing product mix during the three months ended February 28, 2026.

Manufacturing Margin percentage decreased 7.4% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025. The decrease was primarily attributed to an unfavorable change in railcar manufacturing product mix and operating at lower volumes during the three months ended February 28, 2026.

Manufacturing Earnings from operations decreased $60.1 million for the three months ended February 28, 2026 compared to the three months ended February 28, 2025. The decrease was primarily attributed to a 32.0% decrease in deliveries and a change in railcar manufacturing product mix during the three months ended February 28, 2026.

29

Leasing & Fleet Management Segment

Three months ended

February 28,

(in millions)

2026

2025

Increase

(Decrease)

%

Change

Revenue

$

46.0

$

49.2

$

(3.2

)

(6.5

%)

Cost of revenue

$

17.6

$

17.3

$

0.3

1.7

%

Margin (%)

61.7

%

64.8

%

(3.1

%)

*

Earnings from operations ($)

$

35.5

$

34.6

$

0.9

2.6

%

Earnings from operations (%)

77.2

%

70.3

%

6.9

%

*

* Not meaningful

The Leasing & Fleet Management segment generates revenue from leasing railcars from our lease fleet, providing various fleet management services and interim rent on leased railcars for syndication.

Leasing & Fleet Management Revenue decreased $3.2 million or 6.5% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025. The decrease was primarily attributed to a $2.0 million decrease in interim rent on leased railcars for syndication during the three months ended February 28, 2026.

Leasing & Fleet Management Cost of revenue increased $0.3 million or 1.7% for the three months ended February 28, 2026 compared to the three months ended February 28, 2025. The increase was primarily due to ongoing costs related to servicing leased railcars for syndication during the three months ended February 28, 2026.

Leasing & Fleet

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2025-10-28. Report date: 2025-08-31.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

We operate in two reportable segments:

1.
Manufacturing - We design, build and market freight railcars in North America and Europe. We are also a leading provider of freight railcar wheel services, component parts, maintenance and retrofitting services in North America.

2.
Leasing & Fleet Management - We own a lease fleet of railcars that originate primarily from our manufacturing operations. We offer railcar management, regulatory compliance services and leasing services to railroads and other railcar owners in North America. We also place railcars on lease to customers and sell the railcars with leases attached to investors.

We operate an integrated business model which we believe is difficult to duplicate and provides greater value for our customers and investors.

We continue to operate in an environment characterized by ongoing macroeconomic uncertainty, including inflationary pressures, potential impacts from global trade tensions and tariffs and volatility in foreign exchange and interest rates. We believe that a sustained economic slowdown or continued supply chain disruption could significantly affect our operations and financial performance. Such developments could impact our business both directly and indirectly. Direct impacts may include higher costs for raw materials, labor and manufacturing inputs. Indirectly, a weaker macroeconomic environment could reduce demand for new railcar orders and leasing activity.

Despite these potential headwinds, we believe we are well-positioned to continue to execute on our multi-year strategy. In addition, we believe our integrated business model provides flexibility across economic cycles. We maintain a diversified customer base and disciplined approach to managing working capital and operating costs.

While we believe that macroeconomic uncertainty is affecting demand across the markets in which we operate, we delivered strong results in 2025, which included the following:

•
Expanded our Margin as a percentage of Revenue from 15.8% in 2024 to 18.7% in 2025.

•
Increased Net earnings attributable to Greenbrier by $44.0 million or 27.5% compared to the prior year.

•
Generated $266 million of Net cash provided by operating activities.

•
Increased our owned lease fleet by 1,500 railcars, representing a 9.7% increase since August 31, 2024.

•
Renewed and extended our $600 million domestic revolving facility and $250 million term loan in May 2025, extending the maturity date of both instruments until 2030.

34

We believe our results highlight our continued focus on our strategic plan as we remain focused on increasing recurring revenue, expanding aggregate gross margin and raising return on invested capital. Recurring revenue is defined as Leasing & Fleet Management revenue excluding the impact of syndication transactions.

With a global footprint, supply chain and customer base, we are focused on navigating the impact of changing trade policies, such as tariffs, as well as general geopolitical and macroeconomic uncertainty.

In the fourth quarter of 2025, we continued the rationalization of our European operations and approved the closure of manufacturing facilities in Poland and Türkiye. Combined with the closure of one of our manufacturing facilities in Romania announced earlier this year, our European headcount is expected to be reduced by 30% while maintaining the same production capacity.

Financial Highlights

Despite the challenging operating environment, we accomplished the following in 2025:

•
Margin as a percentage of Revenue improved by 2.9% to 18.7% for the year ended August 31, 2025. The increase from the prior year was driven by operating efficiencies in our Manufacturing segment.

•
Earnings from operations increased by $35.6 million or 11.0% compared to the prior year. The increase was primarily attributed to an increase in Margin in our Manufacturing and Leasing & Fleet Management segments during the year ended August 31, 2025. The increase in Margin was primarily due to operating efficiencies in Manufacturing and higher rents associated with a larger fleet and improved lease rates in Leasing & Fleet Management.

•
Diluted Earnings per common share (EPS) increased by 28.0% to $6.35 for the year ended August 31, 2025.

35

Manufacturing Backlog

Our railcar backlog was 16,600 units with an estimated value of $2.2 billion as of August 31, 2025, with expected deliveries extending into 2027 and beyond. Our backlog includes approximately $460 million of railcars intended for syndication which are supported by lease agreements with external customers and may be syndicated to third parties or held in our lease fleet depending on a variety of factors. Approximately 12% of backlog units and estimated value as of August 31, 2025 was associated with our Brazilian manufacturing operation which is accounted for under the equity method.

Our backlog of railcar units is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customers may attempt to cancel or modify orders in backlog. Historically, little variation has been experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.

Change In Reportable Segments

Effective September 1, 2024, we combined our former Maintenance Services and Manufacturing segments into a single reportable segment, Manufacturing. The combined Manufacturing reportable segment reflects a comprehensive production operation that allows us to streamline production processes and resources to better serve our customers. Separately, we renamed our former Leasing & Management Services reportable segment to Leasing & Fleet Management. These changes reflect the realignment of our organizational structure and reporting regularly provided to our chief operating decision maker to assess performance and allocate resources. These changes had no impact on our consolidated results of operations or financial position. Prior period segment results have been recast to reflect our new reportable segments. Financial information about our reportable segments as well as geographic information is located in Note 17 - Segment Information to the Consolidated Financial Statements.

36

Financial Overview

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

Year Ended August 31,

(In millions, except per share amounts)

2025

2024

Revenue

Manufacturing

$

2,991.2

$

3,312.4

Leasing & Fleet Management

249.0

232.3

3,240.2

3,544.7

Cost of revenue

Manufacturing

2,556.6

2,913.0

Leasing & Fleet Management

76.1

73.2

2,632.7

2,986.2

Margin

Manufacturing

434.6

399.4

Leasing & Fleet Management

172.9

159.1

607.5

558.5

Selling and administrative

263.3

247.1

Net gain on disposition of equipment

(15.9

)

(13.1

)

Earnings from operations

360.1

324.5

Interest and foreign exchange

75.7

100.8

Earnings before income tax and earnings from unconsolidated affiliates

284.4

223.7

Income tax expense

(91.4

)

(62.0

)

Earnings before earnings from unconsolidated affiliates

193.0

161.7

Earnings from unconsolidated affiliates

20.1

11.0

Net earnings

213.1

172.7

Net earnings attributable to noncontrolling interest

(9.0

)

(12.6

)

Net earnings attributable to Greenbrier

$

204.1

$

160.1

Diluted earnings per common share

$

6.35

$

4.96

Performance for our segments is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal reporting purposes.

Year Ended August 31,

(In millions)

2025

2024

Earnings (loss) from operations:

Manufacturing

$

327.5

$

308.7

Leasing & Fleet Management

160.6

139.0

Corporate

(128.0

)

(123.2

)

$

360.1

$

324.5

37

Consolidated Results

Year Ended August 31,

2025 vs 2024

(In millions)

2025

2024

Increase

(Decrease)

%

Change

Revenue

$

3,240.2

$

3,544.7

$

(304.5

)

(8.6

)%

Cost of revenue

$

2,632.7

$

2,986.2

$

(353.5

)

(11.8

)%

Margin (%)

18.7

%

15.8

%

2.9

%

*

Net earnings attributable to Greenbrier

$

204.1

$

160.1

$

44.0

27.5

%

* Not meaningful

Through our integrated business model, we provide a broad range of custom products and services in each of our reportable segments, which have various selling prices and margins. The demand for and mix of products and services delivered changes from period to period, which causes fluctuations in our financial results.

The 8.6% decrease in Revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries. This was partially offset by a 7.2% increase in Leasing & Fleet Management Revenue primarily attributed to an increase in rents associated with growth of the fleet and improved lease rates.

The 11.8% decrease in Cost of revenue for the year ended August 31, 2025 as compared to the prior year was primarily due to an 8.5% decrease in deliveries and operating efficiencies within our Manufacturing segment during the year ended August 31, 2025.

Margin percentage increased 2.9% for the year ended August 31, 2025 compared to the prior year primarily due to operating efficiencies in our Manufacturing segment.

The $44.0 million increase in Net earnings attributable to Greenbrier for the year ended August 31, 2025 as compared to the prior year was primarily due to the following:

•
$49.0 million increase in Margin for the year ended August 31, 2025 primarily due to operating efficiencies within our Manufacturing segment and a $27.3 million increase in rents associated with growth of the fleet and improved lease rates in our Leasing & Fleet Management segment.

•
$25.1 million decrease in Interest and foreign exchange expense primarily attributed to higher interest income and a $10.6 million increase in foreign exchange gain primarily due to the change in the Mexican Peso's foreign exchange rate relative to the U.S. Dollar during the year ended August 31, 2025.

These were partially offset by the following:

•
$29.4 million increase in Income tax expense due to higher pre-tax earnings and geographic mix of earnings during the year ended August 31, 2025.

For discussion related to the results of operations and changes in financial condition for 2024 compared to 2023 refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K, which was filed with the U.S. Securities and Exchange Commission on October 24, 2024.

38

Manufacturing Segment

Year Ended August 31,

2025 vs 2024

(In millions, except deliveries)

2025

2024

Increase

(Decrease)

%

Change

Revenue

$

2,991.2

$

3,312.4

$

(321.2

)

(9.7

)%

Cost of revenue

$

2,556.6

$

2,913.0

$

(356.4

)

(12.2

)%

Margin (%)

14.5

%

12.1

%

2.4

%

*

Earnings from operations ($)

$

327.5

$

308.7

$

18.8

6.1

%

Earnings from operations (%)

10.9

%

9.3

%

1.6

%

*

Deliveries

20,400

22,300

(1,900

)

(8.5

)%

* Not meaningful

Our Manufacturing segment primarily generates revenue from manufacturing a wide range of railcar products and components and performing sustainable conversion services. Manufacturing also generates revenue by providing railcar maintenance services.

Manufacturing Revenue decreased $321.2 million or 9.7% for the year ended August 31, 2025 compared to the prior year. The decrease was primarily attributed to an 8.5% decrease in deliveries during the year ended August 31, 2025.

Manufacturing Cost of revenue decreased $356.4 million or 12.2% for the year ended August 31, 2025 compared to the prior year. The decrease was primarily attributed to an 8.5% decrease in deliveries and operating efficiencies during the year ended August 31, 2025.

Manufacturing Margin as a percentage of Revenue increased 2.4% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to operating efficiencies during the year ended August 31, 2025.

Manufacturing Earnings from operations increased $18.8 million or 6.1% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to operating efficiencies during the year ended August 31, 2025 partially offset by an 8.5% decrease in deliveries compared to the prior year.

39

Leasing & Fleet Management Segment

Year Ended August 31,

2025 vs 2024

(In millions)

2025

2024

Increase

(Decrease)

%

Change

Revenue

$

249.0

$

232.3

$

16.7

7.2

%

Cost of revenue

$

76.1

$

73.2

$

2.9

4.0

%

Margin (%)

69.4

%

68.5

%

0.9

%

*

Earnings from operations ($)

$

160.6

$

139.0

$

21.6

15.5

%

Earnings from operations (%)

64.5

%

59.8

%

4.7

%

*

* Not meaningful

The Leasing & Fleet Management segment generates revenue from leasing railcars from our lease fleet, providing various fleet management services, syndication activity associated with leases attached to new railcar sales, interim rent on leased railcars for syndication and the sale of railcars purchased from third parties with the intent to resell.

Leasing & Fleet Management Revenue increased $16.7 million or 7.2% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to a $27.3 million increase in rents associated with growth of the fleet and improved lease rates. This was partially offset by a $2.1 million decrease in the sale of railcars which we had purchased from third parties with the intent to resell during the year ended August 31, 2025.

Leasing & Fleet Management Cost of revenue increased $2.9 million or 4.0% for the year ended August 31, 2025 compared to the prior year. The increase was primarily due to higher costs from a larger fleet and higher syndication activity during the year ended August 31, 2025. This was partially offset by a decrease in the volume of railcars sold that we purchased from third parties with the intent to resell during the year ended August 31, 2025.

Leasing & Fleet Management Margin as a percentage of Revenue increased 0.9% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to improved lease rates and fewer sales of railcars that we purchased from third parties with the intent to resell, which have lower margin percentages, during the year ended August 31, 2025.

Leasing & Fleet Management Earnings from operations increased $21.6 million or 15.5% for the year ended August 31, 2025 compared to the prior year. The increase was primarily attributed to higher rents associated with a larger fleet and improved lease rates in addition to a $3.2 million increase in net gain on disposition of equipment from higher sales of assets from our lease fleet during the year ended August 31, 2025.

40

Selling and Administrative

Year Ended August 31,

2025 vs 2024

(In millions)

2025

2024

Increase

(Decrease)

%

Change

Selling and administrative

$

263.3

$

247.1

$

16.2

6.6

%

Selling and administrative expense was $263.3 million or 8.1% of Revenue for the year ended August 31, 2025 and $247.1 million or 7.0% of Revenue for the year ended August 31, 2024.

The $16.2 million increase was primarily attributed to higher expenses related to our European operations, including facility closure costs and other expenses in addition to higher employee-related costs during the year ended August 31, 2025.

Net Gain on Disposition of Equipment

Net gain on disposition of equipment typically includes the sale of assets from our lease fleet (Equipment on operating leases, net) and disposition of property, plant and equipment. Assets are periodically sold in the normal course of business in order to optimize our lease fleet and to manage risk and liquidity.

Net gain on disposition of equipment was $15.9 million and $13.1 million for the years ended August 31, 2025 and 2024, respectively. The increase was primarily attributed to higher sales of assets from our lease fleet during the year ended August 31, 2025.

Interest and Foreign Exchange

Interest and foreign exchange expense was composed of the following:

Year Ended August 31,

Increase (Decrease)

(In millions)

2025

2024

2025 vs 2024

Interest and foreign exchange:

Interest and other expense, net

$

79.3

$

93.8

$

(14.5

)

Foreign exchange (gain) loss, net

(3.6

)

7.0

(10.6

)

$

75.7

$

100.8

$

(25.1

)

The $25.1 million decrease in Interest and foreign exchange expense during the year ended August 31, 2025 compared to the prior year was primarily attributed to higher interest income and a $10.6 million increase in foreign exchange gain primarily due to the change in the Mexican Peso's foreign exchange rate relative to the U.S. Dollar during the year ended August 31, 2025.

41

Income Tax

In 2025, our Income tax expense was $91.4 million on $284.4 million of pre-tax earnings, resulting in an effective tax rate of 32.1%. This rate was higher than the U.S. statutory tax rate due to several factors, including the geographic mix of earnings, state taxes, U.S. taxation of foreign branch operations, the Base Erosion and Anti-Abuse Tax (BEAT) and minimum taxes in certain foreign jurisdictions. These impacts were partially offset by favorable changes in foreign currency exchange rates affecting our U.S. Dollar denominated foreign operations.

In 2024, our Income tax expense was $62.0 million on $223.7 million of pre-tax earnings, resulting in an effective tax rate of 27.7%. This rate was higher than the U.S. statutory tax rate, primarily driven by the geographic mix of earnings and U.S. taxes on profits earned in foreign jurisdictions. These impacts were partially offset by favorable changes in foreign currency exchange rates affecting our U.S. Dollar denominated foreign operations.

Our effective tax rate can vary from year to year due to discrete tax items and changes in the mix of foreign and domestic pre-tax earnings. It is also influenced by fluctuations in the proportion of earnings attributable to our Mexican railcar manufacturing joint venture. This joint venture is treated as a partnership for tax purposes, meaning its full pre-tax earnings are included in our consolidated earnings, while only our 50% share of the tax is included in Income tax expense.

On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA). As a result, we recorded an increase of deferred tax liabilities and decrease of income tax payable related to the provisions for 100% bonus depreciation on assets placed in service after January 19, 2025. Additionally, our effective tax rate increased due to the impact of non-deductible depreciation in the calculation of our BEAT liability. Many other provisions of the OBBBA will take effect in future tax years and we are currently assessing their potential impact.

Separately, the EU Member States have formally adopted the Pillar Two Directive, which establishes a minimum effective tax rate of 15% under the Organisation for Economic Co-operation and Development (OECD) Pillar Two Framework. These rules must be implemented by each country and became effective for us beginning September 1, 2024. We continue to monitor additional guidance from the OECD and evaluate the potential effects of these changes, though we do not expect a material impact on our effective tax rate.

Earnings From Unconsolidated Affiliates

Through unconsolidated affiliates we produce rail and industrial components and have an ownership stake in a railcar manufacturer in Brazil. We record the results from these unconsolidated affiliates on an after-tax basis.

Earnings from unconsolidated affiliates were $20.1 million and $11.0 million for the years ended August 31, 2025 and 2024, respectively. The increase was primarily related to $7.7 million in higher earnings at our Brazil operations for the year ended August 31, 2025.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest were $9.0 million and $12.6 million for the years ended August 31, 2025 and 2024, respectively. Net earnings attributable to noncontrolling interest primarily represents our joint venture partner's share in the results of operations of our Mexican railcar manufacturing joint ventures, adjusted for intercompany sales, and our European partner’s share of the results of our European operations. The $3.6 million change from the prior year was primarily a result of a decrease in earnings due to lower deliveries at our Mexican railcar manufacturing joint venture.

42

Liquidity and Capital Resources

Year Ended August 31,

(In millions)

2025

2024

Net cash provided by operating activities

$

265.7

$

329.6

Net cash used in investing activities

(203.1

)

(320.4

)

Net cash provided by (used in) financing activities

(101.7

)

86.2

Effect of exchange rate changes

(3.1

)

(29.5

)

Net increase (decrease) in cash and cash equivalents and restricted cash

$

(42.2

)

$

65.9

We continue to be financed through cash generated from operations and borrowings. At August 31, 2025 Cash and cash equivalents and Restricted cash were $326.4 million, a decrease of $42.2 million from $368.6 million at August 31, 2024.

Cash Flows From Operating Activities

The $63.9 million decrease in cash from operating activities for the year ended August 31, 2025 compared to the year ended August 31, 2024 was primarily due to a $102.7 million change in Leased railcars for syndication due to timing of syndication activity. This was partially offset by a $40.4 million increase in Net earnings.

Cash Flows From Investing Activities

Cash used in investing activities primarily related to capital expenditures net of proceeds from the sale of assets. The $117.3 million decrease in cash used in investing activities for the year ended August 31, 2025 was primarily attributable to a $117.9 million decrease in Capital expenditures compared to the year ended August 31, 2024.

Year Ended August 31,

(In millions)

2025

2024

Capital expenditures:

Leasing & Fleet Management

$

(140.5

)

$

(277.0

)

Manufacturing

(139.9

)

(121.3

)

Total capital expenditures (gross)

$

(280.4

)

$

(398.3

)

Proceeds from sales of assets

77.3

75.0

Total capital expenditures (net of proceeds)

$

(203.1

)

$

(323.3

)

Capital expenditures primarily relate to additions to our lease fleet and on-going investments in the safety, productivity and improvement of our facilities. Proceeds from the sale of assets primarily relate to sales of railcars from our lease fleet within Leasing & Fleet Management. Assets from our lease fleet are periodically sold in the normal course of business to accommodate customer demand and to manage risk and liquidity. Proceeds from sales of assets are expected to be approximately $115 million for 2026.

Gross capital expenditures for 2026 are expected to be approximately $240 million for Leasing & Fleet Management and approximately $80 million for Manufacturing, which includes the change in capital expenditures accrued in Accounts payable and accrued liabilities. Capital expenditures for 2026 primarily relate to additions to our lease fleet reflecting our leasing strategy and continued investments into the safety and productivity of our facilities.

Cash Flows From Financing Activities

The $187.9 million change in Net cash provided by (used in) financing activities for the year ended August 31, 2025 compared to the year ended August 31, 2024 was primarily attributed to $153.6 million in lower proceeds from the issuance of debt, net of repayments and a $21.4 million increase in the repurchase of stock during the year ended August 31, 2025.

43

The senior term debt was amended in May 2025 on similar terms, extending the maturity date from August 2026 to May 2030. Principal payments of $3.1 million are to be paid quarterly in arrears with a balloon payment of $190.6 million due upon maturity. The principal balance as of August 31, 2025 was $250.0 million.

During the year ended August 31, 2024 we issued $178.5 million of asset backed securities and used proceeds to pay down $139.9 million of our Leasing warehouse facility. We also borrowed $196.6 million on the Leasing warehouse facility to grow the lease fleet. In February 2024, we paid $47.7 million to retire our 2024 Convertible Notes.

Dividend & Share Repurchase Program

A quarterly dividend of $0.32 per share was declared on October 23, 2025.

The Board of Directors has authorized our company to repurchase in aggregate up to $100.0 million of our common stock. The program may be modified, suspended, or discontinued at any time without prior notice. On January 8, 2025, the Board of Directors authorized the extension of the existing share repurchase program from January 31, 2025 to January 31, 2027 and renewed the amount remaining for repurchase to $100.0 million. Under the share repurchase program, shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. The timing and amount of purchases is based upon market conditions, securities law limitations and other factors. The program may be modified, suspended, or discontinued at any time without prior notice. The share repurchase program does not obligate us to acquire any specific number of shares in any period.

During the year ended August 31, 2025, we purchased a total of 517 thousand shares for $22.2 million under the current authorization of the share repurchase program. As of August 31, 2025, the amount remaining for repurchase under the current authorization of the share repurchase program was $77.8 million. During the year ended August 31, 2024, we purchased 38 thousand shares for $1.3 million.

Cash, Borrowing Availability and Credit Facilities

Our current cash balance is part of our strategy to maintain strong liquidity to respond to current uncertainties. As of August 31, 2025, we had $306.1 million in Cash and cash equivalents and $496.2 million in available borrowings. The available balance to draw under committed credit facilities includes $389.5 million on the North American credit facility, $20.7 million on the European credit facilities and $86.0 million on the Mexican credit facilities.

Our senior secured credit facilities aggregated to $1.3 billion as of August 31, 2025, which consisted of the following components:

Lease fleet – Nonrecourse

Leasing warehouse credit facility – As of August 31, 2025, a $450.0 million nonrecourse warehouse credit facility existed to support the operations of our leasing business in North America. Advances under the facility are secured by a pool of leased railcars and bear interest at the Secured Overnight Financing Rate (SOFR) plus 1.70%. As of August 31, 2025, interest rate swap agreements cover 91% of the outstanding balance to swap the floating interest rate to a fixed rate. The warehouse credit facility converts to a term loan in September 2027 and matures in September 2029.

Corporate and other – Recourse

North American credit facility – As of August 31, 2025, a $600.0 million revolving line of credit existed to provide working capital and interim financing of equipment, principally for our U.S. and Mexican operations. The North American credit facility is secured by substantially all of our U.S. assets not otherwise pledged as security for term loans, the warehouse credit facility or the railcar asset-backed securities. Available borrowings are generally based on defined levels of eligible inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios. Outstanding commitments under the North American credit facility included letters of credit which totaled $5.4 million and $5.9 million as of August 31, 2025 and 2024, respectively. Advances bear interest at SOFR plus 1.50% plus 0.10% as a SOFR adjustment or Prime plus 0.50% depending on the type of borrowing. The North America credit facility was renewed in May 2025, extending the maturity date from August 2026 to May 2030.

44

European revolving credit facilities – As of August 31, 2025, lines of credit totaling $98.3 million, secured by certain of our European assets, were available for working capital needs of our European manufacturing operations. The European lines of credit include $35.1 million which is guaranteed by us. The European credit facilities have variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.10% to WIBOR plus 1.40% and Euro Interbank Offered Rate (EURIBOR) plus 1.90%. The European credit facilities are regularly renewed and currently have maturities that range from October 2025 through September 2026.

Mexican revolving credit facilities – As of August 31, 2025, our Mexican railcar manufacturing operations had lines of credit totaling $156.0 million for working capital needs, $56.0 million of which we and our joint venture partner have each guaranteed 50%. Advances under these facilities bear interest at variable rates that range from SOFR plus 1.96% to SOFR plus 4.25%. The Mexican credit facilities have maturities that range from June 2026 through March 2027.

The following table summarizes our credit facility balances:

As of August 31,

(In millions)

2025

2024

Lease fleet – Nonrecourse:

Leasing warehouse credit facility

$

222.3

$

194.9

Corporate and other – Recourse:

North American revolving credit facility

$

5.0

$

—

European revolving credit facilities

$

77.6

$

46.7

Mexican revolving credit facilities

$

70.0

$

110.0

Other Information

The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us, the most restrictive of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into financing leases; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage. As of August 31, 2025, we were in compliance with all such restrictive covenants.

From time to time, we may seek to repurchase or otherwise retire or exchange securities, including outstanding convertible notes, borrowings and equity securities, and take other steps to reduce our debt, extend the maturities of our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated transactions or other retirements, repurchases or exchanges. Such retirements, repurchases or exchanges of one note or security for another note or security (now or hereafter existing), if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity requirements and contractual restrictions, if applicable. The amounts involved in any such transactions may, individually or in the aggregate, be material and may involve all or a portion of a particular series of notes or other indebtedness which may reduce the float and impact the trading market of notes or other indebtedness which remain outstanding.

We have global operations that conduct business in their local currencies as well as other currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency of each entity, we enter into foreign exchange contracts with established financial institutions to protect the revenue or margin on a portion of forecasted foreign currency sales and expenses. Given the strong credit standing of the counterparties, no provision has been made for credit loss due to counterparty non-performance.

To mitigate the exposure to changes in interest rates, we have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $687.8 million of variable rate debt to fixed rate debt as of August 31, 2025.

45

We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit facilities and long-term financings, to be sufficient to fund expected debt repayments, working capital needs, planned capital expenditures, additional investments in our unconsolidated affiliates and dividends during the next twelve months.

The following table shows our estimated future contractual cash obligations as of August 31, 2025:

Year Ended August 31,

(In millions)

Total

2026

2027

2028

2029

2030

Thereafter

Debt 1

$

1,764.5

$

183.3

$

334.6

$

401.3

$

26.8

$

438.3

$

380.2

Interest 2

534.1

72.2

69.1

54.7

42.2

40.4

255.5

Railcar & operating leases

100.8

18.8

15.6

14.6

12.6

9.3

29.9

$

2,399.4

$

274.3

$

419.3

$

470.6

$

81.6

$

488.0

$

665.6

1 The repayment of the $373.8 million of 2028 Convertible Notes due April 2028 is assumed to occur at the scheduled maturity instead of assuming an earlier conversion by the holders.

2 A portion of the estimated future cash obligation relates to interest on variable rate borrowings. Amounts are based on interest rates as of August 31, 2025.

Off-Balance Sheet Arrangements

We do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes and disclosure of contingent assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.

Impairment of long-lived assets - We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed based upon estimated undiscounted cash flows expected to be realized over the remaining useful life of the asset group. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group.

An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, and the determination of the fair value of real and personal property. Estimates of future cash flows are by nature highly uncertain and contemplate factors that may change over time. For further information, see Note 4 - Divestitures to the Consolidated Financial Statements.

Goodwill - We evaluate goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amounts of our reporting units exceed their fair value. We test goodwill for impairment by either performing a qualitative or quantitative assessment. When we perform a qualitative assessment, we analyze macroeconomic and industry conditions, financial performance, and cost estimates associated with a particular reporting unit. This assessment requires subjectivity based on cumulative information available at the assessment date. If a qualitative assessment indicates it is more likely than not that the carrying value of a reporting unit exceeds its respective fair value, a quantitative assessment is performed. We performed a qualitative assessment for our annual goodwill impairment test during the third quarter of 2025 and determined that it was more likely than not that the fair values of all reporting units with goodwill exceeded their carrying values; therefore, we concluded that goodwill was not impaired.

46

When we perform a quantitative assessment, we exercise judgment to develop estimates of the fair values of our reporting units based on a weighting of income and market approaches. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows which incorporates forecasted revenues, long-term growth rate, gross margin percentages, operating expenses, and the use of discount rates. Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.

We make certain estimates and assumptions to determine our reporting units and whether the fair value of each reporting unit is greater than its respective carrying value. The above highlighted judgments contemplated estimates and effects of macroeconomic trends that are inherently uncertain. Changes in these estimates, which may include the effects of inflation and policy reactions thereto, increases in pricing of materials and components, changes in demand, or potential macroeconomic events may cause future assessment conclusions to differ. For further information, see Note 7 - Goodwill to the Consolidated Financial Statements.

Income taxes - The asset and liability method is used to account for income taxes. We are required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for each tax jurisdiction to determine the amount of deferred tax assets and liabilities. Deferred income taxes are provided for the temporary effects of differences between assets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. We recognize a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities.

Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Judgment is required in determining our tax expense and in evaluating our tax positions, as tax laws are complex and subject to different interpretations by taxpayers and government taxing authorities. Our income tax rate is affected by the tax rates that apply to our foreign earnings and could be adversely impacted by higher or lower earnings than anticipated in a particular jurisdiction. In addition to local country tax laws and regulations which may apply minimum taxes, our income tax rate depends on the extent that our foreign earnings are taxed by the U.S. through provisions such as the global intangible low-taxed income (GILTI) tax and BEAT. We review our deferred tax assets and tax positions quarterly and adjust the balances as new information becomes available. For further information regarding income taxes, see Note 16 - Income Taxes to the Consolidated Financial Statements.

Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available information. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which reserves are established are made.

Judgments used in determining if a liability is estimable are subjective and based on known facts and our historic experience. If further developments in or resolution of an environmental matter result in facts and circumstances that differ from those assumptions used to develop these reserves, the accrual for environmental remediation could be materially misstated. Due to the uncertain nature of environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us. For further information regarding our environmental costs, see Note 20 - Commitments and Contingencies to the Consolidated Financial Statements.

47