The Greenbrier Companies, Inc. (NYSE:GBX) Q2 2020 Earnings Conference Call - Final Transcript
Apr 07, 2020 • 11:00 am ET
It is now time for the question-and-answer session of today's call. [Operator Instructions] First question comes from Justin Long. Your line is open.
Thanks. Good morning and appreciate you taking the questions. Maybe to start just bigger picture on the industry and what's anticipating from a railcar production standpoint, FTR has recently lowered their forecast for 2020 and 2021, so that our low to mid 20,000 units range. I'm curious as you think about kind of cutting back your capacity and some of the things you discussed in the prepared remarks. Is that the type of build rate from an industry perspective that you're planning on or do you anticipate any upside or downside to that? And then also if you could just talk about cancellation risk in the backlog or deferral risk in the backlog, curious if you've seen any if that play out the last month or so?
Lorie L. Tekorius
Sure. So, I'll start out and I'm sure that Bill will supplement. Good morning, Justin. It's nice to hear your voice. From an industry outlook perspective, FTR certainly has gone through several iterations of dropping expected deliveries in 2020 and 2021. Right now, with everything that's going on, I think it is really hard to say specifically what deliveries might look like the next couple of years. I think, it certainly is reasonable that the numbers that they're projecting might be the numbers as you look across the years. Absolutely there is upside. We've seen that historically in our markets where we can be predicting that the sky is falling, and then the next thing is something wonderful happens. That's one of the things that we believe our management team and our manufacturing group in particular is very good at is being responsive to when opportunities present themselves. Our commercial team is very focused on working closely with our customers and remaining flexible so that we can take advantage of those opportunities. So, that's why you see us slow in production as opposed to stopping it all together. If we can continue at a fairly slow rate, we think that gives us optionality.
And then turning to your second question about risk in the backlog, we -- as we've poured through the backlog and looking at the different car types that we're building and it is a broad variety of car types, at this point in time, we don't have anything that we're overly concerned about, but then again, how can you work in this point in time and not be overly concerned about something. I think, we have a good history of working closely with our customers if there is an issue that they raise or a concern that we may need to modify car types or look at delivery timing. But again, at this point in time, we're feeling like our backlog is a very solid position and a good indicator of future activities.
William A. Furman
The only thing I would add, and thank you for your question, is that obviously