The Greenbrier Companies, Inc. (GBX) Earnings Call Transcript & Summary

Welcome, everybody. If you could take your seats, we'll get going here reasonably on time. Something I'm known for, starting right on time. In the railroad business, on time is late, early is on time and late is not acceptable. I especially look forward to this annual event. As you can see, it's the only time of the year that the CEO can look down on the Board of Directors. We have a little bit of elevation height on them. Good afternoon. Welcome to the Greenbrier Companies Annual Meeting for 2020. I'm Bill Furman, the Chairman of the Board and Chief Executive Officer of the company. At Greenbrier, safety and the welfare of our employees is of tantamount importance. To help ensure your safety today, I'm going to ask Greg Bretzing, our Vice President of Global Security and Corporate Affairs, to provide a brief summary of safety procedures for this annual meeting. Greg?

Thank you, Bill, and good afternoon. The principal exit to this room is the entrance in which you came, which is over to my right, back left corner of the room from where you're sitting. There are also 2 service exits: one directly behind the -- or directly in front of the stage and behind you, which is the best exit in the case of an emergency. There's also one to my right, the back left corner of the room. In the event of an evacuation, please exit orderly. We are on the ground floor, and there are 3 exits in this building on the north and east side. Please leave the building quickly and orderly. There is also a first aid kit and an automated external defibrillator that is located in the building at the front desk as well as personnel who are qualified and skilled at using them. In the event of an emergency, I will call 911 and our General Counsel and Chief Compliance Officer, Martin Baker, will let the hotel management know. While talking on the subject, are there any here who are trained in CPR or first aid? So by raise of hands and would be willing to help out in the event of an incapacitation or sickness. Thank you for that. Also, just to be aware, there are a few tripping hazards in the building, please be careful and watch where you step as you move around the room. And that will conclude our safety briefing this afternoon.

Thank you very much, Greg. Let me begin by first welcoming our shareholders who are here today. We appreciate your attendance. And let me just go off script for a moment and be sure I get this done early in the program. Welcome my wife, Jane. Jane, you raise your hand and say, hi. Thank you. And also welcome to the Greenbrier employees who are in attendance today, many of whom and most of whom are also shareholders. Our employees make what we do possible. Let me ask the officers of the company, those who are here, to stand up and join me in recognizing them. Want to stand up? You guys are awfully shy. All right. There we go. Thank you. We also welcome our suppliers, our customers, lenders and friends of the company, a customer right here on the front, Herman Hacksteen from Cryo-Trans. Thanks for coming all the way from Baltimore to join us. Herman is also a big shareholder. He reminds me of that frequently. Our company officers are wearing name tags, and feel free to chat with them and ask them anything that's on your mind. Seating to my left is Sherrill Corbett, our Corporate Secretary. Sherrill will record the minutes and deal with any procedural issues that might arise out of the program. Also seated to my left are Lorie Tekorius, President and Chief Operating Officer; and Chief Accounting Officer, Adrian Downes. Lorie and Adrian have both been promoted during the year, and we welcome them here in their new roles. I would also like to introduce Sean Monahan and Dennis White of KPMG of the -- hi, guys. Thanks for coming today. Our public accounting firm. I appreciate that. I appreciate your guys' hard work during the year. Keeping us straight on the financials. This meeting is being webcast over the Internet via the company's website. Recording will be archived in the website for 30 days. I would also like to welcome shareholders, analysts and others who are participating by webcast. Thank you for joining us this morning. I'll now introduce the members of our Board of Directors, who are seated to my right and ask them to stand as I call their names and to remain standing. Admiral Thomas Fargo, who chairs our Compensation Committee. Admiral? Admiral is a retired military commander, as his title implies. He was head of the Pacific fleet, 5th Fleet, and has a distinguished list of accomplishments, including serving as Chairman of Huntington Eagles -- Ingalls Industries and the United States Automobile Association. Huntington builds our nuclear aircraft carriers and submarines in -- for the United States and is a very, very large company. He's also a director of Hawaiian Electric Industries in Matson. Wanda Felton, secondly. Wanda joined the Board in June of 2017. She's had over 30 years of financial industry experience in commercial and investment banking. Wanda has also served as Presidential Appointee twice, confirmed by the U.S. Senate, to serve on the Export-Import Bank of the United States as Vice Chairman, where she had responsibility for approving financings that supported the export -- that support the export of U.S. manufactured transportation equipment, railcars and aircraft. Wanda also serves as a trustee of the Cooper Union for the Advancement of Science and Art. Along with her Co-Director, Kelly Williams, Wanda was named among the 2019 most influential corporate Board Directors by WomenInc. magazine. Please join me in congratulating both Wanda and Kelly for that recognition. One of the disadvantages of having a name that begins with W is that we [ always have to introduce Kelly last ]. Next, Graeme Jack, who is a member of the Board and chairs our Audit Committee. He's a retired partner of PricewaterhouseCoopers in Hong Kong. Graeme also serves as a Director of COSCO SHIPPING Development Company Limited and is a trustee manager of Hutchison Port Holdings Trust and Hutchison China Meditech Limited. Graeme is our China hand. He is -- knows a great deal about the east and has been a very valuable Director. Duane McDougall has -- serves as our Lead Director. He was President and Chief Executive Officer of Willamette Industries, an international forest products company. He was also formerly -- he's also served as the Chairman and CEO of Boise Cascade and as a Director of Cascade Corporation and West Coast Bancorp. Duane is currently on the Board of Boise Cascade and StanCorp Financial. Dave Starling. Dave joined the Board in June of 2017. He also serves as Chairman of the Board of Ports America and Senior Adviser of Oaktree International Infrastructure Fund. David was President, CEO and a Director of Kansas City Southern, one of the large Class 1 railroads in the United States until 2016. Prior to joining KCS, David served as the President and Director General of the Panama Canal Railway Company. Charles Swindells. Ambassador Swindells served -- joined our Board in 2005 following completion of his service and -- to the United States as U.S. Ambassador to New Zealand and Samoa. Butch consults with the company on international projects and also serves as an adviser to Bessemer Trust, Independent Director, formerly the Vice Chairman for Western Region of U.S. Trust Bank of America and very active in private wealth management. Wendy Teramoto. Wendy just recently was appointed to our Board in October. She had been with our Board previously before moving to be Chief of Staff at the Commerce Department for Secretary Wilbur Ross, who also is a former Director of the company. Ms. Teramoto has been a senior investment management professional and is now affiliated with Fairfax Holding Companies Limited since 2018. Don Washburn. Don Washburn formerly served as Chair of our Nominating and Corporate Governance Committee for many years. Don has spent significant amount of his career and is still active in the hospitality industry including as a former Executive Vice President of Operations for Northwest Airlines. He's also served as a trustee for LaSalle Hotel Properties. Kelly Williams. Kelly is the Chair of our Nominating and Governance Committee. She was formerly Founder, Managing Director and Global Head of the Customized Fund Management Group, or CFIG, of Credit Suisse until its sale in 2014. She stayed with CFIG as President until 2015 and as a Senior Adviser until 2019. Kelly is the CEO of the Williams Legacy Foundation, currently serves as a Director for Grasshopper Bank and a number of nonprofit institutions. Her vast experience in the finance industry has earned her national recognition. Kelly has also, as I mentioned, been recognized as WomenInc's most influential -- one of the most influential corporate Board of Directors. So with that, I'm Bill Furman, Chairman of the Board and Chief Executive Officer, and that completes the list of the Board of Directors, who are here all with you today. May I have a round of applause welcoming the Board? All right. Now we will begin the formal portion of this meeting. I will begin with the votes on 3 action items, considering only those items that have been properly presented for approval or action during this shareholders meeting. Upon adjournment of that portion of the meeting, we'll immediately convene the informal portion of the meeting. At that time, we will have the opportunity for shareholder questions and from members of the community. I'll now call on Sherrill Corbett, our Secretary to establish that we have met the corporate formalities for this meeting. Sherrill?

So the meeting was duly called. All formalities have been met, and a quorum is present.

Good. In that case, I formally call this meeting to order. This is the best part of the whole meeting. I get to stamp that gavel only once a year. So there are 3 action items for today's meeting. And why don't I ask Sherrill to go through the voting procedure?

Votes are normally cast by proxy in advance of the meeting. Record shareholders can vote in person. If you wish to vote in person, please raise your hand and an usher will bring you a ballot. Voting by ballot will replace your proxy.

Okay. Does anyone require a ballot here in the room? We have ballots if some of you have not voted and want to do so. Thank you. Any other ballots that are required? Okay. Hearing no ballot request, we'll proceed with the vote. If you have taken a ballot, be sure to print your name, number of shares you are voting and check the box in the lower left-hand corner to ensure that you would like this to be your official vote and if you've entered previous proxies, that you're canceling those. One last time, anyone else require a ballot? In that case, we will turn to the items of business, the election of Directors. Under the bylaws, the Board of Directors are divided into 3 classes. Directors Felton, Graeme Jack and Starling are Class 2 Directors, whose terms expire this year. Each is submitted for reelection. Director Teramoto is also a Class 2 Director, who is appointed to fill a newly created directorship and is also submitted for election. As no one else was nominated, as provided in the company's governing documents, Director nominations are now closed. The second item of business is a nonbinding shareholder advisory vote on the 2019 compensation of the company's named executive officers. The Board of Directors has recommended the shareholders vote to approve the compensation of the company's named executive officers. May I have a motion to approve the compensation of the named executive officers as described in the proxy statement? You want to second?

Second.

It's been moved and seconded, and therefore, that action item is now in motion. Third item of business is a proposal to ratify the appointment of KPMG as the company's auditors. The Audit Committee has appointed KPMG as auditors for the fiscal year ending August 31, 2020. Board of Directors has recommended that shareholders ratify that appointment. Is there a motion to ratify that appointment. Second?

Second.

Very good. If any shareholder has questions or comments specifically relating to the 3 proposals, please raise your hands -- or your hand, and we will have ushers bring you a microphone. If you do so and you're recognized, which, of course, you will be, please state your name and so on. Questions have to be addressed specifically to the matters that are subject to the current vote. And there will be an opportunity later to answer or to address other questions. Are there any questions or comments on the matters subject to the vote today? Hearing none, then we will ask for the ballot -- the ballot to be collected, and we'll move to closing of the polls and the inspectors of election will tabulate the votes and return the results to the secretary. All right. Again, this year, we have prepared a short video presentation summarizing the company's performance over the last year and offering a preview of what lies ahead. So in a moment, I'm going to ask for your attention, and we'll show that video presentation. This has been a very busy year, crucial year, a year of advancement on major strategic goals. We'll talk for a moment in a minute about the company's strategic goals. But a principal thing that we have achieved in the last couple of years is growth of the company at scale. We're very dedicated now to perform at that increased size and scale. And while we are solidly in support of the strategy and believe that it will create tremendous shareholder value in the near term, all of these things can occur with some growing pains, which will be talked about a bit during the financial part of this presentation. We're very proud of the growth of Greenbrier. We're entering the fifth decade of Greenbrier's existence as a company, not quite as many as a public company, but we've grown a great deal from the time of beginning with a 300-car leasing fleet in Huntington, West Virginia many years ago. At this point, we should be able to easily achieve revenues, possibly exceeding $4 billion in normalized times. It has been a -- quite a trip, and I appreciate the support of shareholders, employees, customers and other constituencies who have made this trip possible. I believe Nick Magaurn and Magaurn Video has put together this video. And if we can dim the lights a little bit, we'll proceed with that show. [Presentation]

Thank you very much. We are sorry that your colleague Marvin can't join us today. Thank you for coming. And in his honor, we've put in that Cryo-Trans car. I noticed you saw that. Well if you came this far to attend the shareholders meeting we want you to buy more stock and if its price is down a little bit, that's the least we could do, right, pay attention to customers. I'd like to make a brief legal statement that -- to remind all of you that some of the matters discussed today, including forward-looking statements under the Private Securities Litigation Reform Act will be made, and you're invited to look at the SEC filings that are all on the table over there. If you've not received a copy yet, our 2019 annual report, first quarter 2020 earnings releases, are available at the information desk here at the front of the room. It's very interesting to look at the growth of the company over these years, to recognize that we were a specialty car builder and a leasing company, headquartered here in Portland, Oregon throughout most of our time, with my late partner, Alan James and I began this company building on those roots from Huntington, West Virginia. And I have to say that this business has grown dramatically and has grown solidly. Today, we operate in 4 continents. We have the dominant market share in Brazil. We have -- we're 1 of 2 leading car builders in the United States. And we are the largest freight car builder, and in many ways, service providers in Europe. In addition to that, the work we have done in the Kingdom of Saudi Arabia and the GCC have dramatically increased the synergies that have made Greenbrier such a different company today than it was only a few years ago, at least to me, at Gunderson. So we operate as an integrated business model today across North America, combining freight car manufacturing, wheel services, repair, refurbishment, component parts, and a wide variety of other services. And among those services is the asset management model that has allowed us to grow to manage almost 1/4 of the North American railcar fleet, about 400,000 cars. Dan Weiler is here today, who runs that unit, and he's done a great job of growing that business. But that's very key to the commercial liability and the economic viability of a manufacturing business today to have that demand pull that can come from managing railcars and also providing the services that are necessary to make Americas' railroads run efficiently. I would like to thank our Board of Directors for having the courage to endorse a strategy of longer-term growth. It always -- I always reflect on what America would be like if those who were responsibly -- responsible for growing our forests were to look for a timber harvest the next year. And while technology has allowed a lot of fast growth, it takes time to grow a tree, and it takes time to grow a forest. Our shareholders have been patient with us to allow us time to advance this company's strong platform, and we are, this year, going to be dedicated to execution on that platform to increase operating cash flow, as you'll hear in a moment, to improve ROIC, to improve shareholder value. But to do so from a much stronger -- a platform that's much stronger than it was only 5 years ago and certainly a decade ago. Our strategy, if we can turn to that slide, is as described in the video, to grow at scale, to protect and strengthen our North American market, to execute on international diversification. In this recent quarter, the quarter that we are in, we have received is -- just through December, almost 5,000 cars. A large component of that came from the international market. This strategy is succeeding and is gaining traction, and we expect it to be converted into shareholder value, stockholder return in the near term. We are also developing a strong talent pipeline for the future. And all of these things developed within a fundamental growth and substance -- strategy for substance. 2019 was a record-setting year in the sense that we completed the largest acquisition that Greenbrier has undertaken. And I'd now like to ask Lorie Tekorius, our President and Chief Operating Officer, to come to the podium, speak about some of the key accomplishments and strategic developments for 2019 and looking into the future. Lorie?

For those of you who were here last year, you know that I'm going to give everyone a wide birth up here. It's dangerous up here on this podium. So good afternoon. It's great to see so many familiar faces and some new faces. Really appreciate all of you coming out to join us this afternoon, and hear a little bit more about what's going on -- what's been going on at Greenbrier for the last year and what we see going forward. Many of these things were covered in the video, but we'll touch on them again just to make certain that you didn't miss any of these points. We did close on our largest acquisition in late July of 2019, acquiring the manufacturing assets of ARI. We onboarded more than 1,600 new employees and added 6 new operations into manufacturing. And this acquisition aligned with 3 of the 4 pillars of our strategy that Bill just outlined. We also achieved record revenues, record railcar deliveries of 23,400 railcars. That's a 12% increase from the prior year. So for any of those of you who are in the manufacturing business and you think about that, 12% increase in deliveries, some of the things that you saw being built, that is pretty amazing, and I can tell you that every single one of those railcars is not exactly the same. That's multiple different railcar lines. That's lots of changeovers. That's lots of different, very important customers. It's a lot of people to keep employed. To keep safe and to keep our customers satisfied. So thank you to all the employees of Greenbrier. We also secured orders during fiscal 2016 -- 2019, right, flashback -- for 20,600 new railcars with a value of approximately $2.2 billion. You saw in the video, the largest barge that we've built in Greenbrier's history, pretty amazing. I was a bit disappointed that I wasn't in town for that. For those of you who are local to Portland, you should very much pay attention to when we're launching a barge because it is one of the most incredible things that we do and probably other than this meeting, it's one of the few things that we do right on time because the fisher people get annoyed when we close the river. You also saw our new Tsunami Gate that's on a covered hopper car, primarily for grain service. We are very focused on our engineers and resource and design and are really proud about this Tsunami Gate that we rolled out just in -- I think it was in November of this year. And then as the video showed, we issued our first ESG report. It's one of those things that I know a lot of investors are paying a lot more attention to. What our company is doing to address some of these issues? Greenbrier has always paid attention to its employees and the communities in which we operate and we decided that we'd better sit down and take a few minutes and communicate that out to the rest of the investor community. And I think it was well received, and we're, I think, in the midst of starting that again, right, Jack? Yes. Once you start something you can't stop. And so to that point, on the next slide, one of our very top priorities is safety. We've had upwards of 19,000 employees. I think we're at about 17,000 right now. It's really key for us to focus on safety. It's our top priority. We have daily meetings on the shop floor. We have quarterly reviews with our Board of Directors. This -- safety gets the highest attention in the company. And it's an everyday activity that requires continuous focus. As you can see from this graph, it's a little bit -- it's bit better on that screen back there, but the shaded area shows how our head count has grown over the course of the years. And those green bars and the trend line show how we've reduced our recordable injury rate and our DART rate. So again, it's -- we can have all the financial performance we want. But if we were to send or to have unsafe areas to work in, that wouldn't matter. Safety is our #1 priority. We're really proud of our safety statistics, and how we've improved. But we also know it's something that we cannot sit back and rest on. It's something that we have to continue to be focused on every single day, and that's what the men and women in our shops and Alejandro and Rick Turner and others who run our operating groups, that's what their focus is with their teams every day. And lastly, I'll turn to our cycles. We talked about this a little bit last year at this meeting. For those of you who may not be as intimately involved with this, the North American railcar market does go through some pretty big swings. And we focus on these swings when we're thinking about how many new railcars are delivered in the North American market. One of the things that we took when we put this new strategy together was to think about how can we deal with these different swings in the market and how can we perform better? So if you look at the period from 2005 to 2008, the average annual deliveries were about -- I went backwards there in time. Back to safety. It is important. Average annual deliveries were about 67,000 units. So that's a bit -- we would consider that a peak in the North American market and our average EBITDA was $111 million. And then in 2009 and 2010, average deliveries dropped significantly to about 20,000. So again, when you think about a manufacturing business and you think about across the North American market and all the cars being delivered, and you go to a -- from an average of 67,000 cars being delivered and it dropping to 20,000 cars, that's what we call cyclicality. That's why you hear us focus on how important it is to have the management team that we have in place to be able to have the flexibility to deal with these changing markets. During that downturn in 2009 and 2010, our EBITDA dropped [ to about ] $70 million. From 2014 to '16 was the most recent peak with average annual deliveries of about 70,000 and our EBITDA was $387 million. That's about a 250% increase from the prior peak. And I think that's just a testament to the operational and strategic actions that we've taken to improve our resiliency across multiple business cycles and our ability to transform the company to drive consistent and substantial EBITDA growth reflected in higher peaks and trough profitability through the years. So in short, we work for higher highs and higher lows. Sometimes, those things don't always happen exactly when we -- they think -- we think that they're going to occur. Again, with a large acquisition that we just completed, it might be a little bit bumpy, but we, the management team, we're focused on the long-term cycle, and we believe that the investments we've made, both here in North America as well as internationally, are setting us up for great growth. And with that, I'll turn it over to Adrian.

Thank you, Lorie. Thank you. Throughout first quarter, employees performed well as we continued the integration of our largest ever acquisition in North America. Revenue of $769.4 million was driven by deliveries of 6,200 units. Aggregate gross margins during the quarter were 12%, generating adjusted EBITDA of $74.2 million and $0.30 of adjusted diluted EPS. The synergies that Greenbrier sought in acquiring the ARI manufacturing assets yielded $2.8 million in the first quarter, a good start towards achieving the fiscal 2020 synergy target of $15 million. Greenbrier's uneven performance in the first quarter of fiscal 2020 did fall short of our expectations. Operating inefficiencies and component supply issues triggered lost production days at one of our newly acquired facilities from ARI. And therefore, a higher proportion of quarterly railcar deliveries originated from our 50-50 joint venture, which impacted net earnings. The operating inefficiencies and supplier issues are being addressed. Our robust backlog of 28,500 units valued at $3.1 billion has grown stronger over the past several years, now spanning across almost all railcar types and reaching more geographical markets. Despite a weak North American freight railcar market, Greenbrier secured worldwide orders of 4,500 units valued at $450 million in the first quarter comprised of tanks, covered hoppers and gondolas. Our stable backlog and orders continue to be healthy, as Bill mentioned, and provide a good base of business and earnings visibility for our manufacturing facilities. Greenbrier's balance sheet and liquidity continues to be strong, even after the ARI acquisition. Net funded debt-to-EBITDA continues to be healthy and we have available liquidity of nearly $600 million at November 30. Greenbrier's Board of Directors is focused on balanced deployment of capital to create long-term shareholder value. One of the means is through Greenbrier's quarterly dividend. And today, we announced an 8% increase to $0.27 per share, our 23rd consecutive quarterly dividend. This increase demonstrates the high confidence the Board and management has in our ability to execute our long-term strategy. Currently, our annual dividend represents a dividend yield exceeding 3%. Greenbrier has transformed over the past decade into a more nimble and adaptable enterprise, featuring a much broader portfolio of products and services. Because we have been proactive in growing our market position and addressing weaker areas of the business, Greenbrier is positioned for sustained, strong performance ahead. Based on current business trends and production schedules for fiscal 2020, we are affirming our FY '20 guidance, which is revenue of approximately $3.5 billion; deliveries to be approximately 26,000 to 28,000 units, including Greenbrier-Maxion in Brazil, which will account for approximately 2,000 units; and adjusted diluted EPS of $2.60 to $3 per share, excluding approximately $20 million to $25 million of integration and acquisition-related expenses from the ARI acquisition. And with that, I'll ask Bill to return to the podium and discuss Greenbrier's outlook and priorities.

Thank you, Adrian. Well, a brief look ahead. Of course, Greenbrier intends to remain focused on those things that are core and the 4 pillars of our strategy. But I think we also intend to remain focused on our values. What has allowed this organic and substantive growth has been those values, a recognition that business is an organic thing. It's not only about profits and certainly not about profits in the short run. We also recognize that stock performance is very important to investors. We play a longer game in a cyclical business. But that business has to be based on a solid foundation. And while it can be easy to produce value in the short run, it may not be sustainable. Today, in our society, we're more concerned about sustainability. We have to remember that business is an organic thing. It consists of people working together to create value. Principally, it consists of customers who want to work with the company. It consists of stakeholders like suppliers, banks, steel companies, all of those things that make America's employment base in the global economy possible. Manufacturing is a key part of our business, so is financial services. But we can't all be in America or in the world only maneuvering with money. We have to be concerned about the whole. That reality. That's why values are very important, and I'm pleased that the management team and our Board of Directors has a longer-term view. And this year, particularly we'll be focused on performing financially on the growth we have achieved. We have made a big acquisition. We've turned around our European operation. It's going to produce a very good franchise value. And we have a great start with our order base in Brazil. But we have to focus on not continuing to grow willy-nilly but to consolidate that growth that we've made, and it has to be reflected in the intermediate term in stronger shareholder value. We're very concerned about that. And we expect to deliver those results. If you look at potential of the $4 billion company versus what we were only a few years ago at $2 billion, if you can get a reasonable margin in $4 billion compared to $2 billion, it doesn't -- you just have to track the profitability, and that's why revenue growth or top line growth matters. So that's the future for Greenbrier. It's a future based on strong stakeholders, customers, communities, diversity and these values. At this point, I think we're ready to hear the results of the voting, and I will turn this back to Sherrill and see how we're doing.

Yes, Bill. The votes have been counted, and I have the preliminary results. All 4 nominees to the Board have been approved with each receiving at least 91% of the votes cast. The advisory vote on executive compensation has been approved with more than 58% of the votes cast in favor. The proposal to ratify KPMG as the company's auditors for fiscal 2020 has been approved with more than 98% of the votes cast in favor.

Very good. Thank you, Sherrill. We'll recognize that this year, our advisory vote on executive compensation did not receive the same level of support as in previous years. We highly value these shareholder inputs. We'll be evaluating executive compensation going forward in light of these results. On the other hand, again, I remind you that we are in a cyclical business, and we're playing a longer-term game. Someone has to do that in our economy. And we've chosen with the strength and courage of the Board and our team to do so. I want to thank everyone who has given us their vote of confidence. And at this point, we'll open it up for questions, if there are questions from the floor. If you have a question, we particularly value questions from shareholders or comments from shareholders, let us know and raise your hand and we'll bring you a microphone. You always ask a question.

Nobody is asking questions, I have one that's of no interest to anybody but me. Back 78 years ago, January 27, 1942, the destroyer, Gunderson, is credited with having sunk the U-boat being the first ship -- American ship to sink a U-boat. And I wonder if that Gunderson and our Gunderson is related in any way.

Well, I'm sure that name was associated with a fine family name here in Portland, Oregon, had some association. I don't recall in my -- of course, that's a little before my time, believe it or not. I don't recall us building destroyers at Gunderson. FMC Corporation did a lot of things over there at Gunderson that they don't even now want to talk about. So we did a lot of very interesting stuff. And I was with FMC Corporation during that period of time. But I think the person who should be more qualified to answer that question than I would be, Admiral Tom Fargo.

So the first submarine that was sunk in World War II was the military Japanese submarine sunk off of Pearl Harbor by the [ USS Bogue ]. And that submarine -- actually the sunken submarine was discovered about 1.5 years ago and [indiscernible] actually gifted one of those [indiscernible]. So that was my contribution in history.

I was afraid he might take that personally because he has a long background in submarines. He worked for Admiral Rickover. And he's probably sunk his fair share of tonnages at one time or another. So we'll have to research that and possibly get back to you. Any other questions that people might have today including awkward ones like why isn't the stock price going up? Why is it going down? If you have the answer to that question, you let me know, it should be going up. And I want to remind you that all Directors, all executive officers and many, many of our employees have the same stake in the company as the shareholders who would like to see the long-term value of the company increase. We have had shares of stock that have -- during the highs and lows, have gone down, but they've gone up to as high as $70 a share. We think we're building a fundamental platform for growth. And I don't think Gunderson will be building submarines or destroyers in the future. But there's a long history in this company. And it's a history we in Portland can always be very proud of. Any other questions? Oh come on, don't be so shy. Go ahead.

So for the past few quarters, the rail price has been dropping nationwide [indiscernible]?

Oh, no, we just shrug that off. No, it's sure of concern, yes. It's a really strange thing. And William Glenn, who runs our European operation is here today. There's a real cut out between the economy. In the United States, everybody says the economy is doing fine. We're puttering along at 2% GDP. The railroads are not. And some of that is self-inflicted by something called PSR or precision scheduled railroading. And we have a railroader right here on our Board, David Starling, who can tell you why that's good for America. It's not always so good for shippers. It has had an -- effect is they become more efficient, which sometimes means less service. I know that Herman Haksteen can speak to that last point. So there's that that's going on in the rail freight economy. There's quarter of the national freight stored right now, the freight fleet. That's a big -- that's a shocking statistic. Now a lot of those are old, obsolete cars that will eventually be scrapped, but scrap prices are down right now, and so people are hanging on to them. So there's that cut out. In Europe, on the peculiar side, the economy looks bad, but the freight side is good. And that's due to forces that are [ entering into ] Europe. But it certainly does concern us. It's not something that is so unusual. This is by its nature and manufacturing is, by its nature can be a cyclical business. Our goal is to reduce that cyclicality by diversification geographically and in other ways. So while we are concerned about it, we are not -- I think that has something to do with the valuation of the stock in the last 18 months. But it is -- we have a solid platform. And I think when normalcy returns, which it will, we will have a lot better -- be in a lot better position. The other thing that's going on with the U.S. economy is the trade controversies. And on that subject, if China and the United States normalize relations on trade, the intermodal business, in particular [ where we've had a strength ] will regain a strong momentum. But agriculture, intermodal port-to-port service, land bridge movements have all been affected by this cloud on the horizon. In addition, if you think about it, we have a lot of activities that affect us in public policy. The U.S. trade relationship with Mexico is very important to North America and to integrated supply chains. In 1 single month, we had 2 major pieces of legislation that were passed by Congress and have gone to the President, and 1 case, has been signed and will go to the Senate and then the President, he will sign it. And that's the reauthorization of what was NAFTA, which is very important to Greenbrier because we do have a Mexican manufacturing footprint. That's put a cloud though on a lot of economic activity in the United States. It's diverted business from America to Brazil, for example, in soybeans. And I think as those things filter through, we'll see a stronger freight revival. At least that's my belief. And what Mr. Starling has told us at this very Board meeting today is that what's good for railroads is good for America. And so we don't have to worry about it. Kind of -- any other comments or questions? Yes. Yes.

As the company has moved into foreign markets, whether it be Brazil or Turkey, you're subjected to a very different set of politics, legal structures, labor unions, players in the market. Has this been a real challenge and have you started to surmount some of these so that you feel that you have ease of operating in those countries without necessarily too many surprises?

Yes, that's a really good question and an interesting observation. We've been in the European market for 20 years now, and it takes patience. We've been tempted many times to depart from our [ moral ] platform because these environments can be very rough and tumble. One of the reasons that we have embraced over the years, a strong relationship with the U.S. government is to protect ourselves from that very thing. We can't be subverted or blackmailed. And we always behave in these international markets as we do in the United States. And customers and governments accept that if you make that clear to them. In fact, our Director of Security was a high-ranking officer with the FBI. We cooperated with the U.S. government aggressively. They're our government after all. And so we should be cooperative with them. So we find that in the international business, 3 things happen. You get a lot better perspective on global economics and global risks. Knowing what's happening in China, for example, through a different set of eyes and ears and the media is very useful if you have, if you will, boots on the ground. A second thing is it diversifies from this U.S. economy. And if we look at this month that we're in, just in December, we had a sizable amount of orders from these international markets, all of them fully transparent. We have ratted out governments in Poland and brought short-term wrap on ourselves for doing that. And I think we are going to maintain the same standard of integrity there as we would anywhere else. Lastly, just in terms of product design and engineering, we've built cars for Saudi Arabia and Poland with AAR certification. We have this new Tsunami car with a gate that's adopted from Poland and from our European operations. We just received a very large order from a Saudi Arabian customer, but not in Saudi Arabia, for here in the United States, because we're there. And so these things bring a lot of benefits. They are complicating factors and believe me, we didn't go there to have an adventure. It's not fun really to travel that much. We went there to make money, and we are making money over time, and we're building a strong, flexible platform for diversified growth. A great question, though. I wish more people would ask that question as it's assumed that you have to do different things in these countries to prosper. And it's a big mistake. It's not true. And if you go down that path, it's really a very bad path to go to. How about anybody on this side of the room? You are awfully quiet over there. All right. Well, you know what, we appreciate you coming in today. We appreciate the time you're taking away from your own business. I see so many familiar faces here. I appreciate your confidence in the company. I can assure you that management team and the Board of Directors is dedicated to making your investment in Greenbrier, whether you're a supplier or a shareholder or you are employee, one that you'll be proud of. So thank you very much. With that, I'll declare the meeting adjourned.