Hello and welcome to The Greenbrier Companies Second Quarter of Fiscal Year 2019 Earnings Conference Call. Following today's presentation, we will conduct a question-and-answer session. Each analyst should limit themselves to only two questions. Until that time, all lines will be on a listen-only mode. At the request of The Greenbrier Companies, this conference call is being recorded for instant replay purposes. At this time, I'd like to turn over the conference over to Mr. Justin Roberts, Vice President and Treasurer. Mr. Roberts you may begin.

Thank you, Angela. Good morning. Welcome to our second quarter conference call. On today's call, I'm joined by Greenbrier's Chairman and CEO, Bill Furman; Lorie Tekorius, Executive Vice President and COO; and Adrian Downes, Senior Vice President and Acting CFO. They will discuss the results for the quarter and provide an outlook for Greenbrier's business in fiscal 2019. Following our introductory remarks, we will open up the call for questions. In addition to the press release issued this morning, which includes supplemental data, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website. Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2019 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. And with that, I'll ask Bill to take it away.

Okay. Thank you very much, Justin, and good morning, everyone. Highlights of Greenbrier's second fiscal quarter included a solid railcar order activity and increased railcar deliveries and revenue generation. But our financial performance in the quarter was obviously disappointing. Our 2019 plan identified our second quarter as the least profitable of the year, due to -- in part to expected manufacturing inefficiencies from production line changeovers and building of a fleet of cars for syndication. However, we also encountered three distinct headwinds mentioned in our press release that impacted profitability in the quarter, specifically challenges in manufacturing at our Romanian and Gunderson facilities and facility closure costs in railcar repair operations. These factors caused second quarter earnings per share to fall short of our goals. Despite these challenges, during the quarter our projected deliveries and revenue for the year remain on target. Ergo, we now estimate fiscal 2019 earnings per share in the range of $3.60 to $3.80, excluding the railcar contract loss accruals and facility closure costs incurred during the quarter. Adrian will discuss our second quarter financial results and full year financial guidance in more detail. While lower than our previous outlook, we are confident in Greenbrier's ability to perform within this range. We have identified the core issues creating the negative financial performance in our Romanian facilities in particular and our Gunderson operations and our railcar repair network. By far, the Romanian operations were the most significant and we believe we have a new handle -- a handle on that with new management under the leadership of long-time Greenbrier officer, William Glenn, who used to run our European operations and has recently rejoined the company. We are also making rapid progress in addressing other performance issues that impacted the quarter. I'll briefly offer observations on the current…

Thank you, Bill. Good morning, everyone. I'll briefly provide some more detail on our operating performance before Adrian addresses the financial detail. We delivered 5,100 railcar units and received orders for approximately 3,800 units valued at nearly $450 million. Orders in the quarter were for a broad range of car types, including covered hoppers, automotive-carrying railcars and tank cars. Our diversified backlog as of quarter-end totaled 26,000 units with an estimated value of $2.7 billion. As Bill mentioned and as detailed in our press releases of today and March 22, challenges in Romania, Gunderson and our railcar repair operations negatively impacted results in the quarter by $0.29 per share, which includes $0.14 related to loss accruals on certain railcar contracts and facility closure costs. With about 95% of 2019 production booked, manufacturing execution is critical and we believe we've identified the right solutions to achieve our updated performance targets in the second half of the year. I'll now give a bit more color on those solutions. First, in Europe. As Bill said, effective February 1 William Glenn rejoined Greenbrier as the CEO of Greenbrier-Astra Rail, our integrated rail -- European rail operation with facilities in Romania, Poland and Turkey. William initially joined Greenbrier in 2003 and over 13 years with Greenbrier, he held several executive positions in both North America and Europe. William's familiarity with Greenbrier, its European operations, which recently doubled in size and his expertise in operational turnaround will expedite the required changes in Europe. In his new role William directs all European strategic and commercial activity and he'll work closely with Martin Graham, our Executive Vice President of Manufacturing, who adds Chief Operating Officer of Greenbrier-Astra Rail to his responsibilities. Together William and Martin have a mandate to improve operating profitability in Greenbrier Europe. Second, at Gunderson,…

Thank you, Lorie and good morning everyone. Quarterly financial information and metrics are available in the press release and supplemental slides on our website. Given the discussion so far, I'll focus on a few additional details in the quarter and then provide additional information on our fiscal year 2019 guidance. Highlights for the second quarter includes net earnings attributable to Greenbrier of $2.8 million, or $0.08 per share, including $4.7 million net of tax, or $0.14 per share of railcar contract loss accruals and manufacturing and closure costs in the repair operations. Adjusted EBITDA of $37.4 million included $7.6 million of an impact from the contract loss accruals and closure costs. Revenue was $658.7 million, up 9% sequentially. Almost 30% of our 5,100 units delivered were outside the North American market. Internally produced, syndication activity accounted for another 1,200 units delivered in the quarter. 10% to 15% of the order activity in the quarter was from international markets. Orders continue to be broad-based across a variety of railcar types and customers. Aggregate gross margin of 8.2% was below our expectations as a result of the factors already mentioned. As we move beyond the production disruptions in the second quarter, we expect gross margins to move back into the double-digits during the second half of the year. We continue to be focused on growing the business and remain optimistic about the opportunities supported by our balance sheet strength and flexibility. Available liquidity of almost $900 million including over $340 million of cash positions us well to support our strategic objective to grow at scale. I'm going to spend a few extra minutes discussing the working capital growth that has occurred over the last two quarters, much of which is driven by increasing business activity levels. Inventory balances increased, reflecting preparation for…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Justin Long with Stephens. Your line is open.

Thanks and good morning. So I wanted to start with a question on the $7.6 million charge that you called out. Can you share how much of that was allocated to the Wheels & Parts segment and how much of that was allocated to the manufacturing segment? And then just thinking about manufacturing margins, is there a way to size up the operational headwind that you saw from Europe and Gunderson? Just curious if there's a way to quantify what that was in the quarter.

Yes. So the closure costs in our repair business was $1.1 million, so the other items related to manufacturing are $6.5 million. So the bulk of it was in manufacturing.

And Justin could you repeat the rest of your question? Sorry, I got a little bit lost.

Sure, no problem. Second part was just on the operational headwinds in Europe and in Gunderson, and if there is any way to call out what that impact was as we think about a more normalized margin going forward?

Right. So I would say that we did have headwinds beyond what we talked about on the job loss accruals. We had some definite inefficiencies in both Europe and at Gunderson that are part of the larger number that we called out in the earnings release. You've been through our shops, so you know that these things don't necessarily turn on a dime, but we didn't wait until the quarter finished to start making adjustments. So we have activities underway and we expect modest improvement in the third quarter and even better improvement in the fourth.

Okay. And then for my second question, I wanted to circle back to a comment that you made Bill that you won't be emphasizing growth in some of the international markets beyond what you've already announced. Can you just comment on your longer-term view of the international businesses? I'm curious if your opinion on the earnings power or margin potential in those international businesses has changed. Or is this just simply a case where the processes in Europe weren't where they need to be and now you changed management and we should see the issues resolved pretty quickly?

Okay. Just simply with regard to international strategy, we believe that it will ultimately result in diversity of revenue and earnings by having footprints in different locations. However, given the nature of the hit in Europe and the disappointments there, we need to regroup and ensure that we have all of that under control. We're also working carefully in Brazil, the GCC and Turkey, which is a very small footprint right now. We think that it's best to consolidate our activities and have a strong profitable base before we do more to expand. But those are the regions that where we are currently operating. So I think that answers both aspects of your question.

And Justin we did call out $0.29 of performance issues at those units. That did include the loss contract accruals as well as the closure costs.

Yes. Not at all with units I mentioned, but just in Europe, Gunderson facility and then the continuing assimilation of the shop network at -- within our Wheels & Parts group, but it's the repair business. The actual Wheel & Parts business as Lorie mentioned, offset some of that in the repair side.

Okay. That's helpful. And one just last quick modeling question on incentive comp. Could you comment on how that assumption has changed versus your prior forecast?

Our incentive comp goes down if our expectations go down, and -- but Lorie can probably give a more precise figure Justin or answer to that.

I think that's spot on. It's yes. As our results decline our incentive compensation declines. We also -- the incentive compensation is expensed pro rata consistent with when we have quarters of earnings. So we would expect higher -- if the back half is going to have higher earnings it will have higher expense.

Okay. But there's not a dollar amount that you can share that in terms of the change from prior guidance to the guidance you gave today?

No, not at this time.

Okay. Fair enough. I’ll leave it at that. I appreciate the time.

Thank you Justin.

Our next question comes from Matt Elkott with Cowen. Your line is open.

Good morning. How are you guys? First I have just a maintenance question on the guidance. I want to make sure I got this right. Did you guys say that the net gain on disposition of equipment guidance was unchanged at around $40 million?

That's correct.

Yes.

Okay. So the second half should be lower because the first half if you annualize it, it would be closer to $52 million.

Exactly, yes. The Q3 and Q4 will be at a lower run rate.

Okay. That's very helpful. My next question is based on your expected deliveries for the second half, the 95% that's already in the backlog, I think you will be left with just over 11,000 units beyond fiscal 2019. So how much of that or what percentage of that is for fiscal 2020 or beyond? And based on the current order activity and the delivery schedules, do you think 2020 could be an EPS growth year?

We always seek to have the next year be an EPS growth year. Regarding where we sit right now on backlog and how our production space is filled into 2020, we're feeling good, but we're also in the rail freight business, so we never feel really good. Our guys are working hard every day to fill that space. We do have some orders that continue into 2021. I don't think any beyond 2021. Maybe just a little bit. But I would say, the bulk of the backlog that goes from out of 2019 is in 2020 with a little bit going into 2021 and 2022. It's hard for me to think about years that big.

Okay. And Lorie, how has the order and inquiry activity been since the end of the quarter?

Since the end of the quarter, we continue to see a lot of visibility in various tank car markets, plastics and other derivative products. We're also seeing strong demand in some commodity types of gondolas for example, a little weaker demand in some car types. But in general, we think we have very good momentum into 2020 and even some visibility as Lorie mentioned into 2021.

Okay. So on the tank car front Bill you mentioned -- I guess the tank car outlook continues to be pretty positive, or have you seen any recent signs that customers are maybe having second thoughts on pulling the trigger on those orders? And also what are the manufacturing lead times for tank cars?

The lead times are anywhere from six to 12 months depending on the type. We haven't seen a lot of hesitation. But I would suggest that -- we don't want to confuse the mix and think it's all crude by rail. There's a broad tank car segment that has a lot of activity going on in it.

Okay. Do you have a sense of how much of the tank car activity is for replacement of older tank cars versus new demand?

I think that's a significant factor.

Okay. All right.

But I don't have a statistic to share.

Great. Very helpful. Thank you very much.

Thank you, Matt.

Thanks, Matt.

Our next question comes from Allison Poliniak with Wells Fargo. Your line is open.

Hi, guys. Good morning. Lorie, I wanted to go back. I think you were talking about automation and some of the issues that you had in the quarter. Can you just give us your high-level thoughts? Is automation just not a process that's going to work? And rail car manufacturing, is it something that you're reworking to go back? Any thoughts there?

Right. So Allison thank you for that question. No, we are firmly embracing automation in all of our facilities Mexico and in North America manufacturing as well as our aftermarkets business, where we can look at ways that we can deploy automation to improve the quality, improve efficiencies in our shops and then actually give our employees an opportunity to learn how to work the automation. So it's not just a focus on trying to eliminate headcount. So if I misspoke during my prepared remarks, what I intended to say is that it was a distraction at Gunderson. It's not that it didn't work or that we're stepping away from it, but it just caused management to be a bit distracted with their time.

I'd just add that we have about 20 people in the team that continues to work on automation and that particular project, which was a for key sub-assembly on the cars we're replacing Chinese content with North American content, we were intending to replace that sub-assembly at Gunderson. The supplier we chose and the execution on the job didn't work out to our expectations and we had to regroup. But we are going to continue with the Gunderson facility particularly to automate as appropriate and it's highly appropriate in that setting.

Perfect. That's helpful. And then so you touched on PSR to some extent. I think everybody's very familiar with the negative impact to cars. But you did say there are positives. Could you maybe expand on that a little bit?

Yes. The -- PSR is different things to different railroads, different things to different people. For some shippers, it's a very big negative. And I think for the railroad industry, in particular, if they lose, touchwood, the shipper community, it could cause blowback as Matt Rose has mentioned at BNSF. He's not entirely -- has not been a great subscriber to PSR as it relates to the effect on the customer base of potential regulation that it might bring in the future. We all operate through customers and if we can't have -- if we don't have customers and we concentrate only on internal metrics that particularly are short-term, it can damage the long-term franchise value of the business. I think that there's a great debate going on among railroad operating people and CEOs. We're certainly seeing efficiencies arising at Union Pacific through PSR and other railroads, but it's leading some of the shippers looking at other ways to haul their freight. And some of those other ways can be through creative programs that can benefit leasing companies and car builders as they aggregate demand in the North American network.

Bill, if I could add just one other point on to that. For companies that are innovative that have strong engineering departments like Greenbrier, we have a history of introducing new more efficient railcar design and that is attractive to companies that are implementing PSR.

Exactly.

Got it. And now you starting to see some of that -- sort of those inquiries come in at this point?

We've been working with several of these customers for the last several quarters and I would say the short answer is, yes.

Great. Thanks so much.

Our next question comes from Bascome Majors with Susquehanna. Your line is open.

Hey, thanks for taking my questions here. You talked a little about growing the business acquisitively. You're adding some verticals domestically. Could you talk a little bit about what kinds of business you're not in, in North America that you'd like to get in, or what you could use to supplement the existing portfolio?

Our management services business has grown from $10 million a year in EBITDA to $25 million a year in EBITDA over the last several years of the last 10 years. That's a significant number. We think that that business is a crucial core business and we like that business, it's essential to our syndication and leasing and manufacturing strategy. So we are internally growing that business. We also think that defined core businesses I have those are areas we're concentrating on for growth. I'm not sure we said that we were -- well I'll just leave it at that.

And I would say -- I would add on to that right with the technology our management services afford us and we touch over 200,000 of the North -- 200,000 -- 300,000.

300,000. Yes.

Cars in the North American fleet. So we have access to a lot of information and by using technology to think about things like preventative maintenance ways that we can help to service our customers better is how we think about, how we might vertically integrate or integrate across our existing lines of business.

Okay. Yes, I apologize, I took the comments about not looking to grow the footprint -- borrowed as a signal that there were some capital deployment opportunities domestically to grow the business acquisitively.

Well, we're not saying that they're -- we're not denying that. We have a very strong balance sheet and if we can employ the capital at a double-digit rate of return obviously that would be the best thing for shareholders in addition to dividends. We think there are opportunities in the core business to do that. All I intended to say is that we want to be sure that our international businesses are in strong footing, so we have some work to do in Europe for the next couple of quarters to put that ship right on the water before we do the inspection. Go ahead.

I think it's a good segue to the next question here. I mean it sounds like you've got some challenges at Gunderson, certainly some challenges in Eastern Europe, but the core Mexico manufacturing operation is performing pretty well here. And you seem pretty confident in the profit and cash flow outlook for at least the next two or three quarters here. Looking back you haven't bought your shares since 2016. Stock's down almost 50% in the last six months. Trades are at a pretty significant discount to some of your peers in the place. You've got $100 million buyback plan in place. Why wouldn't now be the time to act more aggressively on your own stock? Is that a good place to allocate capital today?

Our Board looks at capital allocation every quarter. We on that subject have robust conversations. I think as the balance of this fiscal year plays out, you'll see us take some definite steps on capital allocation. We always are looking at tradeoff between dividends and stock buybacks in terms of returns -- and total shareholder return. But -- and I wouldn't comment further beyond that. But we are very focused on capital allocation and we definitely discuss this at our Board meeting every time we have one.

Okay, fair enough. Thanks for the time guys.

Thank you, Bas.

Thanks Bascome.

Our next question comes from Steve Barger with KeyBanc Capital Markets. Your line is open.

Hey good morning everybody.

Good morning Steve.

You talked about getting cash balance back to $500 million by year end as working capital versus. But I'm curious if the net impact of the international businesses will be positive or negative free cash flow this year?

Good question.

That is an excellent question. I would say--

Should we talk about hope or should we talk about--

Actuality?

Yes, actuality.

I believe what our forecast currently show is they'll be modestly positive, but they won't be the vast majority of what's driving our free cash flow. That will be the North American market.

And do you feel like you have visibility as you go into next year to see a positive reversal there? Is that kind of a longer term ramp to seeing those international businesses be free cash flow contributors?

Well, Bill regularly tells me I'm not allowed to have feelings. But yes, I believe that we will continue to see as the operations improve, we expect to see that flow through to operating cash flow as well.

Yes, just a little color on that. The thing that happened in Europe was and I bear some responsibility here. We relied heavily on European management. We do have control with the supervisory board. But we made some bad decisions. In particular, we've been buffeted by supply problems over there. Knorr Brakes, for example, in Europe has gone through a recent reorganization and management -- or buy out or a private equity buy out. Things have really gotten bad there, they have virtually a monopoly. We're going to seek either regulatory intervention because they've been very slow to provide not just to us, but to other builders and repair facilities the necessary brake systems and they failed in their responsibility in that regard. So, these issues are being addressed and I think that's the one that lingers. But we were accepting orders. We tried to put 10 pounds on a five-pound bag through the enthusiasm of the local group. I think we will have a more disciplined and orderly input of orders there. So, we will take orders that are profitable and we will also avoid the state-owned enterprises that put penalties which cannot even and sometimes be addressed by force majeure. So, I think we have a much better prospect. We exactly understand what happened and we know what to do about it and I feel confident that by the fourth quarter we'll see a huge reversal of headwinds to a tailwind there.

Got it. That's good detail. Thanks. And Bill just to clarify your earlier comments on demand levels for railcars. Have inquiry to order conversion remain steady with what you were seeing last year domestically and internationally?

Yes.

Good. And Justin can you clarify the comment on how new car designs specifically go to benefit PSR?

So, if you go into a customer call it a Class I railroad 10 years ago and you would have said we can take six feet of a railcar and still maintain the cubic capacity, you may or may not have had much of an audience. If you go into a Class I now and say the same thing, they're very interested in understanding how they can put more railcars into a train and carry more cubic capacity.

Got it. Okay. And last one for me. And it's probably too early to talk about this, but if we do get into an order slow down and deliveries were to decline next year, what are the mitigation plans for the manufacturing footprint to minimize decremental margins?

Two significant ones, we are implementing and a test case in Brazil rightsizing factories to stabilize the workforce and to improve margins by not going after market share only. Brazil is a very interesting country where there only two car builders for example. We are the -- have the largest market share. But I think we're running -- we have been running Brazil with too many workers for the volume that could be obtained at the current levels. When and if in North America we see the next decline and certainly it will be when not if, this flexible footprint that we have in Mexico where we can size the factories quite quickly needs to be expanded or extended to Gunderson, it needs to be extended and used actively in Europe because you can end up putting the cart before the horse having a facility that's too large and then competing for orders that are not truly profitable because you're simply supporting the workforce. I think it's easy for a car builder if you're not paying attention to drift into that and that's a primary thing that we're doing. I think the second point just is that half of our facilities or more than half in North America are highly flexible. And we can add and deduct employees pretty easily. In the United States, it's harder, because all manufacturers, all businesses are coping with a changed demographic in the workforce and I think we have to look at not adding and deducting in the United States, but rather a stable workforce base and then just going after the business that will support that base.

Understood. Thanks for the time.

Thank you.

Our next question comes from Matt Brooklier with Buckingham Research. Your line is open.

Yes. Thanks and good morning. I know it's a kind of a smaller part of your manufacturing business, but can you talk about how much revenue you booked at Marine during the fiscal second quarter and maybe a little bit more color on where the backlog currently sits?

So, Matt, this is Justin. The Marine revenue in the quarter was between $10 million to $15 million, probably closer to $10 million, and we expect it to ramp up to a more sustainable range of around kind of $15 million in the -- for the next several quarters. With the two large barges we received orders for from OSG, we've got visibility extending deep into calendar 2020 at this point.

Yeah, the other thing about Marine though is it cannot be measured by the size of the revenue, it absorbs by its nature of its business. It absorbs a great deal of overhead at the facility. So, the economics of that business combined with railroad -- railcars there creates a different dynamic. So, the Marine business is a very important part of Gunderson. We see -- we have pretty good visibility out into 2021 in that business, with two barges we've got and the other things in the pipeline.

Okay. So, it sounds like part of the Gunderson margin improvement story is partially related to work ramping up on the Marine side and getting more of the fixed cost absorption?

Exactly.

Okay.

You got it.

Yeah. And then, if -- you've talked a little bit about it, but kind of the cadence of earnings in the second half of this year, maybe talk to the expectations for deliveries on what's left if I look at what you've delivered year-to-date and use the mid-point of your guidance ex-Brazil, right, we're talking about 14,300 cars. In the past, you've talked about maybe percentages of when we should anticipate kind of the magnitude of deliveries, but just a little bit more color on the deliveries I think would be helpful. Thanks.

We'll see a meaningful step-up in Q3 and then another meaningful step-up in Q4. I would say that it's probably A -- maybe a 20% increase roughly in Q3 and then another maybe 10% to 15% increase in Q4. Part of this is that again as we've been saying this fiscal year, Q2 was positioning us to increase our production rates in the back half of the year. That is already occurring and we will be stabilizing in Q3, with our run rate exiting in Q4.

Okay. Very helpful. Thank you.

And the other thing that I would -- the other thing I would add onto that Justin, is that we had talked about which has been a consumer of cash flow is we do have a number of assets on the balance sheet that we expect to syndicate in the third and fourth quarter. So, you'll see additional volume there.

Got it. Okay. Thank you for the color.

Thank you.

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

Hey, Bill, if I could just revisit your prior answer there the flexibility in the U.S. on your cost side and Europe versus Mexico. I mean, just simply because of unionization, it's going to be much more difficult to flex in the -- in -- at Gunderson in Europe versus Mexico where -- is that what you were saying where you have much more flexibility?

No, it's actually the opposite. We're not unionized Gunderson and we are unionized in Mexico. But the union -- unions -- the nature of unions in Mexico are not exactly like they are in the United States. So, you can add or deduct workers. But what I meant to say, if just at simple terms, is we're going to try to size the facilities to the market. We're going to try to produce -- to work on a sustained volume that will fit the size of those facilities. What we used to do and what railcar builders used to do is if they had a surge of business they'd go out and hire a lot of new employees and then if the surge -- as the surge passed, they would layoff workers. I don't think anyone in this environment and probably in the foreseeable future looking at demographics of age and work preference will be able to afford to do that or that it's a sustainable model. I think instead, the focus on a flexible workforce with some contract workers, you'll have a core set of highly trained people you will retain and you will put business in different facilities in the more flexible facilities where you can add or deduct labor. So I think that I've seen this all around not just us, but other builders too where when you are trying to increase the work force and then decrease it rapidly, it creates all kinds of pain and sorrow. Safety statistics decline, safety is one of our most important, it is our most important priority and you also have a real impact on quality reliability and it just that -- things have changed in the workforce. We -- you can't do it the way we used to do. So what we're doing is getting a core facility with a core fleet of work and trying to make that work more profitable with higher margins. That means that like precision railroading, we're going to turn away some customers that have been used to buying very cheaply, relative to other car types or other customers.

That's great -- great clarification. Thanks for that. Then let me keep on the cost side just for one more. On SG&A, you had a big up quarter last quarter, down slightly year-over-year this quarter. Maybe I don't know Lorie, if you have any thoughts on spending, is that a lever based on kind of market demand then as you flow or maybe just kind of thoughts on the SG&A side?

Sure Ken. I think we touched a little bit on the fact that we would expect SG&A to step up a bit in the second half of the year just from an incentive compensation perspective. So because we record those expenses as we generate the earnings. Now if we can't do everything that we've been trying to explain to you guys that we plan to do in the second half that will occur. We don't have any other that jumps to mind significant movements in what will be driving SG&A to be materially different from kind of taking let's say an average of the first half of 2019.

Okay. And then lastly for me, just to follow up on Allison's question, Bill you mentioned the kind of positives on PSR. Can you talk about the other side? Have you had any orders that got eliminated? I mean you've now got more than half the group that's jumped on in the past call it six months with UP now talking in case, has there been a change of order process through that -- that three-year discussions?

I think Justin more or less nailed it specifically on the design -- service design aspect of a freight car. We and at least one other builder have really advanced the art there. And it's not -- and it's probably not rocket science, but that's been a big plus. And on the negative side, it hasn't affected us yet. We have -- we are closely watching velocity. There's a of course an issue with velocity right now because of the floods. As soon as we have more normalized weather, I think we'll be able to have a better understanding probably by the next quarter. But we haven't really seen our order book or order throughput affected adversely. You have to keep in mind further that shippers are a large part of the customer base besides just railroads. Railroads are -- they own fewer cars than shippers and leasing companies combined. And if you count TGX as a leasing operation biggest in North America and in the world it -- that's where the action is. So it affects shippers adversely PSR does in some cases and positively in other cases. So it is a little bit of a complex thing and it varies by railroad -- railroad by railroad and how it's getting implemented. Some are doing it very well. Some of them are basically just cutting costs and cutting service. And that doesn't set well with a lot of shippers. So those shippers may either go to OT-5s that's rivers allow them and run their own cars, which creates demand or they might go to trucks or they might go to the STB and complain which we believe they will do depending on how harsh this environments gets.

And just I guess on that the crude order from Alberta did that all stay in Canada? Or did some of that come to the manufacturing market in the U.S?

I think that some was in Canada and some was in the -- were to -- awarded to U.S. car builders.

Okay, all right. Thanks for the time and thoughts. Appreciate it.

Thank you.

Thank you very much everyone for your attention today. For those still in the queue, we can -- we will follow-up later today and set up explicit one-to-one calls. Otherwise thank you very much and have a great day.

Thank you for your participation in today's conference. Please disconnect at this time.