Hello, and welcome to The Greenbrier Companies Fourth Quarter of Fiscal Year 2013 Earnings Conference Call. [Operator Instructions] At the request of the Greenbrier Companies, this conference call is being recorded for instant replay purposes. And at this time, I would like to turn the conference over to Ms. Lorie Leeson, Senior Vice President and Treasurer. Ms. Leeson you may begin.

Thank you very much. Good morning, everyone, and welcome to Greenbrier's fourth quarter and fiscal 2013 conference call. On today's call, I'm joined by our CEO, Bill Furman; and CFO, Mark Rittenbaum. We'll make a few remarks about the fourth quarter and fiscal year ended August 31, and comment on our outlook for 2014. After that, we'll open up the call for questions. Please note that we have provided additional financial information in our earnings release and a supplemental financial information slide deck on the Investor Relations section of our website, that includes key factors for the changes in the various figures. As always, matters discussed in this conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we'll describe some of the important factors that could cause Greenbrier's actual results in 2014 and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of Greenbrier. A few highlights for the quarter include record quarterly adjusted EBITDA of $49.5 million; and net earnings of $22.5 million or $0.69 per share, excluding restructuring charges. Economic EPS was $0.79 per share which excludes the impact of the out-of-the-money shares underlying our 3.5% convertible bonds. We reduced net debt by $110 million during the quarter and our board approved a $50 million share repurchase program. We are confident that our balance sheet and liquidity will support this program and allow us to continue to delever and take advantage of growth opportunities. Now I'll turn it over to Mark to discuss progress on our goals.

Thank you, Lorie. I'd like to take a few minutes to update you on our capital efficiency margin goals, and then we'll turn it over to Bill and then back to Lorie to provide outlook for fiscal 2014, and then we'll open it up for questions. As a reminder, in April, we announced initiatives to liberate at least $100 million of capital by February 28, 2014, and grow our aggregate gross margin by at least 200 basis points to minimum of 13.5% by the fourth quarter 2014. The goal of these actions is to increase ROIC, something that we are very focused on and, in turn, to enhance shareholder value. We have substantially met our $100 million capital efficiency goal we outlined and will continue this focus. During the quarter, we reduced working capital by $55 million, way ahead of our $25 million goal. In addition, we realized $35 million from the sale of lease fleet assets. We expect more to come in 2014 in both of these fronts. Make no mistake about the lease fleet sales. We are committed to our Leasing business. It plays a vital role as part of our integrated model, and it provides stability and visibility to our earnings. We continue to refine our Leasing model. Our plan is to drive more leasing volume and, as an originator and underwriter, we hold these assets short term on our balance sheet, then syndicate them to investors and manage the assets. We are reducing the permanent capital we invest in this business and are increasing fee income. In the fourth quarter, we realized proceeds of $35 billion, as I just had mentioned, while retaining the management of these assets. In the first quarter 2014, we'll continue this trend of selling assets that are no longer tax efficient.…

Thank you, Mark. Well this seems to be a day for multitasking. I'm surrounded by folks in costume here. I just have an orange sweater on. Not only that, it's happy Halloween and happy days in Boston. Plus, I guess, a cornucopia of railcar builders all coming out and talking to you at the same time. Thanks, to those of you who joined us this morning. Seems like St. Louis and St. Charles have had a bit of bad karma, but remember, there's always another year. I won't repeat my comments in the news release, nor dwell on the specifics that Mark will cover and Lorie will cover, but I'll try to give some background in market dynamics and our strategy on my views of things going forward. The rail story continues to remain strong with book-to-bill stable in the industry and in our case, and strong order activity. More significantly, the pipeline for orders, particularly, is well-positioned for our strategy, which is to diversify and place ourselves in front of other demand waves, which we have called right so far. I want to remind everybody that orders are not linear in the railcar business, so you have to consider seasonality and longer-term trends. The activity in order inquiries and probable transaction remains strong, but particularly for us because of our diversified manufacturing strategy. As we've been predicting, a diversified product and flexible Manufacturing strategy is paying off. We are now in the right markets with low-cost capacity and new products at the right time. Remarkably, 90% of our anticipated gross margin for manufacturing in our 2014 plan will be in 3 products, which were relatively new only 2 years ago, and where we were not able to compete effectively or at scale. These are automotive and covered hopper cars,…

Thank you, Bill. We are confident about our opportunities in 2014, and based on current business and industry trends, we expect higher deliveries in 2014 which should exceed 15,000 as a result of our product diversification and footprint expansion efforts. We anticipate revenue will exceed $2 billion and earnings per share, excluding restructuring charges, will be in the range of $2.45 to $2.70 per share. We expect gross margin improvement, but as mentioned earlier, we don't expect the improvements to be linear. Overall, we expect 2014 will be stronger in the second half than the first half, and we expect our tax rate to be about the same as 2013. We expect gross CapEx in fiscal '14 to around about $55 million, with proceeds from sales of leased railcars to be about $60 million, continuing with our theme to reduce the amount of permanent capital deployed in our lease fleet. Depreciation and amortization will be about $40 million this year and in order to better align with industry standards. Beginning in '14, our adjusted EBITDA will reflect 100% of our jump to joint ventures earnings instead of the 50% we've previously reported. We anticipate cash restructuring charges of $2 million to $3 million over the next several quarters. This range does not include future noncash gains or losses from facility reductions as they're not presently determinable. As announced on our last earnings call, we'll begin providing segment operating income beginning with Q1 of 2014. We believe these figures will serve as important incremental information and add transparency to our reporting that will help paint a better picture of our business and measure performance within the various segments. As you can see, we're taking a broad and balanced approach to enhancing shareholder value. There are plenty of opportunities in front of us, and management and the board remain confident in our long-term growth prospects, our strategic initiatives and the strength of our integrated business model. One last note, Bill and I will be participating in the Stephens Fall Investment Conference in New York City on November 12. We look forward to the opportunity to meet with current and future shareholders. And now we'll open it up to questions.

[Operator Instructions] And your first question is from Allison Poliniak-Cusick with Wells Fargo Securities.

On the gross margin improvement, obviously a nice lift on rail. Is there any way to quantify -- I know you're doing a lot of work behind the scenes, but what was mixed in the quarter in terms of that favorable upturn?

Can you repeat the question, Allison?

It's mainly the lift, the sequential lift in gross margin, and I'm looking at the rail segment specifically, nice lift there. You're certainly doing operational efficiency initiatives and so forth. But is there any way to quantify what the -- the more favorable mix, I guess, with the tank cars, if any, had on that gross margin?

Well, Allison, I think it's 3 -- there is 3 pieces of it. One, is increased -- without quantifying, but one is increased production rates, particularly in tank cars. So that is -- we had some inefficiency improvements that Bill mentioned. And also with the higher mix of tank cars, which we have acknowledged is a high-margin product. And then the third piece, would be an increased volume of lease syndications, which show through our Manufacturing segment, which we also acknowledge as a high-margin product. So all 3 of those are contributors.

I think also, Allison, just managing complexity of the ramp in tank cars, having significant changes in internal process brought on by the addition of Martin Graham and Alejandro's focus on performance, performance. And now that we've stabilized in several areas, the manufacturing margins ought to really kick in. And we've been slow to do that, but in this quarter, everything gelled and the by-product of it was lower inventory as we had more stable production and a stable platform in both of our plants in Mexico.

Okay, perfect. And then the Wheels & Repair business, I feel like we've been talking about lower, lower and lower volumes on Wheels. I mean, is there a point at the looking to in next year, in fiscal '14 where we could maybe see a more positive inflection, maybe just even based on easier compares there?

A lot of that's being driven by coal demand. There are some positive signs that energy of all types, not just tank cars -- people think about energy cars as tanks. There are all kinds of interesting developments going on in the energy-related fields, including gas-tendered locomotives. Huge markets there, potentially. We are looking at frac sand cars. We're actually seeing in some of our customers different techniques that are going to drive more demand for that. So as those things occur, velocity on the rail will change, and we think that there will be a modest recovery in coal over time. So it's going to be a driver. More significantly though in our -- in both -- in our Wheels, Repair & Parts business, we have got a capital efficiency program that's driving everything. Our margins in Wheels are lower than they should be. They have to be at least at our cost to capital. And we got a lot of capital employed in that business. I'm very optimistic about the management changes we've made in the last 6 months. We're taking a few hits as we change out the leadership team, but we're focused on safety, safety, safety, efficiency and capital efficiency. We had a lot of capital tied up in underperforming units, and all we did is we went to our customers and said, "We can't continue to do this. We have to make some changes." Our customers have helped with that. We've also on pricing and on distribution and finally, we're just closing and taking capital out where capital needs to be taken out. We're also looking at services, eyeing location and a more efficient integration now that William Glenn is running this with our commercial strategy. So there is possible -- we do have a plan for increased margins this year, reduced capital and more capital efficiency. But this will be a year of transition in that business, and it is a challenging area.

The next question is from Justin Long with Stephens.

As you look into 2014, looking at the guidance that you gave, can you comment about the level of visibility that you have to that guidance and how much of the 15,000-plus railcar delivery guidance is already locked in?

Thanks, Justin. You'll see when we file our 10-K before the end of the week, that about -- as of August 31, about 55% of our backlog is -- or about 55% of what our guidance was, was in backlog. Since that time, since August, that number has grown to about 2/3 of what we've given guidance on or about 10,000 cars that we have from orders for now.

Okay, that's helpful detail. And I would guess the remaining orders that are in the backlog for 2015 are primarily tank cars. Are there any other car types that extend out to that timeframe?

Yes, automotive and other cars look very strong, and we have very strong backlog into the most part of 2014.

And you're right. And to your point of 2015, Justin, as you mentioned tanks, and as Bill mentioned, automotive cars in particular, and a little bit on the hopper side.

We had a very strong launch of that Multi-Max product. That's a knockout product, and we expect to have a very good market share. There's a real need in automotive and a very strong market for the kind of technology that we introduced, and we certainly have a jump on the competition in that.

Well, that's good to hear. And Mark, maybe one for you on CapEx with the progress you've made on the capital initiatives and things tracking ahead of plan, how should we think about CapEx in 2014? And maybe if you could comment on net CapEx as well after we exclude asset sales.

Sure, Justin, this is Lorie. We expect growth CapEx in 2014 to be about $55 million and then proceeds from the sale of leased railcars to be about $60 million. So a net a negative $5 million. And the bulk of that $55 million is going to be primarily in our Manufacturing side of our business, as we continue to invest for efficiency purposes. We do have some CapEx associated with the Wheel Repair & Parts business. And then a base load of activity within the Leasing business.

Okay, great, that's helpful color. One question I had on the Wheels & Repair business, it seems like you have a pretty sizable opportunity in taking advantage of an increase in potential tank car maintenance work. Could you talk about the number of locations that are tank-ar certified today? And also where that number could go? I know you've mentioned potentially certifying additional facilities.

We're in the process of certifying our Cleburne facility in Texas, which is close regionally to where a lot of the demand is. We have a robust team working on that. We have 4, counting Cleburne, with good geographic dispersion. The recent longer-term relationship that we announced with CIT is with one of those, and we have another Midwest plant that's really well-equipped for this. We actually have a lot of capacity for HM201 and retrofit, if that comes out of the regulatory process that industry is currently going through as a result of the unfortunate and tragic accident in Québec. So I think that we are really focused on getting scale on that business because the demand is going to be there. And that's one of the possible things -- that's one of the things that we all should watch in the industry is what's going to come out of the regulatory discussions, because that could require obsolescence over a period of time of existing cars and major demands on the tank car repair business. So we're really keen on focusing on our tank-car strategy in that area. In that big area, there's many, many drivers that are doing it.

That makes sense. It seems like it will be a pretty big opportunity. One last clarification and question I had was on the EPS guidance. I wanted to make sure that the number you gave was a GAAP number versus economic or cash EPS that would obviously be significantly higher.

It is a GAAP EPS, and again it excludes any restructuring charges related to our repair, our GRS unit. But it is a GAAP number.

The next question is from Ken Hoexter with Bank of America.

This is actually Veronica Zhang, standing in for Ken. So on the tank car production side, you mentioned crude by rail is strong, here to stay. So I was wondering if you can update us on the capacity you're running at your GIMSA facility and when you plan to hit that 16-per-day target? And also on that tangent, if you've ramped up capacity in any of your other facilities?

We're actually exceeding the 15-per-day target now and have been doing that for the last few weeks. In -- during the preceding month, we have been at 14, 14.5, 14.8 per day and fairly stable. We're moving -- it will be at the targeted 16 per day sooner than we expected, but certainly by the end of the year. We're looking here for a stable production rate where we can continue to keep our supply chain in sync with the production, we don't have disruptions that cause increased inventory. Meanwhile, our labor hours are coming down rapidly on the cars. So we should see margins in that area more comparable to peers the -- as this momentum and stride is hit. Actually, we believe we can exceed the capacity if we needed to, but our targeted market share is in the range, I spoke to, I think our actual capacity could be greater than that at GIMSA because they have really turned that -- in the fourth quarter, that really turned into a moneymaker and everything just kind of clicked. And it's really clicking along, knock on wood, as we speak.

Okay, that's helpful. And then also I think last quarter, you did mention that tanker slots were filled until 2015. So obviously if you keep this elevated level of capacity, you're targeted to hit that probably sooner. But I'm just wondering, with all the additional orders that might be coming in the next year, what kind of delivery timeline you're now looking at for the increased backlog?

We've reserved some -- as we do in all of our product types, some space for preferred customers that we anticipate them wanting to fill. There would be excess demand for us, even in -- as that market has slowed somewhat, because of the uncertainties over the derailment in the so-called concern about the potential bubble after 2015 in oil by rail. I think that's going to stabilize at a higher rate than many are predicting, just because the developments in energy, both the technology and some of the uncertainties, are really more stable than might have been expected. So I think that, that plus the ramping we're doing at Concarril with the new introductions of car types hitting our learning curve should mean really good news for -- at both plants through the year. It reflected in our quarter were -- what are the effects, particularly in the last 6 weeks of the quarter, of changeovers and other things at Concarril, and yet we still had really great manufacturing margins and momentum. And we have a few issues there relating to our plant capacity that we're working on. And we expect Concarril to be, as it was this year, a really high performer for 2014.

Okay, that's also very helpful. And just lastly, just want to hit on your margin improvement guidance. Obviously, part of that is attributed by higher-margin products in the mix and increased capacity. But are there any sort of efficiencies that you're operating at these facilities, that are also attributing to the margin improvement, that you can talk to?

Well, last year -- well 6 months ago, I guess, we brought on Martin Graham and he has been invaluable to Alejandro Centurion, who runs the manufacturing group. Just to give you kind of an index, another data point, we are going to have over $1 billion, about $1.2 billion of our Manufacturing revenue, maybe more than that, in Mexico this year and a supply chain and inventory management is paramount. Transit times, just in time, back expediting, these are things that his engineering background -- value engineering, all of these things are really kicking in now that we've had the time to review our processes and streamline them. And he and Alejandro are just doing a great job. So those are some of the contributing factors and especially important to our working capital goals. We can do much better on working capital, and we're going to do that. And that's the way we're going to do it.

Next question is from J. B. Groh with D.A. Davidson. J. B. Groh - D.A. Davidson & Co., Research Division: Just another way to ask that last question, you've got this 200 point -- or 200 basis point margin goal improvement. Is there a way to sort of think of that in terms of what's mix and what's levers that you pull? Is it half-and-half? Is it 2/3 operations, 1/3 mix? How should we think about that?

So J.B., this is Lorie. It is really tough. There's a lot of various moving parts within all of our operating units. But I think a high-level summary way to think about it is about 1/3 of this is going to come from mix activity, so that's going to be the higher-margin tank cars and automotive. 1/3 of it is going to come from our increased syndication volumes, so again driving more business through that highly profitable approach to the market. And then another 1/3 is coming from efficiencies that Bill was just describing with engineering changes, procurement changes, inventory management, logistics, inbound and outbound transportation. J. B. Groh - D.A. Davidson & Co., Research Division: Very helpful, thank you. And then you mentioned -- you call out here in the press release the -- some of the sales, some of the cars and maintaining a management agreement. Is that unique or does that happen often?

That happens quite often. That is a key part of our strategy with the integrated model and in many of those cases, along with the management, comes the maintenance as well. J. B. Groh - D.A. Davidson & Co., Research Division: Good. Okay, okay. So that's not a big change or anything. And then maybe you could -- it looks like you got a barge order here in the quarter. Maybe you could address that market a little bit more? I may have missed it if you did.

Right. So the one thing I want to clarify, J.B., is regarding the management and the maintenance, it is a big change from, say, where we were 3 or 4 years ago. It has been transformational with the last several years at driving more leasing product and syndication volume that we maintain the ongoing management and maintenance along with the syndication.

J.B., particularly in energy-related products, there's a whole transformation of the demand curve on services because the energy cars, whether it's crude by rail, sand, there's a lot of people owning these cars or leasing these cars that have never really managed the fleet before. And they have maintenance requirements and there's the corrosive aspects of high velocity, it's going to affect wheel business. It's going to -- it's just working through the system. So we're really targeting that market. We have -- in addition to the maintenance side that was discussed earlier, we've made alliances with several shippers now that are producing several million in revenue annually, very high margins. But we're supplying something that they absolutely need in a network, and we're underwriting in maintenance for that. And it's really a great product line for us and a big growth area. But there are probably 10 points of light like that under our strategy discussions, which is very robust involving the board, where we see opportunities to improve EBITDA and sustain it in $5 million increments or $10 million increments. So it's really -- we're hitting our stride in many areas. And again, a lot of our shareholders and some of the analysts have helped us in advising us what to focus on, and again we're listening to them and thank them for their input. J. B. Groh - D.A. Davidson & Co., Research Division: So there has been a little bit of a change in the profile of the buyer and that's been an opportunity, I guess?

That has been. And as Bill mentioned as well, just to be clear beyond just our syndication activities, we've been focusing on expanding our management business, our management services business. And a key part of that expansion has been on combining maintenance and management together, and examples of entering into those relationships would be in the shipper community. Yes, and J. B., I think you had a question on the barge side is -- could you repeat that?

Bill, I know the question. I heard the question, just some color on the pipeline activity. We still have a nascent -- you're here locally. You are living in Portland so you understand the politics of Oregon. We have this rainbow thing going on with coal exports. I've been in a lot of dialogue with the governor about this and he is not actively resisting that, but they are having a lot of delay in getting those permits and that project is -- just keeps moving out. So we're not really focused on that as much as we are big tandem or APB barges. We have 4 or 5 major customers that haven't -- nobody has received these that placed orders. There's not enough capacity to build the demand. This oil by barge and the energy distribution issue is quite complex. But it's going to be a sellers market. It's just that we haven't received and no builder has really received material orders yet. But it is going to occur. And so we're bullish, really bullish on that. We've been bullish on it for over a quarter or 2, and we keep getting more and more people negotiating a contract with us and negotiating contracts with their customers, but nobody's pulled the trigger. So I think that's going to be good news, at least in the second half, as that hits its stride. And also since you're local, I think I ought to mention we filed an 8-K that -- regarding our Chairman, Ben Whiteley. He's been our Chairman since 2004 and a Director since we became a public company. Ben, who's 84, has decided not to stand for reelection to our Board of Directors at the shareholder meeting in January. We thank Ben for his years of service and the board has designated me to service as Chairman after Ben's departure. So I'm honored by the board's confidence. I look forward to assuming the role of Chairman, CEO and President, but this will allow us a more long-term succession plan for our board and a coordination with our very strong management team will position Greenbrier for developing that team further. So I will keep everybody updated in that, but since you know the local scene here, I thought it would be appropriate to mention it before you got off the line.

Next question is from Bascome Majors with Susquehanna.

I was looking at your minority interest expense line and based on that, using it as a proxy, it looks as -- if Jim says profitability is as good as it's ever been on a net basis. And you talked about the success and the production ramp for the tank car lines there, hear it linked already on the call. So I was curious, if my math is right, it looks like the overall railcar deliveries were a bit short of where he had expected they would be for the quarter. If everything is going really well on the tank car side, what's driving that and how much of this is timing? And extending that, what are your thoughts of where deliveries might trend for the current quarter?

Right, so let's just -- I'm glad you brought that up, Bascome, and I'll take the first part of it and let Lorie take the second part. But because we did give that guidance for deliveries for the fourth quarter back in July, and you point out that we -- I came up a little bit short on that end, and we should have highlighted that ourselves. This was not due to a production issue or falling short on our production goals. Rather, we had targeted some railcars for syndication in the fourth quarter that were built and placed into service, and the timing of that syndication got delayed until this year. So that was the reason for falling short on the delivery goal. That is not -- it was not due to a production issue. It is -- it was a timing issue. So thanks for highlighting that for us. I'll let Lorie talk -- I think your question was how might you think -- how might we think about the sequencing of deliveries for fiscal 2014, is that correct?

Yes, you gave us a lot of color on the full year. I was just curious as to -- with the inventory effect can impact your deliveries, what we're looking at for the current quarter since you're 2/3 of the way through it? And do you have directional thoughts on pacing throughout the year?

Sure, Bascome. This is Lorie. So again as we indicated, same as our financial results, we would expect deliveries to be back half of the year weighted slightly, maybe a little bit growing throughout the fiscal year. The one thing just as Mark was mentioning that's tough to always predict is the timing of syndications, which will impact those deliveries. Because we don't count the cars as true deliveries until we actually syndicate those cars. So that's where there might be a little bit of up and down. But we would expect a progress through the year to be slowly building through to the second half.

All right. And just on that point, the syndication deal that slipped from 4Q to 1Q, is there any way to size that up in a number of cars or a dollar amount, something like that?

It was about 400 cars.

Okay. All right, that's all I have on that. I did want to give Bill a question here, more strategically and longer term. Today's results were very good and the guidance since that you're on track for continued improvement for next year and hopefully into 2014 on your goals that you've set out earlier this year. The company seems to be headed in the right direction. I'm just curious what your thoughts are on who's going to run the company when the work is done, and potentially when you might make some sort of announcement as to that transition process and the period that it might potentially get over?

Well, I wouldn't read too much into the change in the stepping up to Chairman. Our Chairman has been a fantastic asset to this company, and walking in his footsteps will be difficult. But he's at a time in his career when he decided he didn't want to run again for another 3-year term. And we are going to be doing work -- development work on our board. We're shrinking the size of the board. As Chairman I'm going to put a lot of energy into that sort of thing and continue to build the management team. We have an excellent management team. So it'll open up some space for others to step up and play stronger roles. I'm excited about the strategy. I'm excited about the execution of the strategy. I'm actually energized by the interaction with some of our very constructive large share owners. I still own 2 million shares in the company, and some of the folks that have been giving really great input on return on capital, and there's several, it's more than 3, have also similar positions of large stock holdings. So I'm interested in seeing this through, the strategy through, but I'm gradually resolving to have others' development and their strengths as well. And we've got a great team. And so this will be -- we're not setting timelines for any of this. Right now, I'm enthusiastic and in good health. But I ain't going nowhere anywhere soon, as long as things are going -- as long as I'm able -- we are able to keep the momentum going. So I think, Ben, it was time for him, he thought, to go on with his life. He's been with us for many, many years when we acquired Gunderson with the State of Oregon. So -- but we are moving in the direction. Again we're listening to shareholders. We're listening to people who have suggestions. And we have a diversified board. We have a good board, but we're going to do board building and development of the management team. All things must end at some point, and so I'm not going to be hanging on forever, but I'm not going to go anywhere right now.

The next question is from Matt Brooklier with Longbow Research.

Just a quick question on marine. How much revenue contribution, potentially, should we be thinking about from marine in the $2 billion number that you gave for fiscal '14?

We have in the range, as Bill mentioned, we have some rather modest goals for this year, but still higher than 2013, that was not particularly robust. But probably around in the $50 million range and with the potential for some upside there.

Okay, and then maybe just also if you could talk to, and you did a little bit of that earlier, but some of the potential upside drivers on the marine side and potentially taking orders for tankers that will participate in petroleum markets. What could be the potential, I guess, magnitude if those orders do come through in a meaningful way? And do you think the timing on that is -- is it a next calendar year event or do you think it's a potentially a '15 event?

I think it's a '14 event, a calendar 2014 event for sure. I really believe that. I've been a little more bullish than the orders book has built. But it's clearly going to occur. Let's just talk about 2 things. The transformation of Gunderson. Mark Eitzen has -- first, he was first assigned marine. He embraced lean manufacturing. We put CapEx in that facility. It's easily able to compete with the Gulf and in some cases, to compete with Asian shipyards. These barges that are -- we're talking about for oil, are big barges. They're $50 million to $60 million, 180,000 barrels. They're not as complicated as other barges we've built, for example, of that size and I remind everybody, in the past we've even built ocean-going tankers for Chevron at that facility. So it's a great facility. And it has the ability -- speaking of the facility to run, it's got a huge burning capacity, lift -- heavy lift capacity, and it's capable of building multiple barges at the same time in modules. It's pretty sexy stuff to the degree industrial America can be sexy. It's pretty sexy stuff. And it's also exciting. It's a fun thing and people like it over there. So we could run 2 or 3 of these at the same time, and it just requires getting some orders. So I think we are right at the threshold of that segment taking wind, and I would hope that we would hear something on the first announcement within a quarter, I would hope. But we are optimistic about coal export project, too. And politics and coal have created very strong headwinds for that project. And clearly the western part of the United States is politically aligned to put an imprint on coal exports from the West. But whether they'll be able to do it under the law, it's hard -- it's really hard to say. So if this project goes ahead, that's a real potential tailwind because at $60 million in the first tranche and another $60 million after that, and it won't happen -- it wouldn't have happened -- if it does happen, it wouldn't happen without our help. And I think it will happen, it's just when. You can wait forever for some of these things. So coal is the most exciting area right now in the general public's view.

Okay, that's helpful. Can you remind us, and I think it's relatively minimal, but within your lease fleet, a, tank cars within lease and then, b, of those tank cars, what are potentially the DOT-111 cars that could face some increased regulation?

Yes, we have about 200 cars in our fleet. We are going to retrofit those cars in keeping with -- we're not going to wait for the standards. Some other customers are doing that. This is a very serious thing that happened in Québec. To be clear, the car was not a culprit, but the car has been thrown under the bus. There are safety improvements that the industry recommended to the government 2 years ago. We've been building cars to that standard. So the cars we have may not require extensive retrofit. But I think that this is a big shoe that we'll have wait to see how it drops. It will favor car builders who build tank cars or it will favor repair shops who will retrofit that can produce the standard of quality that will be required under the yet unknown regulations. I disagree with the viewpoint of some of the industry associations. I think that we need to embrace safety, and we have to do the morally correct thing. And I think if we don't do that as an industry, we're opening ourselves up to questions further in any impact situation with higher velocity going on in these hazardous cars, and more likelihood of incidents occurring. That's why the Class I railroads have put more stringent recommendations in their recommendations that would effectively obsolete the current DOT-111 hazardous material cars if adopted. We don't think that will happen, but I think that the -- our industry association has to man-up and look at a realistic response based on data for fairly minor fixes. And the customers should be able to absorb this. And it's the right thing to do. So we're going to go ahead and do that. And it won't be a major impact to us, but we're also going to position the company so we can respond because people say there's no capacity to fix tankers out there. That's baloney. That capacity can easily be added, and we are going to get in the forefront of adding it.

Next question is from Sal Vitale with Sterne Agee. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: So a quick question, I guess starting on the gains on sale of equipment, that was a big positive this quarter. How do we think about that over the next few quarters? You probably has some visibility into this, I would assume?

Yes, Sal. So the question is on gains on sale and you're correct, that it was a robust quarter, in part tied to the capital liberation goals on the leasing side of the business that we said would continue into this year. So for the year as a whole, we expect that 2014 will be another robust year but not quite as robust as 2013 was. We would currently anticipate that to be somewhere in the $10 million to $12 million range.

And that will be weighted to the first half of 2014. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: So $10 million to $12 million for full year skewed towards first half. Okay, and I guess how much of that $10 million to $12 million is I guess -- what you're thinking is planned due to your capital liberation process as opposed to just the normal process of selling railcars in any given year?

Right. So Sal, that -- well, a straightforward question may not be as straightforward an answer because we regularly sell assets out of our lease fleet, buy and sell outs of our lease fleet, both for capital efficiency purposes, including tax efficiency. And that number can vary from year-to-year, and you would see in prior years, that number has ranged from $5 million to $8 million a year. So in -- so that's a meaningful range in and of itself. But if you consider maybe a $5 million to $8 million range is something that we have historically done, and then you look at something of in the neighborhood of $10 million to $12 million this year, maybe that's how I would think of it. As maybe that incremental amount over the $5 million to $8 million might be due to our capital efficiency goals. But again that really does vary depending on the market.

When we say capital efficiency and leasing, a couple of higher-level comments, we are really transforming our Leasing model and getting in step with others who have higher ROEs. Our ROE in the Leasing business, because of our portfolio policies, have been lower because we haven't been leveraging it and it's all on our balance sheet. And we have had capital constraints. So instead of putting $50 million into our lease fleet this last year, we had a net change in our strategy. And it's not going into our direct portfolio, but we are going to be able to create considerable tax benefits and improve the leasing model by redeploying the cash in the model to much, much higher returns. And we're also going to be more transparent about that business and do it in a smarter way. So I think this is a really exciting area for Greenbrier and by the end of 2014, you should see the effects of it. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: Okay, that's helpful. And then, I guess, just looking at the overall guidance, I guess, first question on the margin progression. And earlier you said that the margin -- the overall gross margin progression should be lumpy, so it won't be linear throughout the year. And I understand that, but I think one of the reasons you mentioned for that is, I think, was the Lease business or the Wheel Services business. What if I look at just the Manufacturing business? Do you think that you'll have a steadier progression throughout the year?

Sal, this is Lorie again. So we do expect that because of changeovers, and we do continue to ramp up production on tank cars, that even the Manufacturing gross margin will not be linear either. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: Okay. Okay, that's helpful. And then, I guess, just overall, so if your overall gross margin in this past quarter was 12.5% and I guess the goal is 13.5% by the end of this fiscal year, I guess, how do we think about what the upside to that could be? What have you thought about in terms of what the main drivers of that are? I would just think that, given that your deliveries are increasing nicely in fiscal '14, that you would have just the operating leverage alone, notwithstanding the favorable product mix and the operating efficiencies, that you should be able to exceed that 100 basis point improvement throughout the year.

We have been accused of sandbagging on that number and why don't you just say it, like, plainly. That's in the plan, man. The 13.5% is in the plan. We have tailwinds this year as opposed to headwinds in 2013, plus 2013, as we said at the beginning of the year, was going to be a year of consolidation building. Now we've done it, and we think that there's upside. But I'm not sure we'd want to give any more data or background on that than what we've already given in the call. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: Okay, understood there. And then just last question is really just a clarification. I think you said earlier that 7,500 to 8,000 units per year, was that -- is that your -- what you've done in the past in terms of intermodal deliveries?

We have had years almost that much, by -- and we've had 60% market share historically in that market. We are always being challenged by other people who would like to break into the market. But we had incredibly high market share this year. Complicated market, it's not easy to forecast what's going on there. But we can do -- our maximum production in wells have been 24 per day at that facility year long, and we've run a double-stack line now for 20 years, I suppose, constantly and we're still running a double-stack lines. So I think our upside is -- it's depends on the market. So if we get 50% of -- or 60% of a 5,000 car or 5,000 well, that would be almost 50%. Well, it would be more than a 50% increase of the current production for 2013. It could be -- and that would be a fairly modest normalized year for intermodal. When we reach that position, we don't really know because cars with high velocity in the railroads and the coal business being down, no congestion to speak of, the intermodal market's been thrown off. There's very high demand in loadings, but the nature of these shipments have changed from international to domestic, temporarily we think. But as housing comes back and light goods are being shipped by rail, there will be a lot of -- via intermodal and other things that are related to housing, we think that the actual car demand will come back much faster and much stronger than the industry forecast. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: I guess that's an interesting way to think about it because global container trade growth has been fairly anemic. Well, last year especially was about 3% and this year it's trending to about something like a low 4% range, whereas historically, it's been more like 7%, 8%, 9%. So I guess, you're saying that a rebound in that, whenever that occurs, should also bode well for your intermodal volume demand?

Yes, but on the other side of that, the plus side of that is the domestic containers because an intermodal car is not intermodal car There is -- domestic containers have been really hot. Shorter, Eastern railroads have had a great renaissance in intermodal of kicking business off the highways. So the traffic patterns have shifted, which means that you can carry more with fewer cars but that is going to have to stabilize. This the basic supply-demand equilibrium that we're seeking. After that, the growth in intermodal, which has been very robust, will drive all of this. And the railroads will have to compete aggressively in intermodal, so they're going to -- with loss of coal or slowdown in coal, that's their second biggest commodity -- or the second biggest traffic and they've got it down to a science. It's really a great place to be, as long as we can continue to improve our efficiencies and reduce our costs in producing a car. And we have built that car in both locations in Portland and in Mexico. Salvatore Vitale - Sterne Agee & Leach Inc., Research Division: Okay, that's helpful. And I guess just the last question is, suffice it to say, it's probably fair to assume that there is not much in terms of -- in your guidance for deliveries for '14, there's probably not much in the way of intermodal there?

Right. That's correct. Think upside, keep it tuned to the double-stack or the intermodal marketplace, and we'll try to provide updated information as we see it. All of these things are opinions, of course, and it is a very unusual car type and marketplace. And it can't be easily -- you can't -- it's not easy to dissect it. I think we can just tell it as anybody else in the business.

. Next question is from Tom Albrecht with BB&T. Thomas S. Albrecht - BB&T Capital Markets, Research Division: I know it's getting long in the tooth here. I was just wondering if you could sort of give a big picture breakdown of the 15,000 cars you hope to build and deliver this year. So we know 3,500 or so are tank. What would be kind of ballpark-ish, other car types to get to the 15,000?

Well, the 3 major car types would be, as Bill referred to at the beginning, would be tank cars; covered hopper cars, which would be hopper cars for the sand and cement market and grain cars; and then the third would be automotive cars. And those 3 would definitely be the lion's share of what would drive the deliveries and margins for this year. Thomas S. Albrecht - BB&T Capital Markets, Research Division: Right. I guess, what I was really looking for if you had sort of approximate unit numbers for those and even intermodal even though that's -- Bill's comments were more kind of beyond '14. I assume there's some build assumption there as well.

So let's do it this way. Just imagine a virtual pie chart, we won't give you the numbers. But if you look at the 3 -- the big 3, and then an all-other category, the big 3 are about equally distributed for 2/3 of the 1,2,3 -- 1/4 of the chart. And then the others be represented by modest amount of the intermodal. Some sliver of boxcars because we have capacity, we're diverting capacity to more profitable -- frankly, more profitable lines. We could take -- be in that market more than -- if we wanted to. Marine and gondola cars, and with gondola cars being the larger of that little pie segment of a quarter of that part of that chart. All of the other big 3 and where we're going to make our money are, again, automotive and hoppers and tanks. That's going to be the big 3. Wildly important things would suggest we concentrate on long runs, efficient production of those 3 car types, and then the all-other category fills in and contributes to the big scheme. So... Thomas S. Albrecht - BB&T Capital Markets, Research Division: Bill, it's like 2/3 or 75%?

Of total production? Yes, I think you're directionally correct, that it's somewhere to 2/3 to 75% of the total production, North American production, obviously.

And in terms of profitability, they represent a lot more than that. I mean, it's a different chart. So the big 3 means more money. Thomas S. Albrecht - BB&T Capital Markets, Research Division: Okay, and then my last question would just be, with the development of the new plastic pellet car, everybody sees what's going on in the Gulf Coast, for '15 and '16. How much -- what's going happen has been translating into discussions for plastic pellet cars at this juncture?

Well, a lot. Initial orders have been placed. ARI just announced that -- it's deal with the Chevron Phillips. Interesting to get the background story on that one. But I'm sure they're going to do well on that order. I'm not sure everybody agreed they should accept it. But it's a funny dynamic. The fact is that orders are being placed. People are reserving space and we are getting started in that car type. We can build covered hoppers and we'll build them in Mexico. We've got lining facilities at both our plants. Lining is key to it. It's got to be absolutely perfect. Paint and lining and quality are all very important. So we believe we can compete in that car. People said we couldn't enter the tank car market robustly. We proved them wrong, and I'm sure there are a few people who are saying, "Well, that's a tough market because Trinity and ARI are so well-established in it." I don't agree with that. We don't agree with it. We think we can make a lot of hay in that additional product category.

Okay, thank you guys very much. We appreciate your participating in our call today and look forward to chatting with you over the quarter to come. Thanks.

Have a good day.

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