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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________ .
Commission File Number 1-6903
trn-20220930_g1.jpg
(Exact name of registrant as specified in its charter)
Delaware 75-0225040
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
14221 N. Dallas Parkway, Suite 1100
Dallas, Texas 75254-2957
(Address of principal executive offices)
(Zip Code)
(214) 631-4420
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock TRN New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨
Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No þ
At October 18, 2022, the number of shares of common stock, $0.01 par value, outstanding was 81,403,369.



TRINITY INDUSTRIES, INC.
FORM 10-Q
TABLE OF CONTENTS
 



2

PART I
Item 1. Financial Statements
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2022 2021 2022 2021
  (in millions, except per share amounts)
Revenues:
Manufacturing $ 302.0  $ 234.5  $ 813.5  $ 490.2 
Leasing 194.6  185.3  572.6  553.6 
496.6  419.8  1,386.1  1,043.8 
Operating costs:
Cost of revenues:
Manufacturing 288.0  238.8  804.4  488.0 
Leasing 107.3  98.6  315.0  297.8 
395.3  337.4  1,119.4  785.8 
Selling, engineering, and administrative expenses:
Manufacturing 8.7  8.3  25.4  25.4 
Leasing 14.2  11.6  39.6  36.1 
Other 25.1  25.9  72.7  75.2 
48.0  45.8  137.7  136.7 
Gains on dispositions of property:
Lease portfolio sales 34.3  32.9  73.0  45.7 
Other 5.1  8.7  19.5  19.5 
39.4  41.6  92.5  65.2 
Restructuring activities, net —  (0.1) 1.0  (1.1)
Total operating profit 92.7  78.3  220.5  187.6 
Other (income) expense:
Interest expense, net 55.0  45.2  148.2  147.5 
Loss on extinguishment of debt —  —  1.5  11.7 
Other, net (0.6) (0.7) (2.7) 1.3 
54.4  44.5  147.0  160.5 
Income from continuing operations before income taxes 38.3  33.8  73.5  27.1 
Provision (benefit) for income taxes:
Current (2.6) 0.5  1.2  5.7 
Deferred 11.2  7.8  16.2  3.7 
8.6  8.3  17.4  9.4 
Income from continuing operations 29.7  25.5  56.1  17.7 
Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $(1.0), $3.6, $(3.5), and $8.0
(3.4) 10.4  (13.7) 24.3 
Loss on sale of discontinued operations, net of benefit for income taxes of $—, $—, $1.4, and $—
—  —  (5.7) — 
Net income 26.3  35.9  36.7  42.0 
Net income (loss) attributable to noncontrolling interest 0.5  3.9  7.9  (6.0)
Net income attributable to Trinity Industries, Inc. $ 25.8  $ 32.0  $ 28.8  $ 48.0 
Basic earnings per common share:
Income from continuing operations $ 0.36  $ 0.22  $ 0.59  $ 0.23 
Income (loss) from discontinued operations (0.04) 0.11  (0.24) 0.23 
Basic net income attributable to Trinity Industries, Inc. $ 0.32  $ 0.33  $ 0.35  $ 0.46 
Diluted earnings per common share:
Income from continuing operations $ 0.35  $ 0.22  $ 0.57  $ 0.22 
Income (loss) from discontinued operations (0.04) 0.11  (0.23) 0.23 
Diluted net income attributable to Trinity Industries, Inc. $ 0.31  $ 0.33  $ 0.34  $ 0.45 
Weighted average number of shares outstanding:
Basic 81.7  97.7  82.3  103.4 
Diluted 83.3  99.5  84.4  105.7 
See accompanying notes to Consolidated Financial Statements.
3

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2022 2021 2022 2021
  (in millions)
Net income $ 26.3  $ 35.9  $ 36.7  $ 42.0 
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $(3.0), $0.2, $(8.4), and $(1.5)
10.0  (0.8) 26.8  5.0 
Reclassification adjustments for losses included in net income, net of tax benefit (expense) of $(0.1), $0.3, $1.2, and $0.6
0.2  1.8  4.6  2.9 
Defined benefit plans:
Amortization of net actuarial losses, net of tax benefit of $—, $—, $—, and $0.1
0.1  —  0.2  0.1 
Currency translation adjustments:
Reclassification adjustments for losses included in discontinued operations, net of tax benefit of $—, $—, $—, and $—
—  —  1.3  — 
10.3  1.0  32.9  8.0 
Comprehensive income 36.6  36.9  69.6  50.0 
Less: comprehensive income (loss) attributable to noncontrolling interest 0.8  4.2  7.4  (5.0)
Comprehensive income attributable to Trinity Industries, Inc. $ 35.8  $ 32.7  $ 62.2  $ 55.0 
See accompanying notes to Consolidated Financial Statements.
4

Trinity Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2022 December 31, 2021
(unaudited)
  (in millions)
ASSETS
Cash and cash equivalents $ 58.5  $ 167.3 
Receivables, net of allowance 280.2  227.6 
Income tax receivable 11.0  5.4 
Inventories:
Raw materials and supplies 481.7  278.4 
Work in process 150.0  91.6 
Finished goods 54.8  62.9 
686.5  432.9 
Restricted cash, including partially-owned subsidiaries of $63.1 and $58.6
180.2  135.1 
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $1,920.5 and $1,927.7
9,244.8  9,105.6 
Less accumulated depreciation, including partially-owned subsidiaries of $591.8 and $568.4
(2,351.0) (2,258.7)
6,893.8  6,846.9 
Goodwill 159.5  154.2 
Other assets 329.4  266.5 
Total assets $ 8,599.1  $ 8,235.9 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 286.6  $ 206.4 
Accrued liabilities 288.9  307.4 
Debt:
Recourse 459.0  398.7 
Non-recourse:
Wholly-owned subsidiaries 3,844.5  3,555.8 
Partially-owned subsidiaries 1,190.2  1,216.1 
5,493.7  5,170.6 
Deferred income taxes 1,128.5  1,106.8 
Other liabilities 140.3  147.9 
Total liabilities 7,338.0  6,939.1 
Preferred stock – 1.5 shares authorized and unissued
—  — 
Common stock – 400.0 shares authorized
0.8  0.8 
Capital in excess of par value 6.1  — 
Retained earnings 997.7  1,046.6 
Accumulated other comprehensive income (loss) 16.4  (17.0)
Treasury stock (15.1) (0.6)
1,005.9  1,029.8 
Noncontrolling interest 255.2  267.0 
Total stockholders' equity 1,261.1  1,296.8 
Total liabilities and stockholders' equity $ 8,599.1  $ 8,235.9 
See accompanying notes to Consolidated Financial Statements.
5

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
  2022 2021
  (in millions)
Operating activities:
Net income $ 36.7  $ 42.0 
(Income) loss from discontinued operations, net of income taxes 13.7  (24.3)
Loss on sale of discontinued operations, net of income taxes 5.7  — 
Adjustments to reconcile net income to net cash provided by (used in) operating activities – continuing operations:
Depreciation and amortization 206.0  200.4 
Stock-based compensation expense 16.7  15.2 
Provision (benefit) for deferred income taxes 16.2  3.7 
Net gains on lease portfolio sales (71.7) (45.7)
Gains on dispositions of property and other assets (12.0) (16.4)
Gains on insurance recoveries from property damage (7.5) (4.7)
Non-cash interest expense 10.2  10.3 
Loss on extinguishment of debt 1.5  11.7 
Other (4.8) 6.9 
Changes in operating assets and liabilities:
(Increase) decrease in receivables (51.9) (31.5)
(Increase) decrease in income tax receivable (5.6) 249.8 
(Increase) decrease in inventories (253.6) (64.2)
(Increase) decrease in other assets (19.9) 6.7 
Increase (decrease) in accounts payable 78.9  43.7 
Increase (decrease) in accrued liabilities (4.6) 14.7 
Increase (decrease) in other liabilities (6.6) 0.5 
Net cash provided by (used in) operating activities – continuing operations (52.6) 418.8 
Net cash provided by (used in) operating activities – discontinued operations (15.4) 8.4 
Net cash provided by (used in) operating activities (68.0) 427.2 
Investing activities:
Proceeds from dispositions of property and other assets 33.2  34.3 
Proceeds from lease portfolio sales 514.8  404.5 
Capital expenditures – leasing (691.1) (363.9)
Capital expenditures – manufacturing and other (25.7) (16.9)
Acquisitions, net of cash acquired (9.4) (16.5)
Proceeds from insurance recoveries 7.6  6.5 
Equity investments (15.5) (0.2)
Net cash provided by (used in) investing activities – continuing operations (186.1) 47.8 
Payments related to sale of discontinued operations (2.7) — 
Net cash used in investing activities – discontinued operations —  (4.2)
Net cash provided by (used in) investing activities (188.8) 43.6 
Financing activities:
Payments to retire debt (1,351.5) (2,256.8)
Proceeds from issuance of debt 1,664.5  2,393.7 
Shares repurchased (36.8) (406.5)
Dividends paid to common shareholders (58.3) (68.5)
Purchase of shares to satisfy employee tax on vested stock (5.6) (9.2)
Distributions to noncontrolling interest (19.2) (6.8)
Net cash provided by (used in) financing activities 193.1  (354.1)
Net increase (decrease) in cash, cash equivalents, and restricted cash (63.7) 116.7 
Cash, cash equivalents, and restricted cash at beginning of period 302.4  228.4 
Cash, cash equivalents, and restricted cash at end of period $ 238.7  $ 345.1 
See accompanying notes to Consolidated Financial Statements.
6

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(unaudited)
Common Stock Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock Trinity
Stockholders’
Equity
Noncontrolling
Interest
Total
Stockholders’
Equity
  Shares
$0.01 Par Value
Shares Amount
  (in millions, except par value and per common share amounts)
Balances at
   December 31, 2021
83.3  $ 0.8  $ —  $ 1,046.6  $ (17.0) —  $ (0.6) $ 1,029.8  $ 267.0  $ 1,296.8 
Net income (loss) —  —  —  (0.7) —  —  —  (0.7) 2.6  1.9 
Other comprehensive income —  —  —  —  17.1  —  —  17.1  0.2  17.3 
Cash dividends declared on common stock (1)
—  —  —  (19.3) —  —  —  (19.3) —  (19.3)
Distributions to noncontrolling interest
—  —  —  —  —  —  —  —  (6.2) (6.2)
Stock-based compensation expense
—  —  5.1  —  —  —  —  5.1  —  5.1 
Settlement of share-based awards, net —  —  0.2  —  —  —  (0.2) —  —  — 
Balances at
   March 31, 2022
83.3  $ 0.8  $ 5.3  $ 1,026.6  $ 0.1  —  $ (0.8) $ 1,032.0  $ 263.6  $ 1,295.6 
Net income —  —  —  3.7  —  —  —  3.7  4.8  8.5 
Other comprehensive income (loss) —  —  —  —  6.3  —  —  6.3  (1.0) 5.3 
Cash dividends declared on common stock (1)
—  —  —  (19.1) —  —  —  (19.1) —  (19.1)
Distributions to noncontrolling interest
—  —  —  —  —  —  —  —  (8.8) (8.8)
Stock-based compensation expense
—  —  5.7  —  —  —  —  5.7  —  5.7 
Settlement of share-based awards, net 0.8  —  0.4  —  —  (0.2) (6.1) (5.7) —  (5.7)
Shares repurchased —  —  —  —  —  (1.0) (25.3) (25.3) —  (25.3)
Accelerated share repurchase agreement —  —  25.0  —  —  (0.8) (25.0) —  —  — 
Retirement of treasury stock
(2.0) —  (36.4) (20.1) —  2.0  56.5  —  —  — 
Balances at
   June 30, 2022
82.1  $ 0.8  $ —  $ 991.1  $ 6.4  —  $ (0.7) $ 997.6  $ 258.6  $ 1,256.2 
Net income —  —  —  25.8  —  —  —  25.8  0.5  26.3 
Other comprehensive income —  —  —  —  10.0  —  —  10.0  0.3  10.3 
Cash dividends declared on common stock (1)
—  —  —  (19.2) —  —  —  (19.2) —  (19.2)
Distributions to noncontrolling interest —  —  —  —  —  —  —  —  (4.2) (4.2)
Stock-based compensation expense
—  —  5.9  —  —  —  —  5.9  —  5.9 
Settlement of share-based awards, net —  —  0.2  —  —  —  (0.3) (0.1) —  (0.1)
Shares repurchased —  —  —  —  —  (0.6) (14.1) (14.1) —  (14.1)
Balances at
   September 30, 2022
82.1  $ 0.8  $ 6.1  $ 997.7  $ 16.4  (0.6) $ (15.1) $ 1,005.9  $ 255.2  $ 1,261.1 
(1) Dividends of $0.23 per common share for all periods presented in 2022.
7

Common Stock Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury Stock Trinity
Stockholders’
Equity
Noncontrolling
Interest
Total
Stockholders’
Equity
  Shares
$0.01 Par Value
Shares Amount
  (in millions, except par value and per common share amounts)
Balances at
   December 31, 2020
111.2  $ 1.1  $ —  $ 1,769.4  $ (30.9) (0.1) $ (0.8) $ 1,738.8  $ 277.2  $ 2,016.0 
Net income (loss) —  —  —  3.3  —  —  —  3.3  (2.0) 1.3 
Other comprehensive income —  —  —  —  5.1  —  —  5.1  0.3  5.4 
Cash dividends declared on common stock (1)
—  —  —  (23.3) —  —  —  (23.3) —  (23.3)
Stock-based compensation expense
—  —  5.1  —  —  —  —  5.1  —  5.1 
Settlement of share-based awards, net —  —  1.0  —  —  —  (0.8) 0.2  —  0.2 
Shares repurchased —  —  —  —  —  (1.3) (36.8) (36.8) —  (36.8)
Balances at
   March 31, 2021
111.2  $ 1.1  $ 6.1  $ 1,749.4  $ (25.8) (1.4) $ (38.4) $ 1,692.4  $ 275.5  $ 1,967.9 
Net income (loss) —  —  —  12.7  —  —  —  12.7  (7.9) 4.8 
Other comprehensive income —  —  —  —  1.2  —  —  1.2  0.4  1.6 
Cash dividends declared on common stock (1)
—  —  —  (21.0) —  —  —  (21.0) —  (21.0)
Stock-based compensation expense
—  —  4.1  —  —  —  —  4.1  —  4.1 
Settlement of share-based awards, net 1.1  —  0.4  —  —  (0.3) (9.1) (8.7) —  (8.7)
Shares repurchased —  —  —  —  —  (10.5) (290.8) (290.8) —  (290.8)
Retirement of treasury stock
(12.2) (0.1) (10.6) (327.0) —  12.2  337.7  —  —  — 
Balances at
   June 30, 2021
100.1  $ 1.0  $ —  $ 1,414.1  $ (24.6) —  $ (0.6) $ 1,389.9  $ 268.0  $ 1,657.9 
Net income —  —  —  32.0  —  —  —  32.0  3.9  35.9 
Other comprehensive income —  —  —  —  0.7  —  —  0.7  0.3  1.0 
Cash dividends declared on common stock (1)
—  —  —  (20.9) —  —  —  (20.9) —  (20.9)
Distributions to noncontrolling interest —  —  —  —  —  —  —  —  (6.8) (6.8)
Stock-based compensation expense
—  —  6.0  —  —  —  —  6.0  —  6.0 
Settlement of share-based awards, net 0.1  —  0.9  —  —  (0.1) (0.5) 0.4  —  0.4 
Shares repurchased
—  —  —  —  —  (2.8) (77.1) (77.1) —  (77.1)
Balances at
   September 30, 2021
100.2  $ 1.0  $ 6.9  $ 1,425.2  $ (23.9) (2.9) $ (78.2) $ 1,331.0  $ 265.4  $ 1,596.4 
(1) Dividends of $0.21 per common share for all periods presented in 2021.

See accompanying notes to Consolidated Financial Statements.
8

Trinity Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The foregoing Consolidated Financial Statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") including the accounts of our wholly-owned subsidiaries and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”) and RIV 2013 Rail Holdings LLC ("RIV 2013"), in which we have a controlling interest. In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of September 30, 2022, the results of operations for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021, have been made in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. Certain prior year balances have been reclassified to conform to the 2022 presentation.
Due to seasonal and other factors, including the ongoing impacts of the coronavirus pandemic (“COVID-19”), the results of operations for the nine months ended September 30, 2022 may not be indicative of expected results of operations for the year ending December 31, 2022. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2021.
Sale of Highway Products Business
In the fourth quarter of 2021, the Company completed the sale of Trinity Highway Products, LLC (“THP”), a wholly-owned subsidiary of the Company, and certain direct and indirect subsidiaries of THP, to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners, for an aggregate purchase price of $375.0 million, subject to a final working capital adjustment, which was recorded in the second quarter of 2022.
We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this Quarterly Report on Form 10-Q. Results of prior periods have been recast to reflect these changes and present results on a comparable basis. See Note 2 for further information related to the sale of THP.
Revenue Recognition
Revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. Payments for our products and services are generally due within normal commercial terms. The following is a description of principal activities from which we generate our revenue, separated by reportable segments. See Note 4 for a further discussion regarding our reportable segments.
Railcar Leasing and Management Services Group
In our Railcar Leasing and Management Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis. Leases not classified as operating leases are generally considered sales-type leases as a result of an option to purchase.
We review our operating lease receivables for collectibility on a regular basis, taking into consideration changes in factors such as the lessee’s payment history, the financial condition of the lessee, and business and economic conditions in the industry in which the lessee operates. In the event that the collectibility of a receivable with respect to any lessee is no longer probable, we derecognize the revenue and related receivable and recognize future revenue only when the lessee makes a rental payment. Contingent rents are recognized when the contingency is resolved.
Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded in the Consolidated Balance Sheets. Interest income related to sales-type leases is recognized over the lease term using the effective interest method. See "Lease Accounting" below for additional information regarding sales-type leases as of September 30, 2022. We had no sales-type leases as of December 31, 2021.
9

We report all sales of railcars from the lease fleet and selling profit or loss associated with sales-type leases as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets. These sales are presented in the Lease portfolio sales line in our Consolidated Statements of Operations.
We account for shipping and handling costs as activities to fulfill the promise to transfer the good; as such, these fees are recorded in revenue. The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.
Rail Products Group
Our railcar manufacturing business recognizes revenue related to new railcars when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer. Certain contracts for the sales of railcars include price adjustments based on steel-price indices; this amount represents variable consideration for which we are unable to estimate the final consideration until the railcar is delivered.
Revenue is recognized over time as repair and maintenance projects and sustainable railcar conversions are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of $3.0 million and $4.5 million as of September 30, 2022 and December 31, 2021, respectively, related to unbilled revenues recognized on repair and maintenance services and sustainable railcar conversions that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
Unsatisfied Performance Obligations
The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of September 30, 2022 and the percentage of the outstanding performance obligations as of September 30, 2022 expected to be delivered during the remainder of 2022:
Unsatisfied performance obligations at September 30, 2022
Total
Amount
Percent expected to be delivered in 2022
  (in millions)
Rail Products Group:
New railcars:
External customers (1)
$ 3,573.7 
Leasing Group 517.2 
$ 4,090.9  16.2  %
Sustainable railcar conversions $ 201.4  26.5  %
Railcar Leasing and Management Services Group $ 133.6  6.8  %
(1) Unsatisfied performance obligations at September 30, 2022 include 15,000 railcars expected to be delivered through 2028, valued at approximately $1.8 billion, associated with a new long-term railcar supply agreement with GATX Corporation.
The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2028. The orders in the Rail Products Group's backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.
Unsatisfied performance obligations for the Railcar Leasing and Management Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.
10

Lease Accounting
Lessee
We are the lessee of operating leases predominantly for office buildings and railcars, as well as manufacturing equipment and office equipment. Our operating leases have remaining lease terms ranging from one year to fifteen years, some of which include options to extend for up to five years, and some of which include options to terminate within one year. As of September 30, 2022, we had no material finance leases in which we were the lessee. As applicable, the lease liability is reduced by the amount of lease incentives that have not yet been reimbursed by the lessor.
The following table summarizes the impact of our operating leases on our Consolidated Financial Statements (in millions, except lease term and discount rate):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2022 2021
Consolidated Statements of Operations
Operating lease expense $ 4.6  $ 4.0  $ 13.5  $ 11.3 
Short-term lease expense $ 0.1  $ —  $ 0.3  $ 0.2 
Consolidated Statements of Cash Flows
Cash flows from operating activities $ 13.5  $ 11.3 
Right-of-use assets recognized in exchange for new lease liabilities $ 21.0  $ 23.7 
September 30, 2022 December 31, 2021
Consolidated Balance Sheets
Right-of-use assets (1)
$ 89.9  $ 82.8 
Lease liabilities (2)
$ 112.1  $ 106.3 
Weighted average remaining lease term 10.0 years 10.8 years
Weighted average discount rate 2.8  % 3.0  %
(1) Included in other assets in our Consolidated Balance Sheets.
(2) Included in other liabilities in our Consolidated Balance Sheets.
Future contractual minimum operating lease liabilities will mature as follows (in millions):
Leasing Group Non-Leasing Group Total
Remaining three months of 2022 $ 3.2  $ 2.1  $ 5.3 
2023 12.0  7.9  19.9 
2024 8.0  6.9  14.9 
2025 6.0  6.1  12.1 
2026 5.7  5.7  11.4 
Thereafter 8.7  57.8  66.5 
Total operating lease payments $ 43.6  $ 86.5  $ 130.1 
Less: Present value adjustment (18.0)
Total operating lease liabilities $ 112.1 
Lessor
Our Leasing Group enters into railcar operating leases with third parties with terms generally ranging between one year and ten years. The majority of our fleet operates on leases that earn fixed monthly lease payments. Generally, lease payments are due at the beginning of the applicable month. A portion of our fleet operates on per diem leases that earn usage-based variable lease payments. Some of our leases include options to extend the leases for up to five years, and a small percentage of our leases include early termination options with certain notice requirements and early termination penalties. As of September 30, 2022, non-Leasing Group operating leases were not significant, and we had no direct finance leases.
11

We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and actively participating in secondary markets. Additionally, our lease agreements contain normal wear and tear return condition provisions and high mileage thresholds designed to protect the value of our residual assets. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.
The following table summarizes the impact of our leases on our Consolidated Statements of Operations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2022 2021
(in millions)
Operating lease revenues $ 167.2  $ 158.2  $ 500.5  $ 486.2 
Variable operating lease revenues $ 17.7  $ 18.8  $ 49.0  $ 44.7 
Interest income on sales-type lease receivables $ 0.2  $ —  $ 0.5  $ — 
Profit recognized at sales-type lease commencement (1)
$ —  $ —  $ 1.3  $ — 
(1) Included in gains on dispositions of property – lease portfolio sales on our Consolidated Statements of Operations.
Future contractual minimum revenues for operating leases will mature as follows (in millions)(1):
Remaining three months of 2022 $ 156.7 
2023 519.9 
2024 406.0 
2025 307.4 
2026 220.0 
Thereafter 369.4 
Total $ 1,979.4 
(1) Total contractual minimum rental revenues on operating leases relates to our wholly-owned and partially-owned subsidiaries and sub-lease rental revenues associated with the Leasing Group's operating lease obligations.
Future contractual minimum lease receivables for sales-type leases will mature as follows (in millions)(1):
Remaining three months of 2022 $ 0.3 
2023 1.1 
2024 1.1 
2025 1.1 
2026 1.1 
Thereafter 11.2 
Total 15.9 
Less: Unearned interest income (5.2)
Net investment in sales-type leases (1)
$ 10.7 
(1) Included in other assets in our Consolidated Balance Sheets.
Financial Instruments
We consider all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less, or short-term marketable securities if purchased with a maturity of more than three months and less than one year.
Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments, including restricted cash and receivables. We place our cash investments in bank deposits, investment grade, short-term debt instruments, and highly-rated commercial paper. We limit the amount of credit exposure to any one commercial issuer. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.
12

Concentrations of credit risk with respect to receivables are limited due to control procedures that monitor the credit worthiness of customers, the large number of customers in our customer base, and their dispersion across different end markets and geographic areas. Receivables are generally evaluated at a portfolio level based on these characteristics. As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical losses and consideration of current and expected future economic conditions. Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days. When a receivable is deemed uncollectible, the write-off is recorded as a reduction to allowance for credit losses. During the nine months ended September 30, 2022, we recognized approximately $1.7 million of credit loss expense and wrote off $1.9 million related to our trade receivables that are in the scope of ASC 326, Financial Instruments – Credit Losses, bringing the allowance for credit losses balance from $10.5 million at December 31, 2021 to $10.3 million at September 30, 2022. This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450, Contingencies.
Acquisitions
In June 2022, the Leasing Group acquired, from an unrelated seller, a portfolio of railcars for $132.1 million in cash. This transaction was recorded as an asset acquisition within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. As a result of the purchase transaction, the Leasing Group acquired approximately 3,800 railcars, substantially all of which are currently under lease to third parties. We recorded acquired railcars of $125.0 million, lease-related intangible assets of $7.8 million, and certain other immaterial assets and liabilities in our Consolidated Balance Sheet as of the purchase date.
In May 2022, we completed the acquisition of a company that owns and operates an end-to-end rail logistics software platform providing a real-time data universe to freight rail shippers and operators. This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. The acquisition did not have a significant impact on our Consolidated Financial Statements. Based on our preliminary purchase price allocation, we recorded intellectual property of $5.2 million, which will be amortized over five years, goodwill of $5.3 million, and certain other immaterial assets and liabilities.
In January 2021, we completed the acquisition of a company that owns and operates proprietary railcar cleaning technology systems. This transaction was recorded as a business combination within the Rail Products Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. The acquisition did not have a significant impact on our Consolidated Financial Statements. This transaction resulted in goodwill of $7.0 million.
Goodwill
As of September 30, 2022 and December 31, 2021, the carrying amount of our goodwill totaled $159.5 million and $154.2 million, respectively, which is primarily attributable to the Rail Products Group.
Warranties
We provide various express, limited product warranties that generally range from one year to five years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. We provide for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assess the adequacy of the resulting reserves on a quarterly basis. The changes in the accruals for warranties for the three and nine months ended September 30, 2022 and 2021 are as follows:
  Three Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2022 2021
  (in millions)
Beginning balance $ 2.7  $ 5.5  $ 3.1  $ 11.3 
Warranty costs incurred (0.4) (3.4) (2.5) (6.2)
Warranty originations and revisions 0.9  1.6  3.1  (1.0)
Warranty expirations (0.3) (0.2) (0.8) (0.6)
Ending balance $ 2.9  $ 3.5  $ 2.9  $ 3.5 
13

Recent Accounting Pronouncements
ASU 2022-04 – In September 2022, the FASB issued ASU No. 2022-04, "Disclosure of Supplier Finance Program Obligations," which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose information about the key terms of these programs, outstanding amounts as of the end of the reporting period, a description of where in the financial statements outstanding amounts are presented, and a rollforward of these obligations. ASU 2022-04 is effective for public companies during interim and annual reporting periods beginning after December 15, 2022 and is to be adopted on a retrospective basis, except for the disclosure of rollforward information, which is effective for public companies during interim and annual reporting periods beginning after December 15, 2023 and is to be adopted on a prospective basis. Early adoption is permitted. We plan to adopt ASU 2022-04 effective January 1, 2023 and are currently evaluating the impact these disclosures will have on our Consolidated Financial Statements.
Note 2. Discontinued Operations
Sale of Highway Products Business
In the fourth quarter of 2021, we completed the sale of our highway products business, THP. The sale closed on December 31, 2021, and we received net proceeds of approximately $364.7 million, after certain adjustments and closing costs. During the nine months ended September 30, 2022, we recorded a loss on sale of discontinued operations of $5.8 million ($4.4 million, net of income taxes), which included a $2.7 million payment to Rush Hour representing a final working capital adjustment, as well as additional transaction costs incurred during the period. There was no loss on sale of discontinued operations during the three months ended September 30, 2022. We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this Quarterly Report on Form 10-Q.
In connection with the sale, Trinity and Rush Hour entered into various agreements to effect the transaction and provide a framework for their relationship after the separation, including a purchase and sale agreement, a transition services agreement, and a lease agreement. The transition services have various durations ranging between one and eighteen months. We have determined that the continuing cash flows generated by these agreements do not constitute significant continuing involvement in the operations of THP. The amounts billed for transition services were not material to our results of operations for the three and nine months ended September 30, 2022. Additionally, in connection with the sale of THP, the Company has agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations below include certain legal expenses that were directly attributable to the highway products business, which were previously reported in continuing operations. Similar expenses related to these retained obligations incurred during the three and nine months ended September 30, 2022, and that may be incurred in the future, will likewise be reported in discontinued operations. See Note 14 for further information regarding obligations retained in connection with the THP sale.
The following is a summary of THP's operating results included in income (loss) from discontinued operations for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2022 2021
(in millions)
Revenues $ —  $ 83.7  $ —  $ 230.0 
Cost of revenues —  60.4  —  165.2 
Selling, engineering, and administrative expenses 4.4  9.3  17.2  32.5 
Income (loss) from discontinued operations before income taxes (4.4) 14.0  (17.2) 32.3 
Provision (benefit) for income taxes (1.0) 3.2  (3.5) 7.2 
Income (loss) from discontinued operations, net of income taxes $ (3.4) $ 10.8  $ (13.7) $ 25.1 
14

Other discontinued operations
In addition to the THP activities disclosed above, results include certain amounts related to businesses previously disposed, including a $1.3 million of loss on sale of discontinued operations, net of income taxes for the nine months ended September 30, 2022 and losses of $0.4 million and $0.8 million included in income (loss) from discontinued operations, net of income taxes for the three and nine months ended September 30, 2021, respectively.
Note 3. Derivative Instruments and Fair Value Measurements
Derivative Instruments
We use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates. Derivative instruments that are designated and qualify as cash flow hedges are accounted for by recording the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss ("AOCI") as a separate component of stockholders' equity. These accumulated gains or losses are reclassified into earnings in the periods during which the hedged transactions affect earnings. We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance. See Note 8 for a description of our debt instruments.
Interest Rate Hedges
     
Included in accompanying balance sheet
at September 30, 2022
AOCI – loss/(income)
  Notional Amount
Interest Rate (1)
Asset/(Liability)  Controlling Interest Noncontrolling Interest
  ($ in millions)
Expired hedges:
2018 secured railcar equipment notes $ 249.3  4.41  % $ —  $ 0.5  $ — 
TRIP Holdings warehouse loan $ 788.5  3.60  % $ —  $ 0.1  $ 0.2 
Tribute Rail secured railcar equipment notes (2)
$ 256.0  2.86  % $ —  $ 0.9  $ 1.1 
2017 promissory notes – interest rate cap $ 169.3  3.00  % $ —  $ (0.3) $ — 
Open hedge:
2017 promissory notes – interest rate swap $ 441.4  2.39  % $ 19.6  $ (19.6) $ — 
(1) Weighted average fixed interest rate, except for the interest rate cap on the 2017 promissory notes.
(2) In May 2022, Tribute Rail LLC ("Tribute Rail"), an indirect, wholly-owned subsidiary of TRIP Holdings, entered into and subsequently terminated a forward starting interest rate swap to hedge the risk of potential interest rate increases prior to the May 2022 Tribute Rail debt issuance.
  Effect on interest expense – increase/(decrease)
  Three Months Ended
September 30,
Nine Months Ended
September 30,
Expected effect during next twelve months
  2022 2021 2022 2021
  (in millions)
Expired hedges:
2018 secured railcar equipment notes
$   $ 0.1  $ 0.1  $ 0.2  $ 0.2 
TRIP Holdings warehouse loan $ 0.3  $ 0.4  $ 1.0  $ 1.4  $ 0.3 
Triumph Rail secured railcar equipment notes $   $   $   $ 0.1  $ — 
Tribute Rail secured railcar equipment notes $ 0.1  $   $ 0.2  $   $ 0.7 
2017 promissory notes – interest rate cap $ (0.1) $ (0.1) $ (0.1) $ (0.1) $ (0.1)
Open hedge (1):
2017 promissory notes – interest rate swap $ 0.3  $ 3.1  $ 5.3  $ 9.3  $ 5.6 
(1) Based on the fair value of open hedges as of September 30, 2022.
15

Foreign Currency Hedge
Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months. Information related to our foreign currency hedge is as follows:
 
Included in 
accompanying balance 
sheet at September 30, 2022
Effect on cost of revenues – increase/(decrease)
Notional
Amount
Asset/ (Liability) AOCI –
loss/(income)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Expected effect during next twelve months (1)
2022 2021 2022 2021
(in millions)
$ 40.8  $ 1.1  $ (1.6) $ (0.5) $ (1.4) $ (0.7) $ (7.4) $ (1.6)
(1) Based on the fair value of open hedges as of September 30, 2022.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are listed below.
Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. Our cash equivalents and restricted cash are instruments of the U.S. Treasury or highly-rated money market mutual funds. The assets measured as Level 1 in the fair value hierarchy are summarized below:
Level 1
  September 30, 2022 December 31, 2021
(in millions)
Assets:
Cash equivalents $ 34.7  $ 11.4 
Restricted cash 180.2  135.1 
Total assets $ 214.9  $ 146.5 
Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Interest rate hedges are valued at exit prices obtained from each counterparty. Foreign currency hedges are valued at exit prices obtained from each counterparty, which are based on currency spot and forward rates and forward points. The assets and liabilities measured as Level 2 in the fair value hierarchy are summarized below:
Level 2
  September 30, 2022 December 31, 2021
(in millions)
Assets:
Interest rate hedge (1)
$ 19.6  $ — 
Foreign currency hedge (1)
1.1  — 
Total assets $ 20.7  $ — 
Liabilities:
Interest rate hedge (2)
$ —  $ 21.0 
Foreign currency hedge (2)
—  0.1 
Total liabilities $ —  $ 21.1 
(1) Included in other assets in our Consolidated Balance Sheets.
(2) Included in accrued liabilities in our Consolidated Balance Sheets.

16

Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of September 30, 2022 and December 31, 2021, we have no assets measured on a recurring basis as Level 3 in the fair value hierarchy.
See Note 1 for more information regarding non-recurring fair value measurements involving Level 3 inputs resulting from acquisition activity. See Note 8 for the estimated fair values of our debt instruments. The fair values of all other financial instruments are estimated to approximate carrying value.
Note 4. Segment Information
We report our operating results in two reportable segments: (1) the Railcar Leasing and Management Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services; and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services. Following the sale of THP, which was previously reported within All Other, we have combined the results of the prior Corporate and All Other groupings into a single Corporate and other grouping. The remaining activity previously reported in All Other primarily includes legal, environmental, and maintenance costs associated with non-operating facilities. Results of prior periods have been recast to reflect these changes and present results on a comparable basis.
Gains and losses from the sale of property, plant, and equipment are included in the operating profit of each respective segment. Our Chief Operating Decision Maker ("CODM") regularly reviews the operating results of our reportable segments in order to assess performance and allocate resources. Our CODM does not consider restructuring activities when evaluating segment operating results; therefore, restructuring activities are not allocated to segment profit or loss.
Sales and related net profits ("deferred profit") from the Rail Products Group to the Leasing Group are recorded in the Rail Products Group and eliminated in consolidation and are reflected in "Eliminations – Lease Subsidiary" in the tables below. Sales between these groups are recorded at prices comparable to those charged to external customers, taking into consideration quantity, features, and production demand. Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. Lease portfolio sales are included in the Leasing Group, with related gains and losses computed based on the net book value of the original manufacturing cost of the railcars.
The financial information for these segments is shown in the tables below (in millions). We operate principally in North America.
Three Months Ended September 30, 2022
Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total
External revenue $ 194.6  $ 302.0  $ —  $ —  $ 496.6 
Intersegment revenue 0.2  295.3  (295.3) (0.2) — 
Total revenues $ 194.8  $ 597.3  $ (295.3) $ (0.2) $ 496.6 
Three Months Ended September 30, 2021
Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total
External revenue $ 185.3  $ 234.5  $ —  $ —  $ 419.8 
Intersegment revenue 0.2  105.4  (105.3) (0.3) — 
Total revenues $ 185.5  $ 339.9  $ (105.3) $ (0.3) $ 419.8 

17

Nine Months Ended September 30, 2022
Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total
External revenue $ 572.6  $ 813.5  $ —  $ —  $ 1,386.1 
Intersegment revenue 0.6  605.5  (605.5) (0.6) — 
Total revenues $ 573.2  $ 1,419.0  $ (605.5) $ (0.6) $ 1,386.1 
Nine Months Ended September 30, 2021
Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total
External revenue $ 553.6  $ 490.2  $ —  $ —  $ 1,043.8 
Intersegment revenue 0.5  372.5  (367.6) (5.4) — 
Total revenues $ 554.1  $ 862.7  $ (367.6) $ (5.4) $ 1,043.8 
The reconciliation of segment operating profit to consolidated net income is as follows:
  Three Months Ended
September 30,
Nine Months Ended September 30,
  2022 2021 2022 2021
  (in millions)
Operating profit:
Railcar Leasing and Management Services Group $ 107.9  $ 109.3  $ 293.2  $ 268.7 
Rail Products Group 26.0  (3.1) 40.5  (8.7)
Segment Totals 133.9  106.2  333.7  260.0 
Corporate and other (21.4) (23.1) (62.2) (63.1)
Restructuring activities, net —  0.1  (1.0) 1.1 
Eliminations – Lease Subsidiary (19.6) (4.5) (48.7) (9.3)
Eliminations – Other (0.2) (0.4) (1.3) (1.1)
Consolidated operating profit 92.7  78.3  220.5  187.6 
Other (income) expense 54.4  44.5  147.0  160.5 
Provision (benefit) for income taxes 8.6  8.3  17.4  9.4 
Income (loss) from discontinued operations, net of income taxes (3.4) 10.4  (13.7) 24.3 
Loss on sale of discontinued operations, net of income taxes —  —  (5.7) — 
Net income $ 26.3  $ 35.9  $ 36.7  $ 42.0 
Note 5. Partially-Owned Leasing Subsidiaries
Through our wholly-owned subsidiary, Trinity Industries Leasing Company ("TILC"), we formed two subsidiaries, TRIP Holdings and RIV 2013, for the purpose of providing railcar leasing services in North America for institutional investors. Each of TRIP Holdings and RIV 2013 are direct, partially-owned subsidiaries of TILC in which we have a controlling interest. Each is governed by a seven-member board of representatives, two of whom are designated by TILC. TILC is the agent of each of TRIP Holdings and RIV 2013 and, as such, has been delegated the authority, power, and discretion to take certain actions on behalf of the respective companies.
At September 30, 2022, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $134.5 million. Our weighted average ownership interest in TRIP Holdings and RIV 2013 is 38% while the remaining 62% weighted average interest is owned by third-party, investor-owned funds. The investment in our partially-owned leasing subsidiaries is eliminated in consolidation.
18

Each of TRIP Holdings and RIV 2013 has wholly-owned subsidiaries that are the owners of railcars acquired from our Rail Products and Leasing Groups. TRIP Holdings has wholly-owned subsidiaries known as Triumph Rail LLC ("Triumph Rail") and Tribute Rail. RIV 2013 has a wholly-owned subsidiary known as TRP 2021 LLC ("TRP-2021"). TILC is the contractual servicer for Triumph Rail, Tribute Rail, and TRP-2021, with the authority to manage and service each entity's owned railcars. Our controlling interest in each of TRIP Holdings and RIV 2013 results from our combined role as both equity member and agent/servicer. The noncontrolling interest included in the accompanying Consolidated Balance Sheets represents the non-Trinity equity interest in these partially-owned subsidiaries.
Trinity has no obligation to guarantee performance under any of our partially-owned subsidiaries' (or their respective subsidiaries') debt agreements, guarantee any railcar residual values, shield any parties from losses or guarantee minimum yields.
The assets of each of Triumph Rail, Tribute Rail, and TRP-2021 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of Triumph Rail, Tribute Rail, and TRP-2021 have recourse only to the particular subsidiary's assets. Each of TILC and the third-party equity investors receive distributions from TRIP Holdings and RIV 2013, when available, in proportion to its respective equity interests, and has an interest in the net assets of the partially-owned subsidiaries upon a liquidation event in the same proportion. TILC is paid fees for the services it provides to Triumph Rail, Tribute Rail, and TRP-2021 and has the potential to earn certain incentive fees. There are no remaining equity commitments with respect to TRIP Holdings or RIV 2013.
See Note 8 regarding TRIP Holdings and RIV 2013, including the debt issuance of Tribute Rail and the repayment of TRIP Railcar Co. LLC's ("TRIP Railcar Co.") outstanding term loan agreement.
Investment in Unconsolidated Affiliate
In August 2021, the Company and Wafra, Inc. (“Wafra”), a global alternative investment manager, announced a new railcar investment vehicle (“RIV”) program between Trinity and certain funds managed by Wafra (“Wafra Funds”). As part of this program, a joint venture was formed, Signal Rail Holdings LLC (“Signal Rail”), which was owned 90% by Wafra Funds and 10% by TILC. Signal Rail or its subsidiaries are expected to invest in diversified portfolios of leased railcars originated by TILC targeting up to $1 billion in total acquisitions over an expected three-year investment period. TILC will service all railcars owned by Signal Rail.
In August 2022, TILC and certain of its subsidiaries sold a second portfolio comprised of 2,678 railcars and related leases to Signal Rail for an aggregate sales price of approximately $254.1 million. TILC recognized a gain of approximately $25.1 million on the sale and approximately $2.5 million was recognized as revenue for services performed associated with the delivery of railcars with attached leases during the three and nine months ended September 30, 2022. In connection with the sale, TILC contributed $13.5 million of cash to Signal Rail, resulting in an increase in TILC's weighted average equity ownership in Signal Rail to 12.9%. Signal Rail financed the August 2022 purchase primarily through a term loan. To date, TILC has sold 6,260 railcars to Signal Rail for an aggregate sales price of $579.2 million.
Upon consideration under the variable interest entity (“VIE”) model of ASC 810, Trinity has concluded that Signal Rail meets the definition of a VIE. TILC has variable interests in Signal Rail arising from its 12.9% equity ownership position and its role as a service provider. We determined that Trinity is not the primary beneficiary and therefore does not consolidate this entity as we do not have the power to direct the activities of the entity that most significantly impact its economic performance. We will absorb portions of Signal Rail’s expected losses and/or receive portions of expected residual returns commensurate with our 12.9% equity interest in Signal Rail.
Our investment in Signal Rail is being accounted for under the equity method of accounting. At September 30, 2022, the carrying value of TILC’s equity investment in Signal Rail was $20.6 million, which is included in other assets in our Consolidated Balance Sheets. The carrying value of this investment, together with any potential future investments described above, collectively represent our maximum exposure in Signal Rail.
19

Note 6. Railcar Leasing and Management Services Group
The Railcar Leasing and Management Services Group owns and operates a fleet of railcars as well as provides third-party fleet leasing, management, and administrative services. Selected consolidated financial information for the Leasing Group is as follows:
September 30, 2022
Wholly-
Owned
Subsidiaries
Partially-Owned Subsidiaries Total Leasing Group
Eliminations – Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents $ 4.4  $ —  $ 4.4  $ —  $ 4.4 
Accounts receivable 97.3  12.3  109.6  —  109.6 
Property, plant, and equipment, net 5,793.1  1,533.5  7,326.6  (774.4) 6,552.2 
Restricted cash 117.1  63.1  180.2  —  180.2 
Other assets 132.6  1.9  134.5  —  134.5 
Total assets $ 6,144.5  $ 1,610.8  $ 7,755.3  $ (774.4) $ 6,980.9 
Accounts payable and accrued liabilities $ 114.9  $ 42.9  $ 157.8  $ —  $ 157.8 
Debt, net 3,844.5  1,190.2  5,034.7  —  5,034.7 
Deferred income taxes 1,147.0  0.9  1,147.9  (177.6) 970.3 
Other liabilities 41.7  —  41.7  —  41.7 
Total liabilities 5,148.1  1,234.0  6,382.1  (177.6) 6,204.5 
Noncontrolling interest —  255.2  255.2  —  255.2 
Total Equity $ 996.4  $ 121.6  $ 1,118.0  $ (596.8) $ 521.2 
December 31, 2021
Wholly-
Owned
Subsidiaries
Partially-Owned Subsidiaries Total Leasing Group
Eliminations – Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents $ 3.4  $ —  $ 3.4  $ —  $ 3.4 
Accounts receivable 90.7  10.1  100.8  —  100.8 
Property, plant, and equipment, net 5,706.1  1,570.6  7,276.7  (779.1) 6,497.6 
Restricted cash 76.5  58.6  135.1  —  135.1 
Other assets 67.3  2.1  69.4  —  69.4 
Total assets $ 5,944.0  $ 1,641.4  $ 7,585.4  $ (779.1) $ 6,806.3 
Accounts payable and accrued liabilities $ 113.4  $ 30.1  $ 143.5  $ —  $ 143.5 
Debt, net 3,555.8  1,216.1  4,771.9  —  4,771.9 
Deferred income taxes 1,114.2  1.1  1,115.3  (176.6) 938.7 
Other liabilities 35.6  —  35.6  —  35.6 
Total liabilities 4,819.0  1,247.3  6,066.3  (176.6) 5,889.7 
Noncontrolling interest —  267.0  267.0  —  267.0 
Total Equity $ 1,125.0  $ 127.1  $ 1,252.1  $ (602.5) $ 649.6 
(1) Net deferred profit on railcars sold to the Leasing Group consists of intersegment profit that is eliminated in consolidation. Net deferred profit and the related deferred tax impact are included as adjustments to the property, plant, and equipment, net and deferred income taxes line items, respectively, in the Eliminations – Lease Subsidiary column above to reflect the net book value of the railcars purchased by the Leasing Group from the Rail Products Group based on manufacturing cost. See Note 5 and Note 8 for a further discussion regarding our investment in our partially-owned leasing subsidiaries and the related indebtedness.
20

  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 Percent 2022 2021 Percent
($ in millions) Change ($ in millions) Change
Revenues:
Leasing and management $ 194.8  $ 185.5  5.0  % $ 573.2  $ 554.1  3.4  %
Operating profit (1):
Leasing and management $ 73.6  $ 76.4  (3.7) % $ 220.2  $ 223.0  (1.3) %
Lease portfolio sales (2)
34.3  32.9  * 73.0  45.7  *
Total operating profit $ 107.9  $ 109.3  (1.3) % $ 293.2  $ 268.7  9.1